Revised Sales Tax And Custom Duty:Imported cars to cost more

Starting today all imported vehicles entering the country will be subjected to a revised sales tax and custom duty, according to a finance ministry notification. This includes those vehicles ordered months ago that have not reached Bhutan as of today.

The sales tax and custom duty were increased, based on the cylinder capacity or cc (cubic centimeter volume of the engine cabin), and categorised vehicles into petrol and diesel run vehicles.

However, vehicles imported from India will only have to pay an increased sales tax. Sales tax for petrol and diesel vehicles imported from third countries is up by five percent for vehicles up to 1500 cc, and by 15 percent for vehicles above 1501cc.

Custom duty for petrol and diesel vehicles up to 2500 cc has been increased by 10 percent, and by 30 percent for vehicles above 2501 cc.

However, vehicles used for public transportation, school buses, tourism buses and heavy vehicles like trucks and dumpers used by “construction companies” will be exempted from the revision in keeping with the economic development policy according to finance ministry’s director general, Nima Wangdi.

However, an individual buying a bus without operating a tourism company will not enjoy the exemption as stated in the EDP.

The increased tax and duty is a progressive taxation, which means people will pay tax, based on their affordability, according to revenue and custom director, Choyzang Tashi. “If you buy a small car, you pay a smaller tax. It increases with the kind of vehicle you purchase,” said the director.

Bhutanese, who are eligible for vehicle import quota, will also pay both the revised sales tax and customs duty, on the amount exceeding the Nu 800,000 quota ceiling.

Nima Wangdi said that they are imposing the rule on vehicles ordered months ago to prevent manipulation in the dates of import. “Every import date will be backdated otherwise,” said the director general.

Meanwhile, vehicles cleared under bond arrangement without payment of sales tax and custom duty and sold today onwards will also be liable for the revised tax and duties. This means that vehicles in the Honda and Hyundai showrooms that are not sold will also be liable for the revised duty and tax.

Director Choyzang Tashi told Kuensel that the government revised tax and duty, considering the vehicle congestion, impact on the environment and also social reasons. “It isn’t so much for revenue. It’s to discourage unnecessary consumption, reduce congestion and pollution,” he said.

By Ugyen Penjore (Source: Kuenselonline)

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