Appeal Procedures and Waivers

Tax Administration

• Responsibilities of RAAD (Revenue Accounts and Audit Section):
  • Registration of revenue collecting agencies and users
  • Issuance of agency code and user ID
  • Reviewing and updating the Revenue Chart of Accounts
  • Creation and assigning of revenue account heads
  • Timely reconciliation of national revenue
  • Rectification of errors and informing RRCO (Regional Revenue and Customs Office) of discrepancies
  • Monitoring, compilation, and publication of National Revenue Report
  • Allocation of revenue targets to respective regional offices
  • Printing and distribution of RMR (Revenue Management Report) and DMR (Departmental Management Report)
  • Maintenance of RMR stock register and update in the system

Revenue Accounting and Reporting

• Roles and responsibilities of RAAS (Revenue Accounts and Audit Section):
  • Monitoring and compilation of revenue collection and deposit
  • Collection and timely deposit of government revenues
  • Monitoring of revenue collecting agencies
  • Preparation of comparative revenue reports and submission to DRC (Department of Revenue and Customs)
  • Allocation of revenue targets for the fiscal year under each account head to respective sections
  • Estimation and submission of annual requisition for RMR/DMR/Receipts to DRC
  • Maintenance of stock registers for RMR/DMR
  • Issuance of RMR to revenue collecting agencies
  • Forwarding application received for registration of agency, creation of agency code, user ID, and revenue account head to DRC
  • Providing necessary assistance to collecting agencies to ensure efficient collection and deposit of revenue

Tax Deducted at Source (TDS)

• Definition: A preliminary estimate of tax liability payable on a Pay As You Earn (PAYE) basis
• Objective: To collect tax at the source from where an individual's income is generated
• Applicability: On various incomes such as salaries, interest received, commission received, and dividends
• Different TDS rates prescribed by the Income Tax Act for different payments and different categories of recipients
• Concept: Every person making specified type of payments to any person shall deduct tax at the rates prescribed in the Income Tax Act at source and deposit the same into the government's account
• The person making the payment is responsible for deducting the tax and depositing the same with the government

Assessment

• Assessment Authority: Department of Revenue and Customs through its Regional Revenue and Customs Offices
• Types of Assessment:
  • Advance Assessment: In advance of the normal due date of filing a tax return in certain cases (e.g., taxpayer ceasing to carry on business, leaving the country permanently, or being declared bankrupt)
  • Desk Assessment: Logical check, arithmetical check, and reasonableness check on the level of self-declared assessed tax
  • Field Assessment: In cases where the desk assessment is not satisfactory
  • Estimated Assessment: In cases where the taxpayer fails to submit a tax return or maintain proper accounting records
• Reassessment: May take place at any time within 5 years from the end of the income year on certain grounds (e.g., request from taxpayer, appeal case, or investigation)

Fines and Penalties

• Failure to comply with rules and regulations: Fines and penalties as mentioned in Chapter 5 of the General Provisions of the Income Tax Act of the Kingdom of Bhutan, 2001
• Late payment of tax: Penal interest at the rate of 24% per annum on the amount of tax due

Collection

• Collection Authority: Department of Revenue and Customs through its Regional Revenue and Customs Offices and withholding agencies
• Payment of Tax: Taxpayers shall pay taxes to the RRCO in one or more of the following ways:
  • Advance Taxes
  • Tax Paid on Quarterly basis
• Taxes paid during the income year: Individuals employed by an employer not liable to deduct tax at source shall pay tax in 4 equal instalments during the income year

Recovery Measures

• Recovery measures used when a company, business, or person:
  • Has not paid tax within the due date
  • Has not deducted tax at source within due date
  • Has not paid fines and penalties
• Types of Recovery Measures:
  • Agreement for recovery of tax dues and claims
  • Restraint on Assets
  • Executing Bond (Gaurantor)
  • Detention of Assets
  • Adjustment of Auction Proceeds
  • Suspension and Cancellation of Business License### Offences and Penalties
• A fine of 50% of the value of goods, in addition to Sales Tax, Customs, and Excise duty, will be imposed for:
  • Under-invoicing or non-declaration of goods or services
  • Non-declaration, mis-declaration, or concealment of goods
  • Misuse of tax or duty exemption
  • Misuse of permits or other prescribed offences
• Offenders may be liable for imprisonment ranging from 3 months to 6 years for:
  • Dealing with seized assets in contravention of the Department's order
  • Smuggling of contraband
  • Willful act or omission to collect tax or duty at source or pay tax or duty to the Government
  • Willful act or omission to produce books of accounts and documents
  • Making a false statement or delivering a false account
  • Abetting or attempting to abet any offence under the provisions of this Act

Appeal and Settlement of Disputes

• A person or business entity may appeal an assessment of Sales Tax, Customs, or Excise duty or any other decision made by an officer of the Department
• Filing an appeal does not postpone the date for depositing the Sales Tax or duty
• An appeal shall be admitted only if the undisputed part of the Sales Tax or duty has been deposited
• If the appeal is unsuccessful, the appellant shall be liable for the disputed amount along with a penal interest of 24% per annum from the due date

Appeal Committee and Appeal Board

• An Appeal Committee shall be established at the Regional Office and Head Office of the Department
• The Appeal Board shall be established at the Ministry of Finance, consisting of four regular members and one adhoc member
• The quorum of the Board shall not be less than three members, one being from the Bhutan Chamber of Commerce and Industry

Appeal Procedure

• The Appeal shall be filed before the Appeal Committee within 30 days from the date of the issue of the demand notice or seizure notice
• The Appeal Committee at the Regional Office shall pass its decision within 30 days from the date of filing an appeal
• The decision of the Appeal Committee at the Regional Office may be appealed to the Appeal Committee at the Head Office within 30 days
• The Appeal Committee at the Head Office shall pass its decision within 60 days from the date of filing an appeal
• The decision of the Appeal Committee at the Head Office may be appealed to the Appeal Board within 60 days
• The Appeal Board shall pass its decision within 60 days from the date of filing an appeal
• The decision of the Appeal Board may be appealed to the Court of Law within 30 days

Appeal to the Courts

• A person may file an appeal to the Court of Law, notwithstanding the provisions of appeal under this Act

Waiver

• The Department may waive any penal interest or fine imposed on a person or entity, if the violation of the provisions of this Act was unintentional

Transfer, Closure, or Winding Up of a Business

• In case of transfer, closure, or winding up of a business, all outstanding claims on account of Sales Tax and duty shall be subject to the provision of Section 112 of the Bankruptcy Act of the Kingdom of Bhutan
• Tax clearance certificate shall be obtained from the Department in case of transfer, closure, or winding up of a business, failing which the current owner of an entity shall be liable for any tax due or duty