The National Council (NC) yesterday adopted the Fiscal Incentives (FI) Bill 2020 after reversing the expiry date of the existing fiscal incentives to the one proposed by the government.
The government had proposed in the National Assembly to extend FI Act 2017 to December 31, 2021 but the Lower House decided to extend until June 30, 2022. The existing FI expire on December 31 this year.
Member from Gasa Dorji Khandu said that the FI Act should be extended as proposed by the government to avoid complications in implementation.
He reasoned that the extension period should be aligned with the income year, not the fiscal year, for convenience of tax assessment. He also said that the Goods and Service Tax (GST) Act will come into effect from July 1, 2021.
“The government must have considered all these factors while presenting the Bill. We should be mindful of complications that may arise during its implementation,” Dorji Khandu said.
Member from Chhukha, Sangay Dorji, supported the argument and said that the government’s proposal would make implementation convenient.
“I support the extension of the Fiscal Incentives but not (as passed by the National Assembly),” he said. He added that the fiscal incentives have benefited the private sector in significant ways.
Eminent member Ugyen Tshering said that the House should not specify the date of commencement of the Bill as the Bill await the Royal Assent. “I think the commencement date should be left blank in the Bill,” he said.
Eminent member Phuntsho Rapten said that the issue merited some consideration. He added that there were a few instances in the past where a Bill was passed not in consonance with the Public Finance Act, which prescribes that a money Bill comes into effect from the day it is presented in the National Assembly.
He was referring to the GST Act, which was passed in February this year but is yet to be implemented.
However, the House decided to retain the commencement date as per the public finance Act.
The FI Bill will be deliberated again in the National Assembly, but it is up to the House to accept the Upper House’s recommendations.
Chairman of the economic affairs committee, Anand Rai, reiterated that the Fiscal Incentives was tabled as an amendment to the FI Act 2017 for the purpose of harmonising the Bill with the Goods and Services Tax Act and the 21st Century Economic Roadmap. He said that the Bill was timely and would help private businesses significantly in this time of pandemic.
A total of 844 businesses benefited from tax exemptions and other fiscal incentives under FI Act 2017, according to the finance minister.
The government has forgone Nu 6.5 billion (B) in taxes under FI Act 2017, as per the finance ministry’s assessment. In return, the government received a total of Nu 5.3B as taxes from the business establishments that availed fiscal incentives under the same Act.