P’ling bar and restaurant owners appeal for tax exemptions

Phuentsholing town back to life after lockdown

Among others they have also requested for exemption of license renewal fees

Sangay Rabten

Bar and restaurant owners of Phuentsholing are appealing for Business Income Tax (BIT) and license renewal fees exemption from the concerned agencies.

This, the owners say, is because of no return from the business due to the pandemic and delaying renewal due to the numerous lockdowns imposed in the town.

Like most businesses, bar owners and restaurant owners are required to pay a BIT and license renewal fees. The license must be renewed after three years and failing to renew on time are imposed fine. Phuentsholing Thromde falls under category ‘A’ and bar and restaurant owners should pay a license renewal fee of Nu 15,000 a year in addition to BIT with a 10 percent increment.

Identifying themselves as measures in key areas, bars and restaurants sought the government’s support towards a successful transition from survival to revival and keep feeding Phuentsholing’s COVID-19 recovery.

They are of the view that the government can help bar and restaurant business individuals by exempting them from BIT and license renewal fees to continue playing as an integral part of the social and economic fabric of their communities.

Exemption from the BIT and fees for the bar and restaurant operators of Phuentsholing is felt necessary as they expect they will need some years to return to a profitable situation once the COVID-19 pandemic subsides.

Otherwise, the bars and restaurants need sector-specific support from the government and financial institutions to survive devastating pandemic debt according to operators.

Almost all the bar and restaurant operators whose savings were relinquished during the pandemic expect their business will not be able to recover unless they are exempted from tax or get some assistance and current conditions change.

Restaurants and bars of Phuentsholing are calling on all parties to seek measures to help the hard-hit business sector recover from their pandemic debt and revive them to contribute to the country’s economic growth.

“This is our earnest appeal to all related authorities and should be given utmost attention,” the bar and restaurant owners say. 

Karma Chogyal said that his daughter owns a bar and restaurant and she is facing hardship paying BIT and renewal fees. Because she could not earn an income disturbed by the pandemic, he said, “It is a huge burden to pay tax. It is even unfair to pay BIT without income.”

He recommends that exempting bar and restaurant operators from BIT and renewal fees by the government would be a “real Kidu.” Otherwise, “it is alike that people apply for Kidu and pay, tax, rent and bills.”

Karma Chogyal says that if tax, renewal fees, and utility bills are exempted, then there is no point in people applying for Kidu. “Thus, Kidu fund can be saved for other noble causes.”

The owner of Dogar Hotel, Gyem Sangay expects the same from the government. “We expect the government to waive off the income tax and renewal penalty, if not at least reduce it,” he opined.

Passang Choden 20 who runs a hired bar and restaurant in Phuentsholing town, shared a similar concern. “Neither is it feasible to run nor leave the business,” she shares her critical situation posed by the pandemic and the burden of paying tax without income.

She requests the government to waive off the business income tax and license renewal fees.

Another restaurant owner in the town, Dawa Yangzom, said, “The public would be grateful to the government if income tax is waived off and license renewal fees are exempted.”

Having operated a bar and restaurant since 1992 in Phuentsholing’s lower market, Dechen Choden said that their business had a huge impact due to the pandemic and little saving was already relinquished for consumption during the long lockdown.

She appeals to the ministry of finance and the ministry of economic affairs to waive off the BIT and renewal fees.

Chunu Pradhan who runs a restaurant, says that she is facing challenges paying rent for a rented apartment and for the restaurant. “If the government waived off income tax and renewal fees, it would at least reduce our tension,” she said.

The chairman of the Phuentsholing Bars and Restaurants, Karma Tshering Dorji, said that the business operators in this category are really in a crisis due to COVID-19 and a very long lockdown. He said that some businessmen have to pay many bills without income.

Karma Tshering Dorji said that it is very arduous to pay income tax and renewal penalties with no income besides having to pay house rent and looking after the family, while many house owners do not waive the rent.

He said that it had been a few days since relaxation and business restarted, but “there are no customers.” He said that the prices of other commodities have also risen.

“It would be a relief to the public if the government could waive off the business income tax and exempt license renewal fees,” the chairman said.

Sonam Tshering who owns a salon and plans to run a restaurant, said it would be a good step for the revival of business if the government waived off income tax and exempted license renewal fees and penalties for all kinds of business operators.

The regional director of trade in Phuentsholing, Sonam Dendup, said that bar and restaurant owners were discussing informally the income tax waiver and license renewal fee exemption but did not approach them formally.

He said that business license holders have been exempted from license renewal penalties since the first lockdown. However, in waiving off the taxes/levies and renewal fees, he said, “the regional office has no authority and the decision has to come from the ministry, routing from the Cabinet Secretariat, perhaps routing from the Parliament.

Responding to the appeal, the finance minister, Namgay Tshering, said that the BIT is under the direct tax category and the core principle of income taxation is that tax is levied on income. He said, “If there is no income, there is no tax liability on individuals.”

On the waiving off license renewal fee, the minister said that the government could look into this positively. However, there are many issues to take into consideration when we design such differentiated fiscal measures, according to the finance minister.

Lyonpo Namgay Tshering said that his ministry will work closely with the Ministry of Economic Affairs to take stock of the issues.  “Indeed, we are very much aware of the issues that our friends in Phuentsholing and Samtse are going through, and it will be the sole responsibility of the government under the benevolent leadership of His Majesty to look into the welfare of our people and provide support in every possible ways,” the minister said.

Lyonpo pays gratitude to His Majesty for rolling out multiple Kidu schemes to protect the lives and livelihood of people.

On the differentiated special schemes for Phuentsholing and Samtse, the finance minister share news, “we are in the process of developing a robust economic recovery strategy in short to medium term building on existing fiscal and monetary measures, and various stimulus packages.”

“The recovery strategy will be strategic and focused to ensure maximum impact is derived,” the minister said.

In earlier interview with Bhutan Times, the minister for economic affairs Loknath Sharma said that the ministry had instructed the regional office to exempt from renewal penalty from the business operators of Phuentsholing and Samtse.