Income taxes contribution grew by over 18 percent in 2021 compared to the previous income year.
The total revenue collected as personal income tax (PIT), corporate income tax (CIT), and business income tax (BIT) in the income year amounted to Nu 11.46 billion (B).
It saw an increase of Nu 1.77B compared to the previous year. In the income year 2020 and 2019, the revenue collected was Nu 9. 69B and Nu 10.94B respectively.
PIT contributed to Nu 1.72B, an increase of 26 percent equivalent to Nu 355.83 million (M) in the income year. PIT’s contribution in 2020 and 2019 accounted for Nu 1.37B and Nu 2.29B respectively.
According to a finance ministry official, the increase was because of growth in the rental declarations, an increase in income and a reduction in interest deduction from 50 percent interest waiver.
To recoup tax, the finance ministry on December 4 last year, notified that all real property owners have to declare the annual rental income correctly while filing PIT.
The number of rental income filers increased from 4,026 in 2020 to 4,318 in 2021. It saw an improvement in revenue from rental income to Nu 3.97M, an increase of Nu 0.54M from the income year 2020.
Similarly, the CIT contributed Nu 8.75B in the income year 2021. It saw an increase of 21 percent or by Nu 1.51B from the previous income year.
“The increase was because of improved performance by ferrosilicon companies, State Mining Corporation Limited, Druk Holding and Investments (DHI), Tashi Infocomm, Bhutan National Bank Limited, and Bank of Bhutan Limited,” according to the ministry.
The DHI group contributed Nu 7.3B as a tax contribution to the government in 2021. This was an increase of 30 percent in tax contributions from 2020. In 2020, the DHI group contributed Nu 5.6B to the government.
However, the BIT recorded a decline of 92.52M or 9 percent compared to the previous income year at Nu 986.02M.
An official from the ministry said that the decline could be because of the downturn in the economic activities last year that affected businesses across the country.
As of June 13 this year, there were 58, 347 who filed for PIT, 35, 859 for BIT and 351 for CIT. Similarly, there were 7,178 non-filers in PIT, 1,107 in BIT, and 66 in CIT.
The finance ministry stated that the number of returns not filed for the income year 2021 was computed based on the actual returns filed for the income year 2020.
The non-filer or late filer numbers might not remain the same because many taxpayers who filed tax returns for 2020 to claim refunds were actually not required to file due to changes in the basic exemption threshold from Nu 200,000 to Nu 300,000, the ministry stated.
Additionally, some taxpayers especially in the tourism sector suffered a loss of income.
Sharing some of the challenges, an official said that the collection of taxes from estimated taxpayers continues to pose a challenge to the ministry since they do not maintain proper records and tax liability is not ascertained scientifically. “Often the basis used for determining the tax liability is criticised.”
He added that the taxpayers poorly declare the income by resorting to income suppression or overstatement of expenses.
“Completing the tax assessment or audit within the prescribed time limit remains one of the challenges to the department,” he said.
An official also said that there is a need for integration between the department of revenue and customs IT system and other systems to source information in time to facilitate prompt service delivery.
To recoup additional domestic revenue, the ministry plans to review the operational strategy and strengthen the enforcement to ensure that taxes are collected fairly, efficiently and equitably, and defaulters are penalised invariably.
An official from the finance ministry said, “As the country continues to brave the challenges ushered by the pandemic, we hope that the general public will take pride in paying their taxes diligently and contribute to nation building.”