Thukten Zangpo

The National Assembly yesterday adopted the Goods and Services Tax (Amendment) Bill of Bhutan 2022, but the Goods and Services Tax (GST) will be implemented when the tax system is ready.

The GST Act 2020 will come into force from the day the Parliament approves for enforcement when the Goods and Services Tax system is ready.

The House adopted the Bill with 41 ‘yes’ votes. While two members voted against it, one abstained from voting.

Finance Minister Namgay Tshering said that the deferment was proposed because the software component, Bhutan Integrated Taxation System (BITS) developed did not meet the quality.

BITS is one of the critical components for the successful implementation of the GST.

During the introduction of the Bill on June 8, Lyonpo also said that deferment was proposed given the country’s unfavourable economic situation and the operational readiness of the IT system, BITS.

He said that the economic situation in the country was badly affected by the Covid-19 pandemic and the recent Russia-Ukraine war had further aggravated the economic situation.

The finance minister also said the BITS contract was awarded to Thimphu TechPark Limited, but the contract had to be terminated as it could not deliver the required BITS solution.

The chairperson of the Legislative Committee, MP Tshewang Lhamo, earlier submitted the committee’s recommendation to defer the implementation date of the Bill from July 1, 2024, as proposed by the government ,to July 1, 2025, stating that the country might be much better and that the operational readiness of BITS would be ready.

The government had spent Nu 220 million (M) to develop BITS, of the total spent, Nu 30M was provided to Armenian developers. The total allocated budget was Nu 570M.

Similarly, the House also adopted the Fiscal Incentives (Amendment) Bill of Bhutan 2022 with all 44 members present and voting in favour of the Bill.

The House repealed Section 56(1) of the Fiscal Incentive Act of Bhutan 2021 since it was redundant and covered by Section 51 of the Act.

“Concessionary customs duty rate of 3 percent on permissible raw material and primary packaging material,” it stated.

The Bills will be forwarded to the National Council as Money Bills for deliberation.