June 18, 2025
THIMPHU – The National Assembly yesterday deliberated on the 207 sections of the Excise Tax Bill of Bhutan 2025, a proposed law that, if passed, will increase prices for tobacco, alcohol, pan masala, and soft drinks, while making vehicles cheaper.
The Bill is expected to be implemented from January 1 next year.
The Economic and Finance Committee (EFC) introduced targeted taxation on the consumption of harmful and non-essential goods which focused on five categories-alcohol, tobacco, pan masala, carbonated beverages, and emissions-related products.
The excise tax will be applied equally to both imported and domestically produced goods to ensure fair practices and avoid discrimination.
The revised Bill proposes a total of 170 taxable items, while exempting or zero-rating 262 items.
While presenting the committee review report, the Member of Parliament (MP) for Radhi Sakteng and a member of the EFC, Tashi Tenzin said, “The Bill is introduced to protect public health and the environment, to discourage the consumption of harmful or addictive substances, to discourage non-essential or luxury consumption, and to promote responsible and sustainable consumption.”
The committee also reported that the number of taxable goods has been reduced by 32 percent, from 157 in the GST Act 2022 to 108 in the current legislation, reflecting a balanced approach between public interest and economic considerations.
The House endorsed the government’s proposal to levy excise tax of Nu 1,200 per litre for pure alcohol content on all alcoholic beverages.
The House also supported the government’s proposed excise tax on tobacco products.
Tobacco and tobacco products will be charged various tax ranges. Tobacco, not stemmed or stripped, chewing tobacco (khaini), jarda scented tobacco, snuff and cut-tobacco will be charged Nu 1,500 per kilogram. In addition, cigarettes containing tobacco and biri will be charged Nu 10 per stick.
Similarly, nicotine-containing products intended for the intake of nicotine into the human body will be charged 100 percent tax.
Supari and Pan masala will be charged an excise tax of Nu 1,500 per kilogram.
Following a submission by MP for Lamgong-Wangchang Sonam Tashi, the House also endorsed a further reduction of the excise tax on aerated waters, containing added sugar or other sweetening matter or flavoured from 27 percent, as proposed by the committee to 20 percent.
The aerated (carbonated) drinks will be charged from a minimum of zero to maximum 50 percent per litre.
The Bill also introduced revised tax rates on various motor vehicles, categorised by fuel type, engine capacity, and vehicle usage with the House endorsing the committee’s proposal, which includes both excise tax and green tax.
Electric vehicles will be taxed zero percent excise tax and hybrid cars will be taxed 9 percent.
For vehicles (petrol) with a cylinder capacity (cc) not exceeding 1, 200 cc will be taxed 36 percent excise tax.
Similarly, vehicles exceeding 1,200 cc but not exceeding 1,500 cc, vehicles exceeding 1,500 cc but not exceeding 1,799 cc will be taxed 54 percent and 59 percent, respectively.
For diesel cars, vehicles not exceeding 1,500 cc to vehicles exceeding 3,000 cc would be taxed between 54 percent to 90 percent
The House directed the EFC to review provisions under Schedule 2 (Sanctions for Offences) in consultation with legal experts, and to report its findings to the House today before the Bill is put to a vote for adoption.