1 TRANSLATION OF THE PROCEEDINGS AND ... - APFA News

The Minister stressed that the PIT is not in any way a burden that is beyond on
individual’s capacity and urged that the Assembly endorse Nu. 100,000 as the
tax exemption level. As there were no further objections raised by anyone it
was decided that the PIT exemption level would be maintained at Nu 100,000
without any change.
With reference to (b), (c) and (d) under 4.2 of article 4 on page 44, the BCCI
representative pointed out that tax on income from real property, dividends and
interest is also reflected in the corporate and business taxes and queried why
these incomes were taxed doubly.
In response, the Finance Minister said that as mentioned earlier the main
purpose of taxation is not to generate revenue for the government but to ensure
a more equitable distribution of wealth amongst the people. Therefore, tax on
dividends will only be applicable to the wealthier people who have shares in the
big companies and not on those who cannot afford to buy shares. This system is
not exceptional to Bhutan but is applied everywhere in the world.
The Minister also informed the Assembly that tax on the company and the
shareholders have been differentiated and income tax is levied differentially as
it is the universal practice for the company not to bear the entire brunt in case
the company runs into problems. Although corporate taxes are prevalent
everywhere in the world, the dividends are not considered important in view of
its smallness in size.
However, in Bhutan as some of the shareholders in some companies earn
dividends up to 100 to 150% it amount to a substantial sum of money.
Therefore, if PIT is not levied on the dividends received by these shareholders,
it does not make much difference to levy PIT on low-income businesses.
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