Bhutan the ecologically rich nation and tiny in size is all set to usher new amendments to its taxation regime. The first is Bhutanese Income Tax Bill 2020 that seeks to instill new life to the outmoded Income Tax Act, 2001 and ensure that loopholes in the tax are covered and the national revenue soars high. One would be increase in tax slab from the current Nu 200,000 to Nu 300,000 or 250,000 and with other combinations. The personal income tax could shall increase from the present 25% to 30% for persons earning above Nu 1 million a year.
Secondly, the National Assembly shall also introduce the Goods and Services Tax (GST) Bill 2020 that would be biggest indirect tax reform in place of sales tax and customs duty. GST would replace the multiple rate of sales tax as well as the customs duty with a single GST tax regime at 7% but could be between 5 to 10% flat rate. The GST Bill will give the legal cover for this major tax reform which will encourage people to file their GST to get benefits like avoiding double taxation. GST will also be an automated system on the implementation side.
Thirdly, the Bhutan National Assembly shall present before the House Property Tax Bill 2020 that will bring for ensuring compliance under the property taxation regime. The property tax amendment shall aim at reduction of the present property and vehicle transfer tax of 5% to ensure compliance inclination of the citizens but an appropriate amount is paid.
Such slew of tax amendments in the mountain nation is due to increasing budgetary deficit of the Government as well as slow down of the national economy due global slowdown of world trade.