With majority votes, National Council (NC) adopted the Fiscal Incentives (Amendment) Bill 2020 yesterday.
The members, however, proposed to amend section 2 of the Bill.
Economic Affairs Committee of NC proposed amending the commencement of the Act as per section 46B of the Public Finance (Amendment) Act 2012 against the National Assembly’s (NA) amendment.
NA’s amendment was that the Act would commence retroactively from the income year 2019.
Section 46B of the Public Finance (Amendment) Act 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.”
The committee accepted the NA’s proposal to defer expiry year of the income tax exemption to small and micro businesses in rural areas from December 31, 2023 to December 31, 2024.
Of the 22 members present in the House, 21 voted for the amendment.
Eminent member Phuntsho Rapten voted against the recommendation to commence the Bill from the date it was initially tabled in NA.
He justified that the commencement of the Act was inconvenient because of the gap between fiscal incentives for income tax exemption to small and micro-businesses in rural areas that concluded in December 2018 and the Bill tabled in NA.
He said that the gap would create inconvenience for taxpayers, collectors and the rural businesses that were exempted from the tax. “The amendment will not cover the gap and inconveniences it caused.”
NA proposed amendment of 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 was because the income tax exemption to small and micro-businesses in rural areas were granted in 2014, the fiscal incentives policy was changed to an Act only in 2017.
He said this during the presentation of the Bill in NC on February 11.
Lyonpo said that the Act superseded the policy and there were gaps in the extension of expiry date. “The current government took over in mid-2018 and we did not get the opportunity to extend the exemption expiry dates.”
He added that the amendment would reduce inconvenience to users when the current government’s term ends in 2023. “When governments change, the committee would also dissolve, which would cause inconvenience to people.
The Bill along with the recommendation is forwarded to the National Assembly for re-deliberation.
Although NC must review both the budget as well as Money Bills and provide recommendations to NA, the recommendations are not binding. This means that the proposal for amendment may or may not be accepted.