The Bhutanese government led by Dr Lotay Tshering is moving over overhaul the economic and financial system of the country, through several announcements.
In a recent announcement, Prime Minsiter Tshering proposed to do away with Five Year Planning system. The Prime Minsiter has instructed his office not to engage in drafting the 13th five year plan and rather opt for other alternative plans. PM said current five-year planning system does not have vision or soul.
The 13th plan is supposed to start from July this year. The government is proposing year-to-year or other multi-year planning for development activities. However, the planning commission has not formally announced if it is phasing out the plans.
The Russian-style planning system was introduced in Bhutan in 1961 with financial support from India.
As part of revamping the economic and financial system, the government on Thursday announced series of new taxation policies.
Foreign Minister Namgay Tshering announced to reduce real property transfer duty rate to 3 percent from current 5 percent. Similarly, motor vehicle transfer duty will be reduced to 1 percent from 5 percent. Following the precedent of India, the government announced to name other indirect tax as Goods and Services Tax which is proposed for 7 percent.
The small businesses in rural areas to get tax exemption until 2023 while each regional tourist would be charged Nu 1,138 per day for Bhutan visit effective July 2020.
Person income tax threshold has been increased from Nu 200,000 to Nu 300,000. However, those earning above Nu 1m will have to pay additional 10 percent. The government did not elaborate if different tiers of the tax rate would change. Corporate income tax is reduced from 30 to 25 percent.
The announcements comes amidst concerns on economic growth due to slowing down of India economy. India’s slow growth has directly impacted Bhutan resulting in 3 percent growth last year.
The proposals will be debated in the parliament before approval. Parliament session started on Wednesday.