The National Assembly adopted the Fiscal Incentives Bill today. The finance ministry drafted the Bill to offer a respite for the underperforming economic sector, especially in COVID high-risk districts. One key proposal is the reduction of Business Income Tax from 30 per cent to 10 per cent for all small, cottage and micro-business operators for the year 2021.
The Finance Minister said the tax concession was proposed considering the recurrent lockdowns in high-risk areas such as Phuentshogling- the commercial hub of the country, Samdrup Jongkhar, Samtse and Gelephu earlier this year.
The lockdowns severely affected the business entities forcing some to move to other commercially thriving districts.
“If your business is closed and if you have not made any profit during the particular year, I think you are not liable to pay the income tax. Of course, you need to file the tax but you are not liable to pay the tax. But if you made an income, you are liable to pay at the reduced rate of 10 per cent and not 30 per cent. The tax will be collected from the first quarter of 2022 for the year 2021. The exemption window is only for the income year 2021,” Finance Minister Namgay Tshering.
But the Opposition party said the incentive package is nothing different from the previous ones. Opposition Leader Dorji Wangdi said Fiscal Incentive Bill has to be in response to the changing economic situation.
“At the moment it should be in response to the impact on the economy by the COVID. So looking at the present bill, it is not so different from the past bills. We have had these fiscal incentive bills in the parliament since a long time back. What this bill has omitted is a clear categorisation of fiscal incentives in terms of the rate as well as duration,” said the Opposition Leader.
“Unlike in the past, we don’t have a blanket kind of tax holiday or exemption for every sector. We have tried to segregate the sectors based on evidence, statistical data that we have on their performances. Currently, in this fiscal incentive bill, we have three broad categories, first is the exemption, second is the concession tax rate and the third is the investment allowance,” the Finance Minister said.
The Money Bill will now be forwarded to the National Council.
Choni Dema
Edited by Tandin Phuntsho
