The government has proposed to defer the implementation of the Goods and Services Tax (GST) Act 2020 to July 1, 2022.

The present GST Act, which was passed in February last year, was supposed to come into force on July 1 this year.

However, presenting the GST (amendment) Bill 2021 in the National Assembly yesterday, Finance Minister Namgay Tshering said that Bhutan Integrated Taxation System (BITS) or the GST software was being developed and it is expected to take up to six months to complete.

The software, he said, was being developed by the Thimphu Techpark with technical experts from Armenia. Lyonpo said that the government could not hire foreign experts on time due to the pandemic.

The government is spending about Nu 600 million on the GST project, according to him.

Lyonpo Namgay Tshering said that it would also take some time for the country’s officials to learn the skills to handle the system. The government, he said, also needed to carry out awareness programmes and train officials on the GST, and register businesses in the system.

“It’s not possible to carry out awareness programmes in the pandemic. It will take some time as it is one of the biggest reforms in the country’s taxation system,” he said.

The GST software comprises a registration platform and a payment and refund system. According to him, 99 percent of the development of the registration platform has been completed while the payment and refund system is being developed.

He also said that it was not the right time to implement the GST Act as prices of goods have increased and consumption has decreased.

Drametsi Ngangtshang MP Ugyen Wangdi said that it would be still difficult for the government to implement the GST Act by July next year. “The Covid-19 pandemic is expected to last for longer than one year (if Covid-19 is the reason for deferring the GST Act),” he said.

However, Bartsham Shongphu MP Passang Dorji (PhD) said that MPs should leave the decision on the implementation of the GST with the government. “If the government is ready for implementation within a year, then MPs should not have issues,” he said.

The GST (amendment) Bill has been referred to the economic and finance committee of the National Assembly as a Money Bill for review. The House will deliberate the Bill in the coming days and refer to the National Council.

The government hopes to recoup additional revenue of Nu 3B with the implementation of the Act.

GST is a consumption-based tax and it is supposed to eliminate the cascading taxation effect. Just like any other GST regime across the globe, business entities and individuals in the country would be levied GST on all goods and services either manufactured within or imported.

By MB Subba

Edited by Jigme Wangchuk