Entirely funded by the government, the BITS project will cost over Nu 1 billion

Thukten Zangpo

Following unforeseen delays and technical hiccups, the Department of Revenue and Customs (DRC) under the finance ministry has outsourced the development of Bhutan Integrated Tax System (BITS) to New Zealand’s leading tech business, Data Torque Limited.

With the agreement between DRC and Data Torque Limited signed yesterday, the BITS is expected to be fully operational by 2029.

Among three international tech companies that  participated in the international competitive bidding process, the Data Torque Limited was selected for its expertise in customising commercial off the shelf (COTS) solutions.

An independent evaluation technical committee composed of officials from DRC, Department of Procurement and Properties, and GovTech evaluated the bidding documents.

According to the DRC, the system will feature real-time data processing, automated tax filing, e-invoicing, and a user-friendly interface for taxpayers.

The development of the BITS will take five years, with three years for implementation and two years as warranty period or pilot testing.

The project will be executed in three phases – development of Goods and Service Tax (GST) within 12 months, non-tax and tax deducted at source within the next six months, and direct tax within the following 12 months.

The BITS project, entirely funded by the government, will cost over Nu 1 billion.

The DRC’s director general, Sonam Jamtsho, said that the project is a transformative lead in the tax administration that will broaden taxpayers base, enhance resource mobilisation from domestic resources, and elevate overall quality of taxpayers’ services.

Despite resource constraints and economic challenges, he said that the government places a high level of importance on the successful implementation of BITS. “The government recognises the critical role that a modern and efficient tax system plays in supporting the country’s long-term development goals.”

Sonam Jamtsho said that BITS is critical as it is required to enable the rollout of the GST, which will help broaden the taxpayer base.

The GST Act , passed in 2020, facilitates the implementation of  a consumption-based single seven percent tax system that will subsume the sales tax and modify the excise system.

Sonam Jamtsho added that BITS will also improve compliance and encourage greater participation from businesses and individuals and  improve taxpayer services through better interfaces and seamless integration with other government agencies, offering a one-stop platform for all taxpayer services.

The BITS will replace the RAMIS system, providing more efficient and effective tools for tax administration.

The director of the Data Torque Limited, Bill Chatwin, said that tax allows the government to collect essential government revenue, and a well-functioning tax system is fundamental to any country’s economy and society. “A reliable tax system is critical to building local communities and making the country more resilient to external shocks”.

The Commissioner of BITS and GST Project, DRC, Kuenzang Thinley, said that the current tax-related systems are scattered such as eCMS, and property tax, among others. “BITS will integrate all these systems.”

Earlier, as per the 2017-18 estimates, the government was expected to recoup an additional Nu 3 billion with the implementation of the BITS.

The DRC expects the revenue collection to increase as  the per 2022-23 estimates.

Commissioner Kuenzang Thinley said that the system could resolve the country’s short-term borrowings in terms of treasury bills as the system will enable steady monthly cash flow.

The National Assembly in the summer session 2022 passed the Goods and Services Tax (Amendment) Bill of Bhutan 2022, with its implementation scheduled after the tax system is ready.

The GST Act 2020 will come into force from the day the Parliament approves for enforcement when the BITS is ready.