…import saw three-fold drop

Thukten Zangpo

In 2023, the import of tobacco and tobacco products decreased by three times, sparking worries about a potential increase in tobacco smuggling within the country.

According to data from the Department of Revenue and Customs, imports of tobacco and tobacco products decreased by more than 300 percent to Nu 542.33 million in 2023, down from Nu 1.59 billion in 2022. This decline coincides with the reintroduction of a 100 percent sales tax.

Tobacco was one of the top ten goods imported in 2022.

Bhutan lifted the ban on tobacco and tobacco products with the amendment of the Tax Act of Bhutan 2021, which came into force in July 2021 to curb the risks of Covid-19 transmission. There were then continuous tobacco smuggling incidents from across the border.

The government revised the sales tax from 100 percent to zero.

However, in November 2022, the government reinstated the 100 percent sales tax and increased customs duty on tobacco import by 10 percent under the Tax Act of Bhutan 2022.

The period of relaxed regulations saw a significant increase in imports, translating to more than Nu 1.59 billion as tax revenue in government coffers in 2002.

Conversely, tax revenue from tobacco imports was more than Nu 542 million tax revenue in 2023.

As per Section 63 of the Customs Act of Bhutan 2017, import and export goods, whether dutiable or exempted, should be declared to the department at the customs station and customs area. As per the Customs Rules and Regulations of Bhutan 2017, a person shall declare goods to customs at the point of entry or exit.

The Customs Act states: “A person shall pay a fine of 50 percent the value of the goods evaded in addition to the amount of customs duty, if the person does not declare or wilfully misrepresents the value or number of imports, export, or transit goods.”

Of the total imports in 2023, import of tobacco and tobacco products from India was reported at 529.74 million and Nu 12.59 million from other countries. Import of cigarettes alone accounted for Nu 507.65 million, equivalent to 109.55 million sticks in 2023.

In the first three months of this year, Bhutan imported Nu 166.92 million worth of tobacco and tobacco products.

Prior to zero tax, the import was recorded at Nu 453.53 million in 2021, Nu 144.23 million in 2020, Nu 0.66 million in 2019, and Nu 1.07 million in 2018.

According to the Bhutan STEPS survey of 2019, the prevalence of current use of tobacco products among 15-69 years was 23.9 percent.

The production and manufacture of tobacco and tobacco products remains banned in the country and smoking in public places is still prohibited.

The sale of tobacco and tobacco products to minors is prohibited. Tobacco business near schools, monasteries, hospitals, clinics, basic health units, and heritage sites is a criminal offence.