The Department of Revenue and Customs (DRC) is proposing to revise its customs duty on goods imported by courier companies. The DRC taxes such goods through the customs service counters operating in the premises of courier service offices. But people feel the tax rate is extremely high while the pint-sized tax ceiling is not justifiable for recent times.
As per the Customs Rules and Regulations of Bhutan 2017, the department shall exempt customs duty on import of goods through courier as gifts up to an invoice value of Nu 3,000.
The current customs duty and sales tax for cosmetics and clothing are at 40 per cent, and footwear is at 35 per cent. There is no or zero tax on mobile phones and laptops imported through courier services.
“The tax rates on the garment and shoes based on the customers’ complaints are high because initially when we have fixed the rate at 40 and 35 per cent, the government was actually aiming to promote the domestic industries. We were anticipating that may be the domestic industries could come up with garments and shoes which could substitute the imports. That’s why it’s high,” said Yeshey Seldon, the Collector at the Revenue & Customs Office under the Finance Ministry.
“People think, they are paying taxes only when they use the courier services but not when they buy the goods directly from stores. But the reality is, even if you buy a good from a store in person, you are paying an indirect tax which is included in the price of the good by the seller,” said Pema Wangdi, the Head of Customs and Excise.
The office has collected more than Nu 34 M from customs duty and sales tax from two courier service providers in Thimphu in this fiscal year alone. That is more than five times the amount collected in the 2017-2018 fiscal year. The increase is attributed to the COVID-19 pandemic, enhancement in the financial system and the growing number of Bhutanese living abroad.
The customs duty allowance and tax rate, according to most people, needs to be looked into.
“Since 90 per cent of what people wear are all imported, we have realised that the customs duty on garments and shoes are high. The DRC will propose a downward revision, especially keeping in mind that we would want to give our Bhutanese citizens better quality products. So very soon we would like to propose the government for a revision in customs duty rates especially in these consumable goods,” the Collector added.
People are also not really sure why the customs counters were put in place only recently. According to the Regional Revenue & Customs Office, the service counters were installed for the convenience of both the service provider and the people.
“We started the custom counter for DHL in September 2019 but the one in Bhutan Post has been there since 2001. This is an in-house customs facility. Most of the consignments that are meant for Thimphu comes from Paro and Phuentshogling and in the past, we usually collect the taxes then and there after declaring the consignments. It was inconvenient for people living in Thimphu to pay their taxes there,” Pema Wangdi added.
Considering the inflation rate and the exponential increase in the usage of such facilities in the country, the department is considering revising the rates at the earliest.
Yeshi Dorji
