Newsletter DEPARTMENT OF REVENUE AND CUSTOMS MINISTRY OF FINANCE

Jan/Feb 2003 ISSUE 13 THE 9TH ANNUAL GENERAL MEETING OF DRC

THE 9 TH ANNUAL GENERAL MEETING of the and it was also the first year of PIT. He Department of Revenue and Customs was held informed that the revenue projection would In this Issue from November 25-30, 2002 at the conference be discussed and added that the tax hall, Regional Revenue and Customs Office, incentives announced by the RGOB will The 9th AGM ...... 1 Thimphu. Over 50 participants attended the have a negative effect on revenue in the News in Brief ...... 2 meeting from five Regional Revenue and short run, but in the long run greater PIT Awareness Campaign...... 3 Articles ...... 4-5 Customs Offices, Head Office, Liaison & Transit revenue would be generated from the new Face to Face ...... 6 Office and Ministry of Finance. industries that are established in response Comments from the Field ...... 7 The objectives of the meeting were: to the incentives. Administration & Personnel ...... 8-10 ● To review the revenue projection for In-country Training...... 9 2002-03 and progress in revenue Ex-country Training...... 9 collection. The whole department Around the Divisions ...... 11 “ Around the Regions ...... 12-13 ● To share field experiences and resolve should be equally Highlights: 8th FYP & common issues/problems faced by the concerned and accept 9th FYP Plans...... 14 regional offices. responsibility for the Humour ...... 15 ● To strengthen the monitoring, Tax Officials Meet ...... 16 evaluation and internal control system. lapses in Paro Airport ● To coordinate an exchange of and avoid recurrence of information between head office and such incidents.” Paro Airport and avoid recurrence of such the regions and between the regions to Finance Minister incidents.” He urged all participants to ensure uniformity in implementation of Lyonpo Yeshey Zimba express their views openly during the the acts and rules. discussions and to recommend measures ● To draw up appropriate strategies and Dasho also commented that the September to root out corruption - with special action plans for effective and efficient incident in Paro Airport Customs was an emphasis on establishing proper administration. eye-opener for the Department and that a monitoring and evaluation mechanisms. ● To provide better taxpayer services and discussion on ways to curb corruption and Over the six-day meeting, various issues improve collection of taxes and duties. improve the internal control system must of concern to DRC were discussed take place during the meeting. In his welcome address, the Director Mr. extensively. With the lapses at Paro still Nima Wangdi, thanked His Excellency the The Finance Minister in his opening fresh on our minds, it will best be Finace Minister and the Finance Secretary address expressed great concern and remembered as a period of reflection and for gracing the opening of 9 th Annual embarrassment on the involvement of our self-examination. It was therefore not General Meeting of DRC. The Director staff at Paro Airport in the smuggling case. surprising that much of the discussions welcomed the participants and stated that His Excellency stated that, “the whole veered around the topics of service ethics the meeting was particularly important as department should be equally concerned and strengthening internal control and it coincided with the first year of the 9FYP and accept responsibility for the lapses in accountability mechanisms.

Jan/Feb 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected] 1

p 1 5/15/03, 10:47 AM NEWS IN BRIEF TAX INCENTIVES ANNOUNCED REVENUE COLLECTION THE MINISTRY OF FINANCE (MOF) ● Other incentives include: FOR FY 2001- 2002 announced numerous tax incentives, which - income earned in convertible currency The Department of Revenue & Customs was presented to the 80th session of the by manufacturing industries, information has exceeded the revenue target of National Assembly by His Excellency the technology industries or services Nu. 4,943.823 million for the Fiscal Year Finance Minister, during the budget and agriculture produce will 2001-2002. The total internal revenue presentation. The tax incentives are be exempt from CIT/BIT; collection reached Nu. 5,093.593 million provided to stimulate private sector - the existing export tax has been which accounts for 9% growth over the investment and came into force with effect abolished; previous years collection. from January 1, 2003. - the tax deductible salary limits will not apply to incorporated companies; The collection comprises of Nu.2,566.941 In brief tax incentives include the - reinvestment allowance of 20% will as tax revenue and Nu.2,526.653 as non- following: be provided to incorporated companies. tax revenue. This is the second year that ● removal of sales tax and customs duty the tax revenue has exceeded non-tax on plant and machinery and raw Furthermore, under the Income Tax Act of revenue. This would not have been materials the Kingdom of Bhutan, 2001, clarification possible without the concerted efforts of ● tax holiday for manufacturing industries; and revision on PIT was also announced. our regional offices and the revenue IT training and vocational institutes; (The details have been published and agencies. hotels, schools and auto-mechanical distributed). workshops established in the interior Compiled by Revenue Accounts & Audit

JOINT ANNUAL REVIEW MEETING - DANIDA PROJECT The team conducted extensive technical through extensive training courses. review meetings with DRC as this is the last The team mentioned that DRC should year for the Danida Project Phase II which be well prepared for the 9th Five Year Plan commenced from the year 1998. where the challenge will be to consolidate DRC submitted a comprehensive review what has been achieved so far, enforce the report with details of the activities taken up PIT (Personal Income Tax) and deconcentrate The fourth Joint Annual Review of Danish by DRC from inception till date and the activities to new regional offices. Yangchen Chhoedon, Under Secretary assistance to the Good Governance & Public proposal of the new budget/activity for the Administrative Reform Programme was held current fiscal year of which the Phase II in Thimphu from April 15-26, 2002. project ends in July 2002. The mission also ACCESSION TO WCO Bhutan has now acceded as a member to looked into the formulation of the new phase Bhutan has now become a member of the THE JOINT REVIEW TEAM consisted of i.e Phase III proposed by DRC in keeping World Customs Organisation (WCO) with effect from February 2002. external consultants Mr. Niels Palmvang and with the 9th Five Year Plans and Programmes. Mr. Kristian Edinger from Ministry of Foreign As a WCO member, we must ensure that In the overall assessment, the team Bhutan’s customs rules and procedures are Affairs Denmark, officials from Liaison Office remarked that the project for DRC has been in keeping with the international norms and of Denmark (LOD) and Department of Aid practices. Correspondingly Bhutan, very successful in terms of broadening tax particularly DRC will also benefit in terms and Debt Management. base and in building the capacity of DRC of training in various customs field that are provided to WCO member countries.

DRC organised 5 days in-country training program on WTO Valuation Agreement with the assistance of World Customs Organization & Japanese Customs Administration from December 2 – 6, 2002 at the conference hall of RRCO Thimphu.

The above program was conducted by two resource speakers Mr. Liu Ping, Technical Officer, WCO and Mr. Takayuki Miyoshi, Customs Officer, Japan Customs, Tokyo.

29 participants, including 14 new recruits and 15 in service candidates took part. The above program was In-country training program on WTO Valuation the first of its kind conducted in Bhutan after the accession to the membership of WCO in February 2002. Agreement, December 02 – 06, 2002

Jan/Feb. 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected]/drc 2

p 2 5/15/03, 10:47 AM PERSONAL INCOME TAX AWARENESS CAMPAIGN

FROM THIMPHU TO GASA, SAMDRUP JONGKHAR TO LHUNTSI, THE PIT AWARENESS PIT CAMPAIGN CAMPAIGN REACHED ACROSS THE LENGTH AND BREADTH OF THE COUNTRY A SUCCESS Following the enactment of the Act, the ● Teaming up with other organizations, The PIT campaign was successfully PIT tax awareness campaign was planned and private corporations to enlist and implemented due to close cooperation and programmed to run from August 2001 engage people in attending the received by HQ from the regional offices st workshops, distribution of information upto March 1 2003. The primary objectives Enhancement of PIT campaign of the campaign were to: materials etc. During the second tax official’s meet, held ● ● Gain acceptance by the general Setting up of PIT information centers in from 22 to 26 July in Thimphu - the PIT public since PIT is a new tax. prominent public venues during special campaign was further enhanced with ● Educate and encourage potential PIT occasions. feedback received from the participants. taxpayers to register with the Mass Media Two main areas were focused on; a report department. To reach the vast majority of the target on findings of the evaluations carried out ● Enable correct filing of PIT returns. audience on a frequent basis - an aggressive on 53 workshops conducted by regional To get the word out across to the taxpayers, advertising campaign was conducted offices from November 2001 to May 30 the awareness campaign used a mix of through the print and broadcast media. Talk 2002, and the development of the second modern communications techniques; from shows on TV in English and Dzongkha were phase of the PIT campaign. interpersonal communication, mass media/ also undertaken to further educate and The workshop evaluation forms submitted publicity and new media - to educate and reinforce PIT messages. As a result of the by the regions (jointly analysed by PIS and empower taxpayers to register and file in advertising blitz, PIT got additional tax administration HQ) were presented. The PIT returns. coverage on both TV news programs (e.g. findings clearly indicated that the INFOCUS/Q&A) and newspaper articles. Interpersonal Communication workshops were an appropriate ● Workshops were the main channel of Furthermore, information support materials communication channel for creating PIT interpersonal communication. PIT such as posters, booklets, pamphlets, awareness with the public - with 65% first officials from the five Regional offices Forms etc. were made available for free time attendees to a tax workshop. The were identified as the resource persons distribution and displayed in prominent responses also indicated that such to conduct the workshops. A total of locations all over the country. workshops are needed and would be well attended in the future. 111 workshops were conducted upto Web site December 2002, covering 7,615 DRC website www.mof.gov.bt/drc was The presentation on the second phase of participants from different agencies and launched in March 2002 by the Secretary the PIT campaign, concentrated on business community. During the of Finance, Dasho Wangdi Norbu.The web strengthening the basic stages of the workshops, evaluation forms initiated site is also advertised on the country’s campaign plan i.e. the overall objective, and designed by PIS were distributed online newspaper www Kuenselonline.com goals, milestones, targets, strategies, allies, to workshop participants. Kaysang W. Samdup, Deputy Director resources, strengths and weaknesses. The participants provided good input and as a PIT awareness workshops conducted during the last Fiscal Year (2001- March 15-03) result the second phase of the PIT RRCO Workshops Participants Taxpayers Registered Campaign from August 2002 till February Gelephu 18 1060 2800 2003 was successfully implemented - Phuentsholing 28 1701 2697 Samdrup Jongkhar 30 1482 4620 contributing to improved staff performance Samtse 14 1372 1352 and client experience. Thimphu 21 2000 10,117 Kaysang W. Samdup, Deputy Director Total 111 7615 21,586 PIT Information Center Informative, interesting and tried to make idea clear Venue:Clock Tower Place: Thimphu “with other modern techniques besides lecturing Dates: 14 to 18 ...Taxpayer BH, Phuentsholing ” September 2002

PIT officials with teachers of YHS School PIT workshop Phuentsholing

Jan/Feb 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected] 3

p 3 5/15/03, 10:47 AM ARTICLES

This article is an extract from the assignment on Economics, CORRUPTION & GOVERNANCE prepared by Kinzang, University of London, UK.

Relationship between corruption and economist or international agencies. them across the board to economic development and to what Therefore, most study done on corruption see the relationship with extents can corruption be controlled is one sided since we are leaving out economic development is not only doubtful through institutional reform? political model and by doing so, our whole but it could also be misleading. This could understanding of corruption is not only be due to significance of corruption since Introduction limited but even misleading. most important type of corruption in one The issue of corruption is one of the most country may not be relevant in another debated issues in the developing countries Definition of corruption country due to difference in legal norms, especially in the context of analyzing the Corruption may be defined by normative state intervention, social structure and most success and failure of development. The definition or positive definitions. Normative importantly the type of corruption etc. economist and international agencies such definition of corruption could be process Another problem associated with the as World Bank and IMF argued that the oriented or outcome oriented. Normative study of corruption is type of corruption. It market policies such as liberalization, definition of corruption, which is process could range from petty corruption to massive privatization and structural reforms could oriented is defined as ‘an act which rent exchanges and this has different not be implemented or met with little deviates from ethical norms’. This definition implications on the studies of corruption. success in the developing countries and though intuitively appealing is the most So understanding the type of corruption identified corruption as one of the reasons. problematic definition. It looks at the act or whether it is paying bribe to buy traffic They argued that the degree of corruption process and not the outcome or tickets or paying bribe to channel the large could to certain extent explain the reason consequence. The second definition, which chunk of the country’s resources, whether why some state significantly fails to make is also normative, but outcome oriented is it is economic corruption or political any policy work in many developing defined as “an act with an outcome which corruption is fundamentally important. countries. harms the public interest”. Many everyday To understand the likely relationship references to corruption are this type and Relationship between corruption and between corruption and economic it definition looks at the consequences of economic development development, we need to study what we acts but here also the problem is that it is It is very difficult to point out the sort of mean by corruption, how to identify still subjective (normative) since public relationship shared between corruption and corruption, how we could measure interest cannot be objectively defined and economic development in a true sense, corruption, what are the consequences of depends on the implicit normative values since there is no specific method as to its corruption in economic development and of the observer. The third definition is the explanation. However, most of the studies what measures are needed to control positive definition, which tries to avoid the carried out so far and to some extend by corruption. The answer to these questions problem of first and second definition by looking at empirical evidence, it appears to seems to be very complex and in fact there is defining a corrupt act as “an act, which indicate that there is a negative relationship no clear-cut answer. This paper will basically try deviates from legal norms or one which (correlation) between corruption and to explain the relationship between corruption violates an existing legal norm”. With all economic performance. So let us discuss and economic development and some these definitions, we are left with three and see some of the studies done to measures that could be considered in controlling different answers to a same question “is establish the relationship between corruption. this a corrupt action?” But for our corruption and economic performance and discussion, we use the third definition as then see some empirical evidence Determinants of corruption preferred by both the economists and confirming or rejecting this hypothesis. The There are basically two determinants of political scientist since it is both objectives most notable studies carried out by Paulo corruption, political determinant of (positive) and process based. Of course Mauro (1995) based on regression analysis corruption and economic determinant of there are other similar definitions such as show a negative correlation between corruption. The issues we are going to “use of public office for private benefit”, but corruption and economic growth. discuss in this presentation are the such definitions are still associated with the The other important question that can economic determinant of corruption not problem of first or second definition. be asked is why developing countries are because political determinant of corruption Now after taking the third definition of more corrupt than developed countries? To is less important on economic performance corruption as “ deviation from legal norms” answer that we have to look from economic but mainly due to sensitivity of the issues as a satisfactory definition but by no means corruption such as demand supply and lack of study references. Further the comprehensive or well defined. Example imbalances which is partly due to poverty study of such nature would mean political identifying corruption through legal norms and partly due to economic transition and interference in other countries and also may be problematic since legal norms primitive accumulation. The other aspect is practical difficulties in suggesting change overtime and vary across countries. political corruption and allocation of recommendations on such nature by Therefore identifying corruption and ranking resources by state for its political stability. Jan/Feb. 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected]/drc 4

p 4 5/15/03, 10:47 AM ARTICLES

TAX EVASION IS ILLEGAL BUT TAX AVOIDANCE IS MORALLY WRONG Anok Kr. Rai Sr. Tax Officer, RRCO, Samtse

TAX EVASION is defined as an attempt, l Such scheme would often take action that falls outside the boundary or whether successful or not, to reduce or advantage of loopholes in the law or jurisdiction of the tax laws is categorized as totally eliminate the tax liability by illegal apply legal provisions for purposes for tax evasion, and hence illegal in nature. means such as omitting records, which they were not intended; On the other hand, unlike evasion - tax understating the taxable income, giving l Secrecy is also a main feature of such avoidance is not illegal in nature but it too incorrect information and by manipulation schemes, where tax advisers sell distorts the functioning of the economy in of accounts etc. Tax evasion has been ready-made avoidance devices with the similar way. It is an intelligent way of playing synonymously used with tax fraud, both of condition that the taxpayer keeps the and manipulating with the provisions of the which connote an integration of these three facts secret as long as possible. tax laws, finding the loopholes and deriving factors, namely: - fringe benefits of such shortcomings in the 1. The payment of less tax than that The implications of tax avoidance and tax laws. Its effect to the economy is silent known by the taxpayer to be legally due; evasion can be viewed through the major but much passive and incurable. Since it 2. Created in a state of mind that is goals of taxation, namely the attainment of falls within the tax laws, it is much more described as being evil and not economic growth and stability and the difficult for the tax officials to handle as fines accidental; economy towards the achievement of these and penalties does not cover up this issue, 3. An unlawful course of action tinged with noble goals, but presence of these factors tax avoidance being legal. It is unethical and three elements of deceit, misinterpretation, circumvents the intents of tax policy and disturbs the morality of the development concealment and dishonesty. distorts the desired objectives of the process of the nation. Hence, tax avoidance, economy. Tax avoidance, on the other hand is the though legal, has been described as morally By looking at the definition and salient wrong. achievement of similar objectives which are features of tax evasion and tax avoidance within the framework or jurisdiction of the The scope of these two activities would they seem similar in nature. But in practice, vary among countries depending on the tax laws. It involves an intelligent analysis they differ from each other. Although both and choice of suitable schemes, which will specific terms of domestic laws and schemes are designed to achieve similar international treaties. A scheme may be bring about less tax impact than the objectives but their presence in the eyes of commonly used methods. legal in one country but illegal in another. In law differ in each other. As mentioned some countries, a mere plan to break the The main characteristic feature of tax above, tax evasion is an intentional act of law itself is already tantamount to breaking avoidance scheme is the following: disobedience, breach of tax laws and the law. A scheme may presently be only l The presence of artificiality where the unlawful course of action. Any taxpayer who avoidance but once it is detected and various arrangements involved in a chooses to follow up this scheme would land prohibited by legislation, it becomes a tax scheme would not, in the absence of up with fines and penalties, imprisonment evasion. tax factors, take the form they do; and other legal proceedings. Any course of

continued from page 4 effect or corruption through bribe have a transfer of rights from public officials to negative and at the most neutral value capitalist in return of bribe. This as shown of corruption rather than at the scale or quantity enhancing. The effect of bribe is that it is in the diagram depending on the nature of of corruption because different type of corruption generally believed that the bribe, which is transfer whether it is value enhancing or has different effect on economic performance. a rent seeking expenditure, reduces value reducing. If the rights are transferred Thediagram below shows that any corrupt investments by transferring or resources which could result in bad economic transaction is based on two sets of transfer. that would have been invested in more implications, corruption is bad for economic The first is the bribe from social actors productive areas. The reason is not very development. On the other hand if such Bribes strong from my point of view because it transfer led to economic development, then (First Effect: Value-Reducing or Neutral) would entirely depend upon the choice of corruption at the least has no negative the rent receive (in this case public officials) implications. The reason why South Korea whether it is invested in the economically developed faster than India with almost State Official productive investment or luxury same level of corruption could be explained Social Actors (Rights Created or Transferred) consumption. On the other hand, there is by this argument. no guarantee that the capitalist or social The other effect is that the corruption actor would always invest in the productive destabilizes property rights. But we cannot (Second Effect) economy. Quite often these bribe would purely blame it on corruption. It is also to (Value-Enhancing or value reducing) even be wasted on luxury consumption if with the economic transition in the (usually private) to state officials (public barging were not required. Therefore, we development countries. On the other hand, officials) in exchange of the bribe. cannot generalize capitalist as productive we don’t know the specific relationship By looking at the type of corruption, investor and public officials as unproductive between corruption, economic development and some of the economic effects of corruption investor. property rights. could be explained. From the diagram - the The second effect of corruption is the To be continued in the next issue…….. Jan/Feb 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected] 5

p 5 5/15/03, 10:47 AM FACE TO FACE

source of supplier. Earlier goods were types of facilities such as store, latrine, imported from a local supplier in New Delhi, vehicle parking space etc. India. For customers, we can provide better We managed to tie up with the and faster services as many can be Manufacturing Company and got the goods accommodated. We also have seating directly from the Manufacturing Company. provision for the customers to wait and relax. With this arrangement, we are able to sell In fact, I am proud to express that the at a reasonable price. Also the credit construction could be made possible from facilities were stopped and further, the the profit out of sales from the DFS as I display of goods on shelves and sales of mentioned earlier. The construction of new Duty Free Shop stock with short shelf life has improved. 7. What was your customers’ view/ building has been completed 4. What are the main achievements reaction on your shifting to the new DFS and from July 2002 sale of goods were made in DFS? building? operated from the new building. Some of the achievements are: Customers expressed that now it looks like l Goods are sourced directly from a real DFS like in other countries abroad. The four storeyed DFS building was manufacturer and authorized dealers The customers can see all the items at a constructed by the East West Construction, thereby ensuring the quality at glance with the improved display of goods. a local Contract Group based in Thimphu, for competitive price 8. As a manager, what is your opinion a contract value of Nu. 40 million. It started in l Standard Rules and Procedures on the future plans for the DFS? mid 1999 and was completed in June 2002. implemented Well, in my opinion, from the existing regular The building is said to be one of the best l Computerized system development of prevalent functions, DFS could be government office buildings. In the new stock entry and transactions corporatized which will give more freedom building, DFS is based at the ground floor and l Introduction of membership card system as a corporation. This will ultimately improve the Regional Revenue and Customs Office for quota holders. the sales as currently it is under bureaucratic Thimphu occupy the first and second floors system which gives hindrance to better while the third floor will be occupied by the These have drastically changed and performance in certain areas. proposed DRC Training Center. modernized the operation of the DFS which Training is also required to upgrade the The Duty Free Shop was initially started is a landmark achievement. For this, skill of DFS staff for commercial accounting, as a Foreign Drink Store under the Ministry credibility also goes to the dedication, financial management and sales techniques of Finance in 1967. During the Coronation integrity and hard work of DFS staff. It is to further improve the customer services. in 1974, the shop supplied imported also attributable to the valuable advise and foodstuffs as well. The Foreign Drink Store contributions from the DRC Steering CONCLUSION later functioned under the Department of Committee Members which was formed in DFS has progressed and geared well during Revenue and Customs and was renamed 1996 with which DFS worked in close the last few years. New products such as as Duty Free Shop in mid 90s. cooperation and made the above household appliances have been added to achievements. provide service to the members. From July YONGSEL talks to the 5. During your term as manager, a new 1998, the new set of Rules and Procedures Manager, Kesang Dorji DFS building has been constructed. Did that was prepared by the DFS Steering 1. When did you take over as the you face any difficulties during the Committee Members was implemented Manager of DFS? period? after the formal approval from MOF. Steering It was in August 1992. Not really. We had slight problem at the time Committee also streamlined the sales and 2. What was the situation of the DFS of making the drawing of the DFS building. purchase of goods at DFS and also the DFS during that time? Initially, it was planned for three storeyed transactions and the stock is systematically It was like any ordinary store with very few departmental store. Later the decision computerized. and limited items. At the same time, items changed and increased to four storeyed with From the sales, DFS has been doing were not so good and fresh which had the approach road cum parking area to well and it has been possible to construct a resulted in loss for the shop. accommodate Thimphu Regional Office, for new building from the excess cash balance 3. How has it improved so far? In what which we had to obtain further clearance from sales proceeds. DFS deserves ways? from the City Corporation. Also the mention of good and effective management We have made immense improvement in all construction budget increased from Nu. 20 that is an essential component of any areas including the supply source from million to Nu. 40 million. business functions drinks to foodstuff. 6. Now with the completion of the DFS and it is hoped that it will progress further After I took over the management and complex, how do you feel about it? in the years ahead. towards the end of 1992, I was able to take Excited! Wonderful! It is convenient and swift, quick and strong actions with good comfortable. Everything is inside with all Yangchen Chhoedon Under Secretary Jan/Feb. 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected]/drc 6

p 6 5/15/03, 10:47 AM COMMENTS FROM THE FIELD YEARLY TAX By Touring Group, RRCO, Phuentsholing COLLECTION TOUR not operate due to launching of new town planning and also due to some inevitable TAXPAYERS APPRECIATE the initiative sufficient time to devote to other tax filing circumstances. Of course, there is a taken by Revenue and Customs by visiting business units once micro units are consideration in the rule if they follow and the shop sites and collecting yearly completed. This exercise is useful though fulfill certain conditions. But to fulfill and Business Income Tax (BIT). They are of the cost of collection may be high as compared provide us with all the documents cost more view that BIT levied is rational being to other big units. Yearly Tax collection by than the tax amount. So it may have to be assessed on physical verification of shop, visiting the units has also reduced the reviewed before the next tax collection. location and other considerations. More numbers of late payments. We noticed that many people operate than that they feel that their time and money On the part of the touring officials, it is without trade licenses and carry out is saved from going to RRCO for such noticed that the minimum Tax Payment of commercial business. Contractors also do payments. Nu. 500 per activity should be reviewed. In trading business without license. Many The touring officials also feel that BIT certain cases, we find some shops are not canteens for offices and private business/ collection by visiting the shops of micro even worth the tax amount and logic of organizations are without license. The issue at units should continue as the coverage of levying tax as per paying capacity is the Regional level has been voiced and we feel assessment in terms of numbers of units defeated. Business not operated also pay that the matter needs to be addressed at higher is almost 90% and at the time of Nu.500. In some cases, it is justifiable as level. Due to such illegal business operations, assessment all records are updated. they keep the license to get a plot in the tax icollection becomes more and more difficult Besides, it gives Tax Administration town. But in many cases, some shops could to collect.

BHUTAN AUTOMATED CUSTOMS SYSTEM ( BACS) By: IT Section, DRC

IN ORDER TO INCREASE efficiency in the Kolkatta including the Department of Trade, electronically sent to Paro Airport, LTO customs proceedures with speedy Ministry of Trade and Industry. Kolkata and RRCO P/ling where third clearance of goods, uniform application of BACS consists of nine modules viz. country import goods are cleared customs tariff and BST, improved Trade Import India, Third Country Import, Export, accordingly. Information Statistics - DRC has Internal Market, Transit Bhutan, Excise, There are several advantages of the BACS implemented Bhutan Automated Customs Receipt Registration and Accounting, system and a few of them are given below: System (BACS) with effect from 1st July Revolving Accounts and System ● Speedy clearance of goods 2002. Administration. The system has been ● Timely and accurate trade statistics BACS has been developed jointly by M/ broken down into these modules in order ● Uniform implementation of the Customs S Strabus Software Solution and M/s Druk to encompass the activities of the Customs Tariff and Sales Tax Rates Information Technology funded under the and Excise Administration. ● Facility for advance declaration of goods DANIDA Project Phase II. It is implemented BACS is not only used by DRC but also In order to implement the system at all sites i.e. DRC Headquarters, Regional used by other agencies like Clearing Agents efficiently and effectively, series of Revenue and Customs Offices (RRCOs), and the Department of Trade. Department workshops have been conducted to train Interior check posts, border check posts, of Trade uses BACS for issuance of import the users from the Department, Clearing Paro Airport and Liaison and Transit Office, licence. The import licenses are then Agents and Business Communities.

PIT RULE ABIDERS, one who declares actual declared and possibly the benefits are shared. SHAPING rental income and issues proper money They are all country cousins. RENTAL INCOME receipts. They are classified as honestly PLANNERS are the ones with wisdom. They CLASSIFICATIONS stupid in the gossip circle. transfer their houses in their sons, daughters Gyeltshen Parop & Kinzang PIT Section, RRCO, P/ling BROWBEATERS are the ones who compel and spouse’s name and reduce the PIT. It is the tenants to tell lie to Revenue officers permissible but who knows they may also be PRIOR TO 1ST JANUARY 2002, relationship and if they do not listen they are threatened taking fresh loans against their assets. tenant and a house owner was simple. with vacation notices. Grace to the absence These classifications and dimensions may Tenant who pays the monthly rent and house of Act for house owners and short supply increase with further research. However, it is owners who receive the rent were both of housing in the market, the tenant has no necessary for the Department of Revenue complacent. option than to agree. Will such connivance & Customs to issue notification citing the But from 1st of January 2002, more worries be punishable if they are caught? penalties that will discourage people from have cropped up and the relationship RELATIONSHIP MAKERS are the ones who further formation of categories or reduce between house owner and tenant has taken try to redraw the family tree and restructure it the members of existing ones. four dimensions as follows: to make relation. The rental income is under Comments from the field continued on page 10 Jan/Feb 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected] 7

p 7 5/15/03, 10:47 AM ADMINISTRATION & PERSONNEL

“The person who never makes a mistake Welcome.... is the person who never does anything. Theodore Roosevelt (1858-1919)” Mr. Graeme Hepburn, Chartered Accountant,VSA, from New Zealand joined DRC on March 15, 2002. He is attached with Tax Administration Division in Head office and will be working for a term of two years.

The PGCFM graduates after completion of 1 year course at the Royal Institute of Management, Simtokha, joined the Department January 2002 promotions w.e.f. January 1, 2002. They are posted in the following places. Name Designation Grade Place Sl. No. Name Office 1. Sangay Zam Joint Director IV DRC, HQ 1. Ms.Lhakpa Bhuti, DRC, HQ 2. Karma Tshomo Under Secretary VI DRC, HQ 2. Ms.Pem Bidha, RRCO, Thimphu 3. Kesang Dorji Manager VII DFS 3. Ms.Sonam Zangmo, RRCO, Thimphu 4. R.K. Tiwari Finance Officer VII P/Ling 4. Mr.Ugyen Wangdi, RRCO, Phuentsholing 5. Mr.Devi Bhakta, RRCO, Phuentsholing 5. B. K Pradhan Asstt. Director VII P/Ling 6. Mr.Choki Gyeltshen, RRCO, Phuentsholing 6. Wangdi Drukgyel Asstt. Director VII Thimphu 7. Mr.Karma Lhatu, RRCO, Gelephu 7. Yeshey Lhendup Sr. Programmer VIII DRC, HQ 8 Ms.Yeshey Lham Dorji, RRCO, Thimphu 8. Rinjay Superintendent VIII Thimphu The following Asstt. Superintendents have been recruited July 2002 Promotions w.e.f. 1/12/2002 in Customs Section. 1. T.B. Chhetri Joint Director IV DRC, HQ Sl. No. Name Office

2. Ugyen Namgyel Dy. Director V Thimphu 1. Karma Palchen RRCO,Thimphu 3. Tharchen Lhendup Dy. Collector V P/Ling 2. Karma, RRCO, Thimphu 4. Sangay Wangdi Dy. Collector V DRC, HQ 3. Kesang Dorji RRCO, Gelephu 5. Kesang Deki Under Secretary VI P/Ling 4. Jigme Dorji Norbu RRCO, Phuentsholing 6. Phuntsho Choden Asstt. Director VII DRC, HQ 5. Tashi Rabten RRCO, Samdrup Jongkha 7. Needup Gyeltshen Asstt. Director VII Samtse 6. Raju Kaflay RRCO, Phuentsholing 8 Tshewang Dolma Dy. Supdt. IX P/Ling 7. Tshering Dorji RRCO, Thimphu 9 Mon Bdr. Ghalay CA IX Samtse 8. Deki Gyamtsho RRCO, Thimphu 10. Jigme Dorji C/ Programmer X Samtse 9. Dechen Zangmo RRCO, Phuentsholing 11. Karma Loday Accountant XI Gelephu The Sixth batch of new tax inspectors who completed Induction 12. Sunit Kujur Tax Inspector XI Gelephu Course at the Royal Institute of Management, Simtokha, have been 13. Sonam Laickey Sr. Inspector XII Paro appointed with effect from 1st July, 2002 and are posted in the Re- 14. A.H. Ansari Sr. Inspector XII Kolkatta gional Offices as follows: 15. Gyeltshen Dukpa Sr. Inspector XII Paro Sl. No. Name Office i) Mr. Kunzang Dorji T, RRCO Thimphu 16. Peka Zangmo Revenue Clerk XIII Thimphu ii) Mr. Sigay Dorji, RRCO Thimphu 17. Pema Wangchuk Dy. Inspector XIII Thimphu iii) Mr. Chencho Rabten, RRCO Thimphu 18. Dophu Tshering Dy. Inspector XIII Samtse iv) Mr. Tenzin, RRCO Phuentsholing 19. Dechen Pelden Revenue Clerk XIII Samtse v) Mr. Sonam Dendup, RRCO Phuentsholing 20. Dechen Dorji Dy. Inspector XIII S/Jongkha vi) Mr. Sonam Dorji, RRCO Phuentsholing 21. Karma Rinchen Dy. Inspector XIII S/Jongkha vii) Mr. Kinzang Tshering, RRCO Phuentsholing 22. Chimi Rinzin Dy. Inspector XIII Gelephu viii) Mr. Dendup, RRCO Gelephu 23. Sonam Chhoizom Revenue Clerk XIII P/Ling ix) Mr. Ugyen Penjore, RRCO Samdrup Jongkha 24. Dorji Rinchen Dy. Inspector XIII P/Ling 25. Lhap Tshering Dy. Inspector XIII P/Ling SUPERANNUATED 26. Dy. Inspector XIII P/Ling 27. Tshering Dorji Dy. Inspector XIII P/Ling Mr. T P. Raveendran, Office Superintendent, superannuated on 28. Dy. Inspector XIII P/Ling 30.4.2002. His responsibility was mainly in the field of documenta- 29. Yongla Asst. Inspector XIV Thimphu tion of third country goods bound for Bhutan. He served for 29 years starting from 3.4.1973 at the Liaison and Transit Office (LTO), Royal 30. Tendang Wangdi Asst. Inspector XIV P/Ling Bhutan Customs, Kolkatta. 31. Karma Yangzom C/ Operator XIV Gelephu DRC wishes him success in his future assignment!

Jan/Feb. 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected]/drc 8

p 8 5/15/03, 10:47 AM RESIGNED 3. Induction Course for Inspectors: DRC recruited 10 new Class XII passed candidates as 7th batch Staff from various regional offices resigned from service in of Customs & Excise Inspectors. They startedd undergoing recent months as follows: Induction Course at the Royal Institute of Management, Simtokha from August 12, 2002. After 5 months at RIM, they 1. Mrs. Kuenzang Lhamu, DCA, RRCO, Thimphu, on June 30, 2002. 2. Mrs. Dema, Asst. Accountant, RRCO, Thimphu, on July 1, 2002. will then take Specialization Course at DRC. It is funded by 3. Mr. Kado, Sales Person, Duty Free Shop, Thimphu on July 5, 2002. RGOB. 4. Mrs. Namgay Zam, Programmer, RRCO, Thimphu on July 31, 2002. 4. Workshop on Sales Tax, Customs & Excise Act & Rules, 5. Mr. Chimi Rinzin, Asst. Inspector, RRCO, Thimphu, on July Bhutan Trade Classification & BACS: commenced on 17th 6. Mr. Sangay Dorji, Accountant, RRCO S/Jongkhar on August 30, 2002. 7. Ms. Kesang Youden, Despatcher, RRCO, Gelephu, on June 1, 2002. June, 2002 at RRCO Phuentsholing and ended on 20 August, 2002 at RRCO Gelephu. The officials of DRC, business DRC wishes them Good Luck in their new venture! community, major stakeholders of Clearing Agents and other TERMINATED related Government agencies, attended these workshops funded by the Danida Project. The following staff were terminated in association with the misuse of Government Revenue: EX-COUNTRY TRAINING: JANUARY - DEC. 2002 1. Mr. Jambay Dorji, Tax Inspector, RRCO, T/phu w.e.f. March 14, 2002. 2. Mr. Rajesh Chhetri, Asst. Supt., RRCO, P/Ling w.e.f. March 14, 2002. Source: HRD Section, AFD, MOF 3. Mr. Rin Dorji, Asst. Inspector, RRCO G/phu w.e.f. August1, 2002. 1. Customs Management & Techniques Course at Singapore: th th 5. Mr. Nidup Tshering, Asst. Inspector, RRCO P/ling w.e.f. August 1, 2002 4 March to 8 March 2002 –funded by Singapore-UNDP/ TCDC and Danida CONVICTED (i) Mr. Sangay Wangdi LTO LTO, Kolkatta 2. Tax System & Administration Course at Korea: 4th March The district court, Thimphu Dzongkhag, convicted 19 Customs to 16th March 2002- funded by Government of Korea officials due to the involvement in gold smuggling racket in connection to the September 22nd 2002, incident in Paro Airport. (i) Mr. Gyeltshen Sr. Tax officer RRCO, P/ling (ii) Mr. Santosh Bhattarai Sr. Tax officer RRCO, S/jongkhar TRANSFERS IN MOF AND DRC 3. WTO Valuation Agreement Course at AKMAL, Malaysia: 5th to 14th March 2002 –funded by Malaysian Customs & The Director General of DNP, Mr. Pema Tenzin, has joined the Danida MOF as the Joint Secretary in AFD, MOF. Dasho Karma Dorji, is (i) Mr. Yeshey Jamtsho Dy. Inspector RRCO, G/phu the new Director General of DNP, MOF. (ii) Mr. Lekey Dorji Dy. Inspector RRCO, S/jongkhar Ms. Karma Tshomo, Under Secretary, DRC is transferred to AFD, 4. Tailor made course on Narcotics Identification MOF, as the head of HRD and Personnel Section. Enforcement & Basic Investigation at AKMAL, Malaysia: 18th March to 30th March 2002 – funded by Danida Mr. Zamtsho Tshering, Joint Director, Head of Customs & Excise (i) Mr. Gyeltshen Wangdi Asst. Collector Paro Airport Division joined the Liaison & Transit Office, Kolkatta as the Liaison (ii) Mr. Karma Dupchu Inspector Paro Airport & Transit Officer with effect from 1 April, 02. (iii) Mr. Pema Chophel Dy. Inspector RRCO, P/ling (iv) Mr. Tshering Dorji Dy. Inspector RRCO, P/ling Mr. Sangay Wangdi, Deputy Collector, from LTO, has joined the (v) Mr. Yeshey Zamtsho Jr. Inspector RRCO, Samtse DRC, Headquarter. (vi) Mr. Jigme Thinlay Asst. Inspector RRCO, P/ling (vii) Mr. Tshering Dorji Asst. Inspector RRCO, G/phu Mr. Kesang Dorji, former Regional Director, RRCO Thimphu is (viii) Mr. Dechen Dukpa Dy. Inspector RRCO, S/Jongkhar now the Head of the Customs & Excise Division at DRC. (ix) Mr. Sherab Dorji Asst. Inspector RRCO, S/Jongkhar (x) Mr. Karma Dorji Dy. Inspector Head Office Mr. Karma Loday, Deputy Director, from DRC has been appointed 5. Revenue Forecasting & Analysis Course at Institute of Cost as the new Regional Director of RRCO, Thimphu, with effect from & Works Accountant, Kolkatta, India: 25th March to 19th June 2002. April 2002 – funded by Danida IN-COUNTRY TRAINING: JANUARY – JUNE 2002 (i) Mr. T.B. Chhetri Dy. Director DRC, HQ (ii) Mr. Karma Loday Dy. Director DRC, HQ 1. Awareness Workshops on PIT (Personal Income Tax) and 6. Effective Supervision Course at AKMAL, Malaysia: 7th May TDS (Tax Deduction at Source): to 17th May 2002 – funded by Malaysian Customs & Danida. A total of 46 workshops on PIT and TDS for various groups of (i) Mr. Tsheten Dorji Inspector RRCO, P/ling taxpayers has been carried out by the 5 Regional Offices in (ii) Mr. Rinchen Dorji Asst. Inspector RRCO, Samtse their jurisdictions during January till June 2002. The awareness 7. Tailor made Course on Evasion, Assessment, Investigation workshop on PIT continued till December 2002 at RRCOs under & Fraud Techniques at National Tax Academy, Selangor, the Danida Project. Malaysia: 13th May to 31st May 2002 – funded by Danida. 2. BACS Users Training : has been conducted for the users at all (i) Mr. Sonam Tenzin Asst. Director Tax Adm, DRC RRCOs during March till May 2002 before the implementation (ii) Mr. Sonam Jamtsho Asst Director RRCO, Samtse of BACS. 26 workshops have been held for various groups at (iii) Mr. Ugyen Wangdi Sr. Tax Officer RRCO, P/ling RRCOs under the Danida Project. (iv) Mr. Bishal Rai Sr. Tax officer RRCO, P/ling

Jan/Feb 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected] 9

p 9 5/15/03, 10:47 AM (v) Mr. Passang Tshering Asst. Accountant DRC 16. Study Tour on precursor control mechanism at 8. Course on Financial Management with Computer Hongkong Customs: 20th October to 1st November 2002 – Application at McMathise Consulting Services, funded by UNDCP Philippines:28 th May to 24th June 2002 – funded by Danida (i) Mr. Phuntsho Wangdi Superintendent RRCO, P/ling (i) Mr. Dorji Dukpa Chief Accountant AFD, MOF (ii) Mr. T. Jamtsho Inspector RRCO, T/phu 9. General Tax Administration Course at National Tax Academy, 17. Meeting on SAFTA & SAPTA at SAARC Secretariat, Malaysia: 12th June to 23rd July 2002 – funded by MTCP Kathmandu: 28th October to 1st November 2002 – funded (i) Mr. Anok Kumar Rai Sr. Tax Officer RRCO, Samtse by SAARC 10. Course on Financial Management and Computerized (i) Mr. H.B. Gurung Deputy Collector DRC, Hq Accounting at McMathhise Consulting Services, 18. Regional Focus Training for new WCO member at Philippines: 15th July to 5th August 2002 – funded by RGOB Customs Japan: 9th December to 20th December 2002 – (i) Mr. Udesh Chhetri Chief Accountant DFS funded by WCO (ii) Mr. Dago Tshering Salesman DFS (i) Mr. Kesang Dorji Joint Director DRC, Hq 11. Computer Forensic Course at AKMAL, Malaysia: 17th (ii) Mr. Choyzang Tashi Regional Director RRCO, P/ling September to 28th September 2002 funded by DANIDA (iii) Mr. Karma Loday Regional Director RRCO, T/phu (i) Mr. T.Dhendup Programmer DRC, Hq 19. Attachment on Excise at State Excise, Maharashtra, th th (ii) Mr. Chimi Rinzin Inspector RRCO, G/phu India: 9 December to 30 December 2002 – funded by 12. Annual meeting of the IMF/World Bank, at World Bank, DANIDA (i) Mr. B.R. Pokrel Deputy Collector DRC, Hq USA: 24th September to 8 th October 2002 – funded by (ii) Mr. Balaram Gurung Deputy Inspector RRCO, T/phu World Bank (iii) Mr. D.B. Ghalley Junior Inspector RRCO, G/phu (i) Ms. Sangay Zam Joint Director DRC, Hq (iv) Mr. Karma Deling Asstt. Inspector RRCO, S/kha 13. Training Management Course at AKMAL, Malaysia: 15th (v) Mr. Namgay Dukpa Asstt. Inspector RRCO, P/ling October to 26th October 2002 – funded by DANIDA (vi) Mr. Rinchen Dorji Junior Inspector RRCO, Samtse (i) Ms. Kesang Deki Asstt. Director RRCO, P/ling 20. Tailor made Course for Mid level Tax Officials at National th th (ii) Mr. Sonam Gyeltshen Superintendent RRCO, P/ling Tax Academy, Malaysia: 9 December to 18 December 2002 nd 14. WCO Focal Point Meeting at New Zealand Customs: 22 (i) Ms. Lhakpa Bhuti Senior Tax Officer DRC, Hq October to 25th October 2002 – funded by RGOB (ii) Mr. Sudesh Pradhan Tax Inspector RRCO, Samtse (i) Mr. Nima Wangdi Director DRC, Hq (iii) Mr. Karma Lhatu Senior Tax Officer RRCO, G/phu 15. Seminar of Tax Incentives at IMF Institute, Singapore: (iv) Mr. Tandin Dorji Tax Inspector RRCO, T/ph (v) Mr. Chadho Tax Inspector RRCO, S/khar th st 28 October to 1 November 2002 - funded by IMF (vi) Mr. Ugyen Wangdi Senior Tax Officer RRCO, P/ling (i) Mr. Nima Wangdi Director DRC, Hq (vii) Ms. Reshmi Sharma Tax Inspector RRCO, T/phu

EXEMPTION OF BHUTAN SALES TAX on Bhutanese movies does not have any impact on the price of the Bhutanese movie tickets. The prices of the movie tickets are exorbitantly high. So it does not benefit the lower income group moviegoers. So if the intention of the subsidy in form of BST is to keep the price of the tickets reasonably low and encourage our people to watch, the policy has failed to achieve it’s intended purponeUgyeVo Vo ed t8.5 p91 o goor maae price of the Bhmeans does 9 have

Jan/Feb. 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected]/drc 10 AROUND THE DIVISIONS - HQ

CUSTOMS & EXCISE TAX ADMINISTRATION REVENUE AUDIT AND ACCOUNTS

Customs Section The second Tax Official’s Meet 2002 was The revenue compilation for the Fiscal Year held by the Tax Administration team with the 2001-2002 has been completed and the l The Rules on Sales Tax, Customs & Regional Directors and tax officials of the report is now with the printers for printing. Excise Act 2000 has come into effect five Regional Offices from July 22 - 26, from January 1, 2002. Customs Tariff 2002. It was funded by the Danida Project. The division is also working on the proposal & Sales Tax schedule based on for the direct deposit of revenue by Harmonized System of Nomenclature Mr. Sonam Karma Tshering, has taxpayers to the bank. The above proposal has now been published and successfully completed the LLB Degree will also facilitate those agencies/ implemented from January 1, 2002. from Delhi University, Faculty of Law, India. companies/corporations who are not allotted l The responsibility of issuing Import Duty He started his course from July 1999 and with RGR Account to deposit their Exemption Certificate (IDEC) is completed in April 2002 and he has resumed collections directly to the bank. transferred to DRC from the Ministry of his duties. Finance with effect from February 01, 2002. l Bhutan has become the member of INFORMATION DIVISION World Customs Organization (WCO) with effect from 12 February, 2002. PUBLIC INFORMATION BBS l Bhutan Automated Customs System SERVICES (PIS) l Gowa talk show on BBS Eng/ DZ (BACS) has been implemented with Publisher appointed to sell and distribute he l Concept/editing of 5 tax commercials effect from July 1, 2002. Income Tax Act 2001 and the Rules on the radio/TV l Published Bhutan Trade Statistics book IncomeTax Act of the Kingdom of Bhutan l Press releases/coverage for the year 2000. 2001. Other activities l A contract has been signed with M/s Kuensel Corporation appointed as the l Advertisement in Bhutan Telephone A.R.Das & Associate, Chartered official publisher with the responsibility to Directory Accountant, Kolkatta for drafting of print, sell and distribute the above l Management of DRC web site at Indirect Tax Manuals within a period of mentioned publications. This decision was www.mof.gov.bt/drc. three and half months under the Danida made as the department faced many Project. constraints in placing small reprint orders IT (Computer) Section from the regions - which might result in 1. From 1st July 2002 BACS has been Excise Section taxpayers being faced with different selling implemented in all RRCOs, Airport Paro, price with each reprint. As per the New Excise Rules, the following LTO Kolkata, border check posts as well changes have taken place with effect from Programs and Activities undertaken from as internal check posts. January 1, 2002. January 2002 till December 2002 2. The present Tax Management System l The levy of Excise duty is changed from Specific to Advalorem. Publications/Forms/Posters (TMS) and Revenue Accounting System (RAS), which works on, stand-alone PCs l The levy of import permit fee of Nu.150 l National Revenue Report 2000 – 2001 per permit for the import of beer from l Personal Income Tax, guidebook on will be redeveloped and enhanced into India. frequently asked question in both LAN environment and will be integrated English and Dzongkha with BACS. The proposed system will Auction of liquor shop license fee for the l PIT Poster DZ/English merge the requirement of RAS and TMS Fiscal Year 2002-03 was successfully l Income Tax Poster DZ/English and will be developed as Revenue completed in all five regional offices. The l PIT Registration Form Management System (RMS). The validity period of the license is for three l PIT Return Form development of RMS is contracted out to M/S Druk Information Technology, years ending in June 2005, subject to the Mass Media Thimphu, through tender at a cost of payment of license fee for the liquor shop Kuensel Nu.44,80,000/- and the development is every year. The auction resulted an l Customs & Excise/Tax Administration scheduled to complete by July 2003. The increase of revenue by 22% from the advertisements/notifications development started from August 2002 previous auction value. l 4 page color Tax supplement and the project is funded by DANIDA. l DRC web site posted on 1998 – 99 Auction Nu.9.694 million 3. RRCO, Thimphu’s new building is kuenselonline.com 2002 – 03 Auction Nu. 11.874 million Networked like all other regional offices l Press releases/coverage now.

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p 11 5/15/03, 10:47 AM AROUND THE REGIONS

RRCO: THIMPHU

PIT Implementation and Workshops: After long speculation assignment was to steer Tax Administration Year 2002 was another step into pages of on the identity of the into the desk assessment mode and to instill history for DRC. The highlight was the new RD, in early June, the belief that proper planning of those units coming into effect of the Income Tax Act Mr. Karma Loday, selected for field assessment to identify risk 2001 from 1.1.2002. Deputy Director, joined areas is vital for an efficient and effective our Office as the new assessment. A nation can progress when it has the Regional Director. courage to take hard difficult decisions and PIT Prototype Workshop: In a move to not bend over to challenges. Difficult New Office: Another notable event in June familiarize the staff of the whole office to decision most of the time turn out to be wise was the shifting of the RRCO Thimphu to a the PIT prototype model a 3 days in-house decision. Taxes are crucial in the new office complex. The design of the new workshop on PIT prototype was also administration and development of nations. office is contemporary, spacious, and has conducted in June. Danida funded the Taxes can contribute to nation building when very good work environment. The workshop and it gave us opportunity to the tax system is fair and free of corruption contemporary set up in the design of the learn registering taxpayers, preparing PIT so that no honest taxpayer is sent away office also provide convenient access to tax returns and calculating tax liability. We disheartened. Introducing PIT has been taxpayers as all Tax Officers and Tax got better idea of the potential problems strategic. Inspectors are housed in one single bed like ascertaining correct PIT income. The room on the same floor. We are thankful to PIT system will improve greatly once we Riding on this wave RRCO Thimphu the Ministry for providing us better working get it tested for real next year. conducted massive tax education conditions. workshops focusing on PIT and TDS in all At present the PIT team is busy complying the six western Dzongkhag- going even as Excise - Liquor Auction: In mid June the and verifying vital information on PIT returns far as Gasa Dzongkhag. The workshops Office also carried out an auction to sell the filed . Rest of the Tax Administration is busy were able to dispel the insecurities and liquor vendor licenses for the period 2002- carrying out selective field tax assessment. misconceptions created by PIT among 2003. The auction was aimed at selecting varying section of the participants. PIT has liquor vendors who will be permitted to been morally accepted and there is no supply liquor for sale in the six dzongkhags. resistance to it. Majority believes that this is This is also one major source of non-tax a socially equitable tax. revenue and the auction was held with great diligence. The staff in the Tax administration was also given the opportunity to understand the New VSA: From mid May Rules on PIT, BIT, CIT and TDS through in- till 7th August Mr. Graeme house training and workshop. Hepburn, VSA Chartered

Accountant and a New Taxpayers filing in PIT returns Transfers: In mid-May 2002 our former Zealander, was attached for income earned in 2002 Regional Director Mr. Kezang Dorji got temporarily with RRCO Reported by: Ugyen Namgyel transferred to HQ DRC as the Head of Thimphu within days of arriving. His Deputy Director Customs and Excise. RRCO SAMDRUP JONGKHAR

Excise Issue: Liquor Auction was person. All the officials of this office had to help his friends despite his busy schedule. conducted in Samdrup Jongkha region, in expressed deep shock when the news of We all share the saddest moment to bid June 2002 jointly by DRC and Samdrup his voluntary resignation has been brought farewell to him and wish him all the best of Jongkha for 19 vendors. The total collection to light. Most of the colleague had requested luck. Sangay Dorji was initially appointed on from the bid was Nu.850,000, an increase him to reconsider his resignation to which 16.6.1984 at Phuentsholing where he of Nu.11,898 from the previous years. he replied coolly, “I had no alternative but to worked till 14.6.1987 and was transferred to Samdrup Jongkhar till he resigned. He Administration & Personal resign though I have to face the unknown has served for a total of 18 years in service. Mr. Singay Dorji, adm. and Accountant of future which is lying ahead of me”. As a this office has resigned on domestic ground. friend, we will miss him as a wonderful During his entire service, he has been found person, especially as an Administrative & Reported by: Palden Tshering to be honest, sincere and hardworking Accounts personnel. He was always there Under Secretary Jan/Feb. 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected]/drc 12

p 12 5/15/03, 10:47 AM RRCO: GELEPHU

Revenue Accounting: Customs: The introduction of Bhutan Excise: Army Welfare products liquor Regional Revenue and Customs Automated Customs System (BACS) has licenses of 12 vendors under RRCO were Gelephu has 49 Revenue Collecting and been successfully implemented with the conducted in the month of July 2002 jointly Depositing Agencies in 6 dzongkhags assistance of head office staff, except for by DRC Head Office and RRCO, Gelephu. and 3 dungkhags under its jurisdiction. Lhamoi Zingkha Check-post, which could The collection of annual license fee was The revenue auditing of all the revenue not be done due to insufficient computer Nu. 12,78,000 registering an increase of collecting and depositing agencies have equipments. Nu. 360, 949 in value and 40% over the started from 1st of August 2002. At the The Regional Office has also previous years. same time this office is also imparting conducted workshop for potential Immediately after the auction the Excise training to all the concerned officials on taxpayers under Business Income Tax Section carried out search and seizure of revenue accounting system at the time and Corporate Income Tax for facilitating illicit liquors in 6 dzongkhags. A total fine of auditing. This exercise is to ensure imports and exports. The workshop has of Nu.30,000 has been collected and correct collection, timely deposit and solved most of the problems associated deposited into Royal Government Revenue monitor effectively on the collecting and with BIC codes, BTC classification and Account. depositing agencies. unit of measurements.

RRCO: SAMTSE

Internal Co-ordination Meeting: previous Regional Director and hoped that for the well being of all sentient beings. Ven The Regional Revenue & Customs Office they would continue giving the same co- Lam Neten along with the monks of Samtse at Samtse conducted the first Internal Co- operation to him. He advised all the Dratshang performed the puja. On the same ordination Meeting after the arrival of the participants of the meeting to continue to day, the RRCO also initiated the recitation th new Regional Director on 15 July 2002. render their services with dedication and of ‘Choe Bum’ by the monks of Samtse The meeting was attended by all the section loyalty. Dratshang. The ceremony was performed heads and the Officer In-charges of all the with contributions from all the officers and BACS: The Regional Office has five checkposts under the jurisdiction of the staff of the RRCO. This is the fourth time implemented BACS in Samtse and Gomtu RRCO. The meeting discussed on various that the RRCO has been initiating the check posts, Excise section and the Excise issues ranging from strengthening of the performance of the religious ceremony on Office at AWP Distillery w.e.f 1st July 2002. working atmosphere, budgetary issues, Drukpa Tshe Zhe every year at Samtse. revenue performances, staffing pattern, etc. Meanwhile, the RRCO Officials and staff With best wishes for a wonderful issue of The Regional Director appreciated the performed a puja at SamtseDratshang on Yongsel. officers and the staff for the wonderful co- the occasion of the The first sermon of Lord operation that they had given to the Buddha (Drukpa Tshe Zhe) on 14 July 2002 Reported by: Sonam Jamtsho Asstt. Director

LIAISON & TRANSIT OFFICE, ROYAL BHUTAN CUSTOMS, KOLKATTA It was indeed gratifying for the officers and staff of this office to have been able to help someone in distress. This is to share with our colleagues, that we (Royal Bhutan Customs) not only deal with goods and cargo but also human beings!!! On 27.07.2002 when the office was about were found to be loitering around the Domang, Mr. Phub Gyeltshen, Inspector, to close, Mr. Zamtsho Tshering, LTO, station helplessly. The boy said that along escorted the boy to Phuentsholing. received a telephone call from one stranger. with his two Nepalese friends were on their The Child Line is a project of the Ministry The caller identified himself as Mr. way back to their home on holiday from of Social Justice and Empowerment of the Mukherjee from Child Line Don Bosco Kajay Goenpa in Mysore, Karnataka where Government of India operated by NGOs. Ashayalam in Howrah and said that one all of them are enrolled as monks. This Project is aimed at rendering help to Bhutanese boy is under their custody and is However, during the journey, they were all children in crisis, especially the looking for a Bhutanese Office in Kolkata for robbed off their belongings and cash and marginalized children such as: repatriation to Bhutan. LTO and myself thus the trauma. ● Street children and youth living alone immediately went to the institute and we On 29.07.2002, the Liaison & Transit on the streets were surprised to see a 14 year old boy Officer and myself went back to the institute ● Children Laborers working in the named Sonam Dukpa from Dremitse in their and formally took over the custody of the unorganized sector institute. boy. It was not possible to locate his parents ● Domestic help, especially girl Sonam Dukpa along with two Nepalese in Dremitse from Kolkata, we sought the domestics boys were picked up by the Child Line help of Royal Bhutan Police in officials from Howrah train station as they Phuentsholing. As agreed by Captain continued on page 14

Jan/Feb 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected] 13

p 13 5/15/03, 10:47 AM HIGHLIGHTS: ACHIEVEMENTS IN THE 8th FYP & THE 9TH FYP PLANS OF DRC

ACHIEVEMENTS IN THE 8th FYP PLAN AND PROGRAMS OF DRC DURING THE 9 FYP Some of the main achievements made The main objectives of the 9FYP for DRC during the 8FYP are: l to continue to mobilize internal resources to meet at least the recurrent l Legislation of Customs, Excise and expenditure of the government. Sales Tax Act 2000 l to strengthen the tax system and ensure that it is equitable, efficient and l Framing of Rules of Customs, Excise uniformly enforced. and Sales Tax Act 2000 l to continue to use tax as a fiscal policy instrument to promote economic growth l Legislation of Income Tax Act of the and investment Kingdom of Bhutan, 2001 l Framing of Rules of the Income Tax Act through publications of tax information 2001 Infrastructure: To improve the materials and workshops. l Surpassing the Revenue Target: internal infrastructure in particular the Regional Administrative Restructuring: In line with revenue collection has exceeded the offices and Check-Posts including staff RGOB’s policy, the Department will undergo revenue estimate quarters located in remote areas. In the administrative decentralization with the l Computerization of systems and absence of the dry ports, warehouse will installation of LAN/WAN at DRC and also be constructed to facilitate storage and creation of three new Regional Revenue & RRCOs. The systems include PIT checking of goods. Customs offices. The places identified for (Personal Income Tax) prototype and Institutional strengthening: Procurement establishment of RRCOs are Bumthang, BACS (Bhutan Automated Customs and replacement of office equipment for Punakha and Mongar. Further, additional System). DRC, Regional Offices and the new DRC Divisions will have to be created in the Head l Enhanced qualification and capacity of Training Center. Office and corresponding units in the staff through in-country and ex-country Human Resource Development: Top Regional Offices viz. Sales Tax etc. training priority will continue to be given to upgrade Management Information System: DRC l Bhutan’s accession as a member to the the skills of DRC personnel to increase will continue to computerize activities to World Customs Organisation (WCO). efficiency and effectiveness through both ensure that certain functions of the DRC is th The 8FYP has been successful with the in-country and ex-country training as per fully automated during the 9 Plan. The assistance of DANIDA Project’s grant of 16 training needs identified. various DRC systems will be integrated and million Danish Kroner. The Danish Tax Awareness Programmes: a management information system (MIS) assistance to DRC in institutional Campaigns will continue to be conducted will be developed along with the centralized strengthening has made a significant impact through the mass media, particularly with database, department Intranet and in all spheres. new tax such as PIT. Concurrent efforts will development of a system for district revenue also be made to disseminate tax information offices.

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l Children affected by physical/sexual/ Tivoli Court team who were all in the fittest BACS: Initially, the officials of this office emotional abuse in schools, homes to forms with bulging tummy, mercilessly faced problems while implementing the government or non governmental defeated students and Bhutan House team. BACS system as it failed to respond - organizations It was a grand feast for the winners but of perhaps due to human virus. However, l Children who need emotional support & course the losers equally enjoyed if not Tharchen Lhendup, Asst. Collector, from guidance. more. The match concluded with “ Tashi RRCO Phuentsholing arrived at Kolkata on Child Line is said to be a nation wide 24 Lebey”. This was organized to have some 08.08.2002 to discuss the BACS problems hour, free phone emergency service for fun and get togetherness amongst the faced between LTO and RRCO. children in difficult circumstances and Bhutanese living in the hectic city life. linking them to long term services. The problem was sorted out in coordination with Tshewang Dendup, Programmer from DRC, Thimphu. With some rectification, the Friendly Match system responded positively and we could A fierce volley match battle was fought on clear backlogs. It is indeed a great feeling Saturday & Sunday i.e on 27th & 28th July that Royal Bhutan Customs is also keeping between Bhutan Customs verses pace with the modern information Bhutanese students in Kolkata on bet technology. “PHOB TORAY” and between the officials Reported by: Chewang Jamcho, of this office residing in Tivoli Court and Volleyball match:Bhutan Customs verses Bhutan House. On both the occasions, Bhutanese students in Kolkata Asst. LTO

Jan/Feb. 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected]/drc 14

p 14 5/15/03, 10:47 AM HUMOUR

IT PAYS TO PAY ATTENTION! Do you believe this? Students at a medical school were receiving their first MATHEMATICS anatomy lesson with a real dead human body. They all OFFICE ARITHMETIC gathered around the surgery table where the body was Smart boss + smart employee = profit covered with a white sheet. The professor started the Smart boss + dumb employee = production class by telling them, in medicine it is necessary to have 2 Dumb boss + smart employee = promotion important qualities as a doctor. “The first is not to have Dumb boss + dumb employee = overtime disgust”, and as he said the words he drew away the sheet that covered the corpse. The professor then SHOPPING MATH promptly sunk his finger into the rectum of his patient, A man will pay $2 for a $1 item he needs. and then withdrawing it he sucked on that finger. “Go A woman will pay $1 for a $2 item that she doesn’t need. ahead and do the same thing,” he told his students. They ROMANCE MATHEMATICS had seen their boss suck his finger after first sticking it Smart man + smart woman = romance first into the corpse’s rectum. Smart man + dumb woman = affair Dumb man + smart woman = marriage At first they freaked out and hesitated, then one by one Dumb man + dumb woman = pregnancy they poked their finger into the corpse’s bum and then sucked on their finger after withdrawing it. When every GENERAL EQUATIONS & STATISTICS one had finished the professor looked at them and added, A woman worries about the future until she gets a husband. A man never worries about the future until he gets a wife. “the second most important quality is OBSERVATION, I A successful man is one who makes more sunk in my middle finger and sucked on my index finger, money than his wife can spend. PAY ATTENTION PLEASE”. PIS A successful woman is one who can find such a man. PIS

SARDARJI, an Intelligence Tax officer(ITO), goes to a shop for Despite being frustrated by his repeated failures the sardar once investigation work and asks the shopkeeper while pretending again goes to the shop, but this time after sacrificing his beard. to be a customer, “What is the price of this FRIDGE?”. The Sardarji (ITO),”How much this refrigerator will cost my dear?” shopkeeper keeps quite as if he was evading his question. this time using slang English. But as if the failure was following On being asked the same question again he answers while him like a shadow, the shopkeeper caught him red handed. taking a pause from his urgent work, “ See man, we don’t sell As no more enthusiasm was left in him (Sardar), he pleaded to Sardars”. in murmuring language, “Bhai!, please tell me for the sake of For the fear of disclosure of identity, the ITO officer decides Wahe Guru, how were you able to recognise me everytime to go back only to appear again in the shop in a veil (after all he despite my being best at my acting “. The Shopkeeper replied was an intelligent sincere investigator). But this time the smilingly, “ The thing which you called FRIDGE was actually a shopkeeper recognizes him and says angrily, “Why are you ” WASHING MACHINE”. coming again and again, I have clarified to you in clear words Karma that WE DON’T DEAL WITH SARDARS.” RRCO Samdrup Jongkhar

TATER PEOPLE (definations not according to any dictionary) PIS Some people never seem motivated to participate, but are just content to watch while others do the work. They are called “Speck Taters”. Some people never do anything to help, but are gifted at finding fault with the way others do the work. They are called “Comment Taters”. Some people are very bossy and like to tell others what to do, but don’t want to soil their own hands. They are called “Dick Taters”. Some people are always looking to cause problems by asking others to agree with them. It is too hot or too cold, too sour or too sweet. They are called “Agie Taters”. There are those who say they will help, but somehow just never get around to actually doing the promised help. They are called “Hezzie Taters”. Some people can put up a front and pretend to be someone they are not. They are called “Emma Taters”. Then there are those who love others and do what they say they will. They are always prepared to stop whatever they are doing and lend a helping hand. They bring real sunshine into the lives of others. They are called “Sweet p’Taters”, that could be you.

Jan/Feb 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected] 15 TAX OFFICIALS’ MEET 2002

On the introduction of PIT, Dasho advised that “anything new must be practiced cautiously and strike a good balance as too strong a drive will produce resistance while too lax an approach can make a mockery of the initiative.” Dasho urged free and frank discussions in the meeting and stressed the importance of setting up proper systems and procedures. Most importantly, the Finance Secretary also urged those present to be conscious of corruption and temptations and encouraged maintaining a policy of good governance.

The meeting went smoothly and was considered a success. Some of the issues addressed were:

l Review of Income Tax Rules l The Performance Indicators Report WORKING l The status of PIT implementation and TOGETHER... information collection “Revenues form the l The strategy for the second phase of the THE SECOND TAX OFFICIALS’ MEET was main foundation of a PIT awareness campaign held from July 22 - 26, 2002 at the new DRC His Excellency the Finance Minister and Training Center, in the Thimphu RRCO government, for without senior officials from MOF attended the building. Over forty participants including revenues; we will have no meeting’s closing dinner at the DRC officials from Head Office, Regional money to spend for the Training Center. His Excellency Directors and Tax Officials from the regional congratulated the DRC for the tremendous offices attended the meeting. administration of the government and for the effort and hard work put in by the staff in The Director of DRC in his welcome the field and head office in meeting the address highlighted the Department’s new development of the nation” revenue target. His Excellency stressed the Acts and Rules, which were implemented Finance Secretary importance of the integrity of DRC staff and with effect from January 2002. The Director Dasho Wangdi Norbu wished the very best for the successful said that a special concern for the meeting implementation of PIT, which is now was PIT. He also stressed the importance generally accepted by the public. of a close working relationship amongst the regional offices and with the Ministry of Finance.

The Finance Secretary, Dasho Wangdi NEWSLETTER TEAM Norbu, graced the opening of the Tax Editorial Services: Officials’ Meet. In his opening address, Sangay Zam Dasho mentioned that the meeting was Karma Loday Kaysang W. Samdup timely as it was being held at the beginning Yangchen Chhoedon of the plan period. “Revenues form the main Design & photographs: foundation of a government, for without The Finance Secretary Dasho Wangdi Norbu, Director Kaysang W. Samdup revenues; we will have no money to spend Mr. Nima Wangdi at the opening ceremony of the Second Tax Officials Meet. Layout: for the administration of the government and Suresh Gurung for the development of the nation”, remarked We have been able to meet, at least, the Compiled by: the Finance Secretary Dasho Wangdi Norbu Yangchen Chhoedon recurrent costs of our government with our during the opening of the Tax Officials Meet domestic revenues.” 2002. He continued, “Over the years, with LETTER TO YONGSEL the tremendous importance placed on The Finance Secretary also highlighted the You can send your information and article to email address marked: revenue growth by His Majesty the King recently announced tax incentives and the “For YONGSEL publication” through successive five-year plans, and with corporatisation of government revenue e-mail:- [email protected]/drc your efforts, we have grown considerably. earning departments.

Jan/Feb. 2003 - ISSUE 13 - Public Information Services, DRC. Ph 324357/Fax 323608. e-mail:- [email protected]/drc 16