Bhutan taxes tourists

NEW DELHI, 21 January 2020: Bhutan has introduced an INR1,000 (USD15)  environment tax on visitors from India, Bangladesh, Sri Lanka, Pakistan and Maldives as part of a raft of tax amendments that came into effect 16 January.

Officially named the Sustainable Development Fee, regional tourists (South Asia)  will now pay a fee that is approximately 25% of the USD65 SDF that tour-tariff paying tourists from outside of the region were already debited.

According to media reports in India, officials in Bhutan said they wished to slow the tourist flow following incidents when tourists from South Asian countries failed to respect local customs.

In place for some years for nationalities from outside South Asia, the fee is used mainly to establish and promote sustainable development and protect the environment which is now under threat from tourism.

Citizens of other countries outside South Asia also pay USD250 a day as a minimum daily fee to cover accommodation and tours.

Bhutan warned its neighbours it would introduce the fee on visitors from South Asia last November which was widely reported in the travel press.

The Bhutan Government announced other amendments to its taxation regime 16 January 2020 with the most important being the introduction of a Goods and Service Tax imposed at a flat rate of 7% on goods and services. It will earn the country around BTN 3 billion a year in additional tax revenue according to the taxation website Tax Scan. Hotel and tour service rates will increase.

Linked to the GST Bill 2020 the country is now also taxing what it calls unhealthy goods and plastic wrapping with a 20% ‘Excise Equalization Tax,’ while alcohol and tobacco are taxed by a rate of 100% on the retail value.

The Bhutanese ngultrum currency pegs to the Indian rupee at par.

(Source: Tax Scan, Indian news media)

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