All the four political parties have promised to reform the tax system, which will require amendment of Revised Tax and Levies Act of Bhutan 2016.
One of the changes Druk Phuensum Tshogpa (DPT) and Druk Nyamrup Tshogpa (DNT) have promised is to raise the lowest exemption limit on Personal Income Tax (PIT) from Nu 200,000 to Nu 300,000.
The PIT exemption limit was last revised in 2016 from Nu 100,000 to Nu 200,000.
The DPT manifesto states that the party will examine PIT rates for equitable income distribution without harming the incentives for work and investment and encouraging tax avoidance. “We will examine the income brackets to give cascading benefit of the increased basic exemption amount to Nu 300,000,” it states.
The party has pledged to remove anomalies and other perverse effects of application and to undertake targeted subsidies to citizens below the poverty line. According to the manifesto, DPT will provide tax concessions to rural enterprises to generate rural employment and income.
DPT also promises to review the import tax levied on the import of vehicles from third countries. “We will review the renewal fee imposed on different categories of business and contract license holders and increase the rural life and housing insurance,” the manifesto states.
DNT’s manifesto states that it will recoup Nu 10 billion by strengthening tax collection and by addressing the issue of tax evasion. “We will build a stronger and more transparent tax system,” the manifesto states.
The party also promises to exempt Business Income Tax (BIT) for businesses and firms with less than Nu 200,000 annual turnover.
DNT wants to build an economy that works for all, not just for those at the top segment of the society. “The tax system should enable everyone to pay their fair share for the good of everybody and the country.”
“We will exempt low and middle income families from paying Personal Income Tax up to Nu 300,000,” DNT states.
The party also promises to remove tax for farmers on income generated from primary agricultural produce and consider lowering taxes on electric appliances.
The party also promises to remove five percent voucher tax, which was imposed by the People’s Democratic Party (PDP) government.
PDP says that it will review regulations to address double taxation.
“We shall offer Fiscal Incentives to create conducive environment for economic growth and other tax measures to enhance domestic revenue,” PDP’s manifesto states.
According to the party manifesto, while tax revenue has grown at an annual average of 19 percent from 1980 to 2018, non-tax revenue grew at a higher rate of 25 percent.
PDP, the manifesto states, will provide tax incentives to electric and eco-friendly vehicles.
“We shall provide financial incentives and tax holidays for media houses for the next five years.”
Bhutan Kuen-Nyam Party (BKP) will place the existing sales tax regime with a more dynamic general service tax (GST).
The party’s manifesto promises to exempt taxes on income from rural-based farm production and do away with all forms of duties and taxes on agricultural inputs. “We will increase revenue as a percent of GDP through technology and intelligence led tax practices that support national priorities (expanding tax base and promoting re-investment in the country).”
The party states that it will increase revenue as a percent of GDP through technology and intelligence-led tax practices that support national priorities by expanding tax base and promoting re-investment in the country.
BKP promises to synchronise the upper PIT rate and the CIT/BIT rates and exempt all pension payouts from PIT from the tax year 2018.
BKP also plans to incentivize gewog off-farm and non-farm economic activities accruing benefits of job creation, curtailing urban migration, exports and import substitution through credit, tax holidays, incubation centers and ready markets among other measures.
The party will withdraw the 5 percent tax on mobile vouchers.