The National Assembly (NA) yesterday rejected the National Council’s (NC) proposal with 33 votes to commence the fiscal incentive amendment Bill 2020 as per the Section 46B of the Public Finance Amendment Act 2012.
Section 46B of the Public Finance Amendment Act 2012 states: “The imposition or increase of any tax or abolition, reduction or remission of any existing tax once passed as law by Parliament, shall be applied retroactively from the date it was initially tabled in the National Assembly.”
Commencement of the Bill, if passed as per NC’s recommendation, would cause inconvenience to taxpayers, collectors and the rural businesses that were exempted from the tax. There would be gaps between fiscal incentives for income tax exemption to small and micro-businesses in rural areas.
As proposed by NA, the Bill should come to force retroactively from the income year 2019.
The Lower House of the Parliament also amended section 3 of the Bill deferring expiry year of the income tax exemption to small and micro-businesses in rural areas from December 31, 2023 to December 31, 2024.
This, according to Finance Minister Namgay Tshering, is because the income tax exemption to small and micro-businesses in rural areas were granted in 2014 but the fiscal incentives policy was changed to an Act only in 2017.
Lyonpo said that the Act superseded the policy and there were gaps in the extension of expiry date. As the new government took over in mid-2018, there was no time for the government to extend the exemption expiry dates.
The amendment of the section is expected to reduce inconvenience to users.
During NA’s deliberation of the Bill on February 5, Lyonpo said the Bill required major amendments according to review and would be presented in the upcoming session. He said the government should make need-based changes in the Act as exemption of income tax has incurred government a loss of Nu 4.2 billion.