MB Subba

The National Assembly yesterday decided to extend the fiscal incentives granted under the Fiscal Incentives Act 2017 by one and a half years.

The House will vote for adoption of the today.

Earlier last week, the finance minister had proposed an extension up to December 31, 2021.

The extension up to June 30, 2022 came after the recommendation of Drametse-Ngatshang MP Ugyen Wangdi on the grounds that most of the current exemptions were granted for five years beginning from the middle of 2017.

“Extension by a year is not in consonance with the Fiscal Incentives Act, as most of the exemptions would not have completed five years by the end of next year,” he said.

Among other exemptions, the Fiscal Act 2017 grants income tax holiday of five years to companies going for an Initial Public Offering (IPO).

The government had to propose the new Fiscal Incentives Bill because the tax rebate, additional expenditure deduction, TDS exemption, sales tax and customs duty exemption, concessional customs duty, among other exemptions, will expire on December 31, 2020.

Finance Minister Namgay Tshering said that the government had not proposed any changes in the present Fiscal Incentives Act except the date. The government, he said, did not propose new fiscal incentives, as it needed to wait and see how the Covid-19 situation would evolve in the coming months.

He also said that the Fiscal Incentives would be aligned with the 21st Century Economic Roadmap, which will be the main economic policy.

The drafting of the economic roadmap, he said, would be completed soon.

Opposition Leader Dorji Wangdi said the government should explore the possibility of proposing new fiscal incentives in the summer session.

Prime Minister Dr Lotay Tshering said that the government would have been able to propose new fiscal incentives anytime if the Covid-19 situation was predictable. “Today, finding a job for the unemployed is becoming more difficult. Many people in the private sector have lost their jobs.”

The government, he said, would not delay new fiscal incentives beyond the proposed time.

The fiscal incentives are aimed at stimulating economic growth, foster private sector development, and generate employment.

The Bill will be forwarded to the National Council for deliberation but the recommendations of the house will not be binding, as it is a money Bill.

Under the existing Act, there are 60 different types of incentives under FI 2016, of which 36 are the continuation from the FI 2010; 24 are new incentives; nine direct tax incentives; 15 indirect tax incentives.