Some members of the National Council expressed their concerns over the government’s decision to levy a uniform 10% customs duty on all goods imported from third countries. They said this might burden the foreign currency reserve and would ravage the local markets. The issue was brought up during the presentation of the Goods and Services Tax (Amendment) Bill of Bhutan 2021 and the Customs (Amendment) Bill of Bhutan 2021 by the Finance Minister today.
The members said reducing Customs Duty will increase the import of goods which might result in a huge outflow of foreign currencies. They also shared that domestic firms and local industries would struggle to market their products having to compete with international products.
However, Finance Minister Namgay Tshering said the Foreign Exchange Rules and Regulations under the central bank will monitor foreign currency outflow.
“There is a clear regulation regarding the foreign currency outflow. Every individual will be scrutinised by the RMA through the guidelines and regulations in place,” said Lyonpo.
Currently, the Foreign Exchange Rules and Regulations 2018 mandates individuals who take out money exceeding 10,000 US Dollars or its equivalent in foreign currency obtain clearance from the RMA and make declarations at the customs.
Lyonpo also said local markets will instead thrive from the reduction in customs duty after the Goods and Services Tax comes into force.
“If you look at the past records or trade statistics, about a decade ago, the import of goods had never reduced. The export was also not that good, it was moving at a crab’s pace. There is no concern about the impact it will have on the domestic market. When the GST come into force, the domestic market will benefit immensely from it. For example, if you bring a thing from Singapore and if I produce the product here, and if we are to tender this thing, my product will have an advantage because there is a 10% preferential treatment through procurement regulations,” Lyonpo added.
The Customs duty is levied at the point of entry on the goods imported from third countries and the tariff rates ranges from 0-100%. The government now plans to levy 10 % customs duty on all goods will be levied at 10% except on alcohol, tobacco products and vehicles.
Further deliberation on the Bill will be continued tomorrow.
Meanwhile, the National Assembly today adopted the Customs (Amendment) Bill of Bhutan 2021. On this bill, the house previously discussed the proposal to introduce a flat 10 per cent Customs Duty on all goods imported from third countries. Gold and silver, alcohol, tobacco products and vehicles are exceptions. The revision was aimed at increasing tax payment compliance, reduce inflation and make varieties of products available for consumers. Of the 38 members of parliament present, 32 of them voted for yes while five abstained and one voted no. The Bill which is a Money Bill is now with the National Council.
Tshering Dendup/Sonam Tenzin
