The Department of Revenue and Customs is reviewing the Income Tax Act of the Kingdom of Bhutan 2001 for amendment during the winter session of Parliament. The Act was endorsed some two decades ago. According to the Department of Revenue and Customs, the revision will address foreign direct investment transactions and consider incorporating digital assets, such as cryptocurrencies, as sources of income under personal income tax.
The Income Tax Act outlines the types of taxable income for individuals, companies, and businesses in the country.
The Act states that for businesses and companies, any income in money or money’s worth, regardless of its form, is taxable.
However, the Act does not address income from digital assets such as cryptocurrencies.
According to the Director General of the Department of Revenue and Customs, digital assets are not currently specified as sources of income for personal tax.
The DG added that to clarify whether digital assets should be taxed as personal income, the department plans to amend the Act.
The revisions will include new rules for foreign direct investment transactions to stop companies from moving their assets to places with lower taxes. This move aims to prevent potential negative effects on pricing.
While individuals are not required to pay personal income tax on digital assets, public servants must declare these assets during their annual asset declaration with the Anti-Corruption Commission.
The commission said that according to the Anti-Corruption Act of Bhutan 2011, public servants and individuals using public resources must declare all forms of property and digital assets.
Meanwhile, during the Meet the Press yesterday, Finance Minister Lekey Dorji said there are risks of cryptocurrencies being used for money laundering and terrorist financing. He warned people to engage in crypto trading cautiously.
“Governments and regulators around the world are working on this issue, but nothing definite has been established so far. Therefore, it is the government’s responsibility to protect consumers and businesses in the country. There is a risk of cryptocurrencies being used for money laundering and terrorist financing, making commercial use of crypto very risky,” said Lekey Dorji, Finance Minister.
The minister added that the government and the central bank have made a conscious decision not to allow individuals to engage in crypto business. This, he said, is done to protect people from the volatile and risky crypto market.
Sonam Dendup
Edited by Sherub Dorji
