People are starting to feel the heat of the new property tax that was enacted in 2022. During the third parliament, the government fixed the property tax at the rate of 0.1 per cent on the value of land and buildings as per the Property Assessment and Valuation Agency or PAVA rate. While the deliberations were ongoing in the parliament, many people, unaware of the magnitude of the increment at the time say it is huge now.
With the Property Tax Act of Bhutan 2022 in effect since the beginning of last year, tax payable to the government has shot up multiple times. For instance, land owners in core Thimphu town will have to pay more than 26,500 ngultrum per 10 decimal plot from a little over 2100 ngultrum for the same plot size until this year.
Similarly, land tax on an acre of Kamzhing or dry land in rural areas of Samtse has increased from Nu 12 to around Nu 780 after the 50 per cent concession on cultivated dry land.
Likewise, tax on Chuzhing or wet land in rural areas of Punakha has increased from Nu 24 to Nu 81 per acre.
The increase is felt by all property owners but it is especially straining the rural population who solely depend on agriculture as their source of income.
“I was shocked upon hearing about the tax reforms. Regarding the people in the urban areas they have more source of income whereas we the villagers solely depend on agriculture which is also affected by many factors. So, the difference between the tax levied on us and our income is huge,” said Lam Tshering, a resident of Wangchang Gewog in Paro.
“I have heard about the problems people are facing in our gewog due to the tax increment. It is very worrisome for being a farmer with no alternate income,” said Dawa Tshering, another resident of Wangchang Gewog.
“It would have been better if they increase the tax by one or two ngultrum but the increase by 1000 ngultrum is very concerning,” said K.N Khatiwara, a resident of Pelrithang in Sarpang.
The Former Finance Minister, Namgay Tshering during the deliberation on the new property tax in the parliament said the rate was fixed in accordance with international best practices on property taxation where the rate is not too heavy for the taxpayers and one which would allow the government to implement it smoothly. He also said the rate is one of the lowest not only in the region but globally as well.
“The tax rate is not kept based on the market value of properties as it will be much heavier, so it’s in accordance with the PAVA rate. Before it used to be based on the size of the land but now it’s based on the value of land and house,” said Sonam Jamtsho, Director General of the Department of Revenue and Customs.
However, a concession of 90 per cent of tax payable on wetlands or Chuzhing and for land in highland communities and 50 per cent concession on dry land or Kamzhing are provided. Similarly, Traditional Houses used fully for family residential purposes in rural areas and Protected Traditional Houses in urban areas are given a concession of 50 per cent and 70 per cent respectively.
People can pay their taxes through the Property Tax System using the Bhutan NDI App within the 31st of next month.
Intern (Passang Dema, Phuntsho Lhamo, Kinzang Lhamo and Dechen Norbu)
Edited by Kipchu
