The government would have earned Nu.1 BN from mining and quarrying companies in the past five years, had there been effective enforcement of tax law and corporate governance.
The finding was presented in the National Council today, while discussing Performance Audit Report on Tax of Mining and Quarry.
The Members of the Special Committee presented the key findings tax of mining and quarrying sector. Some of the findings include inadequate legal framework, weak enforcement of rules and regulations by the authorities, and lack of provisions to fix remunerations for board members and executives.
In absence of a strong legal and regulatory framework, the government incurred huge revenue losses, promoted a few individuals and minority shareholders were impacted, a member of the special committee, MP Jigmi Rinzin, presented.
The special committee’s finding also says the promoters, who are the majority shareholders, elect themselves to the post of the board of directors and chief executive officer of the companies. It says they also fix their salaries, commissions and bonuses.
Many quarrying units have been either declaring losses for the last five years or showing erratic trend of profitability thereby availing tax exemption. However, the finding says the quarrying units are still being operated while the returns shown are always negative.
The finding also says that, 17 mines and quarries had not deposited environmental restoration bond.
From 2008-12, 19 mines and quarries have operated and closed without or partially paying the environmental restoration bond.
Mining Feasibility Study was also found to be riddled with false information.
Several loopholes in the enforcement were also pointed out. Non-mapping of mineral resources of the country, allotment of mines and quarries on first-come first serve basis, and non-revision of royalty since 2002 were a few of them.
From 2008-12 mines and quarries contributed revenue of about Nu. 8 billion to the government. It made up 2 percent of the country’s GDP.
