The National Assembly today repealed a subsection of the Fiscal Incentives Act 2021. The subsection has a precondition for businesses to be eligible for reduced customs duty rate of three per cent on permissible raw material and primary packaging materials.
Finance Minister Namgay Tshering during the second reading of the Fiscal Incentives (Amendment) Bill of Bhutan 2022, submitted to repeal the subsection. The minister said the section was redundant as it is covered by section 51 of the Fiscal Incentives Act.
“If we look at Section 51 under chapter VII, everything is there. Section 51 says there shall be Sales Tax and Customs Duty exemptions on plant and machinery, raw material, and packaging material for manufacturing units.”
The minister also said access to convertible currency was being governed by the Foreign Exchange Rules and Regulations.
As per the minister, the letter issued by the RMA stated that access to foreign exchange shall be governed by the Foreign Exchange Rules and Regulations as empowered by the RMA Act 2010 as opposed to the Fiscal Incentives Act of Bhutan.
Under the Act, manufacturing units have to earn in convertible currencies from the export of their finished products to get full Sales Tax and Customs duty exemption on the import of raw materials from countries other than India. This means the manufacturing units have to earn in currencies like dollars and euros from the sale of their products. However, the RMA asked the finance ministry to dismiss the convertible currency earning requirement as a precondition for exemption in March this year.
The House today adopted the Bill and will forward it to the National Council as a Money Bill.
Kinley Dem
Edited by Sonam
