Fiscal incentives scheme to stimulate economic growth, foster private sector development, and to generate employment has resulted in a revenue loss of Nu 10B in between January 2008 and February 2018.
This is according to details for fiscal incentives and tax forgone published by the finance ministry yesterday.
The details also include the list of beneficiaries across all major sectors of the economy. A list of 126 beneficiaries in the hotel industry who availed of tax incentives between 2010 and 2015 was also attached.
The list was published on Opposition’s demand to make public all the beneficiaries of the fiscal incentives after the Prime Minister asked the Anti-Corruption Commission to investigate possible case of policy corruption involvingthe former works and human settlement minister, Yeshey Zimba.
The former minister’s daughter owns Bhutan Hotels Pvt. Limited that is managed by the Le Meridian, Thimphu.
Between the period 2008 and 2018, 171 hotels benefited from the tax incentive amounting to Nu 447.8M.
Considering the exemption on customs duty and sales tax, Bhutan Hotels Pvt. Limited received a tax break of Nu 80M from 2010 to 2015, of which Nu 60.7M was provided between 2013 and 2015. A total of 126 hotels were granted tax breaks from 2010 to 2015 amounting to Nu 241M.
Bhutan Ventures Hospitality Limited is the second biggest beneficiary with a tax break of Nu 25.4M, followed by Manidheepa-Mohsin Hotels and Resort Pvt. Limited with Nu 24.5M.
In terms of income tax, Taj Tashi was the biggest beneficiary availing a tax break of Nu 71.54M.
Income tax is a direct tax such as business, corporate and personal income tax. Customs duty and sales tax are indirect taxes.
A highest revenue forgone (Nu 5B) was in the service sector, which is about half of the total foregone revenue between 2008 and 2018.
Drukair Corporation received tax exemption of about Nu 1.8B from sales tax and customs duty in a period of 10 years. This was attributed to purchase of aircrafts.
Bhutan Telecom and Bhutan Power Corporation benefitted a little over Nu 1B each from sales tax and customs duty exemption, followed by Tashi Infocomm and Tashi Air with Nu 630M and Nu 189M each.
With respect to the income tax, Bhutan Broadcasting Service was exempted from paying Nu 7.8M, the highest in the service sector.
A total of 87 entities in the service sector benefited from fiscal incentives in the last 10 years (2008-2018)
Manufacturing sector had the highest number of beneficiary (203). Tax breaks in the sector amounted to Nu 4.27B.
The Army Welfare Project (AWP) got an exemption of Nu 722M from sales tax and customs duty in the 10-year period.
Likewise, Bhutan Metals Pvt. Ltd. and RSA Pvt. Ltd. benefited by Nu 395M and Nu 373M respectively.
Druk Wang Alloys got an income tax exemption of Nu 52M and Ugyen Ferro Alloys of Nu 22M.
More than 60 percent of incentives in the health sector pertained to the ministry of health. Of the Nu 209M tax incentive granted in 10 years, Nu 130M pertained to the ministry.
Exemption on customs duty and sales tax in the field of transport, film and media and education was not too substantial, the highest being Nu 1.21M.
However, the Royal Thimphu College benefited with Nu 17M from income tax, followed by Nu 10M for Tenzin Higher Secondary School in Paro.
Among the travel agents, X-plore Bhutan got a tax break of Nu 8M followed by Bhutan Tourism Corporation Ltd with Nu 7M. This was the benefit from sales tax and customs duty.
In ICT sector, Thimphu Tech Park was given Nu 9M exemption from Sales tax and customs duty and another Nu 8M from income tax.