The National Assembly (NA) on November 30 did not pass the 10 percent sales tax on mobile phones that the National Council (NC) had recommended in the Tax Bill 2022.
The Economic and Finance Committee Chairperson and Gangzur-Minjey MP Kinga Penjor said that the NC recommended imposing a 10 percent sales tax on mobile phones.
He added that there was neither sales tax nor customs duty imposed on the import of mobile phones, and there could be a possible deflection of mobile phones given the large volume of import of mobile phones and the need for an in-depth analysis.
Bhutan imported mobile phones worth Nu 0.5 million in 2019, Nu 1.6 billion (B) in 2020 and Nu 2.4B in 2021.
Finance Minister Namgay Tshering said that mobile phones are taxed 18 percent of goods and service tax in India. The cost is similar in Bhutan.
He added that deflection could be happening but that the government had not come across any such cases and the department of revenue and customs under the finance ministry is monitoring.
Foreign Minister Dr Tandi Dorji also said that if mobile phones have to be taxed it should be for those worth above Nu 20,000.
Bartsham-Shongphu MP Passang Dorji said that the deflections are just claims and communication electronics are zero-taxed in many countries. He asked to carry out a study on the issue.
The NA also supported the NC’s recommendation to do away with the 30 percent sales tax on movie tickets.
The members expressed that it would help the local film industry to promote the country’s tradition, culture and national language.
Re-deliberating on tax for eggs, the NA supported retaining 10 percent sales tax as proposed by the NC. The NA had proposed 50 percent sales tax.
However, the NA did not agree to the NC’s proposal of 10 percent sales tax on sausages and similar products and kept 20 percent as sales tax.
Similarly, for beef-related products, the NA retained the 20 percent sales tax from 10 percent NC recommended. The NA also retained 20 percent sales tax on pasta and did not agree to the NC’s 10 percent-proposed tax.
The tobacco substitutes such as nicotine patches were taxed 100 percent sales tax. As recommended by the NC, the sales tax was retained at zero percent.
The NA also supported the NC’s recommendation of 15 percent sales tax on cement from the NA’s 30 percent.
The NA, after deliberating the NC’s recommendations, all 43 members voted in favour of the Bill.
The Bill will be submitted to His Majesty The Druk Gyalpo for Royal Assent.