Revenue Performance 2015 – 2016

Overview for FY 2015-16

With the improvement in macroeconomic conditions, the net domestic revenue had increased by 11.5 percent in FY 2015-16. The Department collected a gross revenue of Nu 28,541.616 million, refund disbursed during the year was Nu 507. 804 million and the net domestic revenue was Nu 28,033.812 million. The collection exceeded the target of Nu 26,293.685 million by 6.6 percent. Domestic revenue covered the entire current expenditure in addition to 23.8 percent of the capital expenditure of the government. Net domestic revenue represented 19 percent of the GDP.

 Tax revenue contributed 71 percent to the total net revenue and the remaining from non-tax revenue. Revenue sources like Corporate Income Tax, Dividend, Sales Tax contributed 26 percent, 13.5 percent and 12.7 percent respectively to the total domestic revenue.

Net Collection vis-à-vis Target

Gross domestic revenue for the year was recorded at Nu 28,541.616 million, an achievement of 8.6 percent over the target. As compared to last year, refund decreased by 3.2 percent. Implementation of the online system RAMIS since 2015 has increased the efficiency in collection of taxes through better information management.

Summary of National Revenue FY 2015 – 2016

Tax Revenue :-

Tax revenue contributed 71 percent to the domestic revenue with Nu 19,884.626 million which registered an increase of 8.1 percent. Although there was increase from both direct and indirect tax, however indirect tax coupled with increasing imports and revised tax rates since 2014-15 contributed more to the growth.

A)  Direct Tax :-

During the year, the revenue from direct taxes was Nu 12,200.094 million which was an increase of 4.9 percent. Under this source CIT and PIT performed well. Direct tax contributed 61.4 percent to the tax revenue and 43.5 percent to the total domestic revenue.

1)   Corporate Income Tax ( CIT ) :-  CIT continued as the highest contributor to total revenue with Nu 7,459.579 million. It increased by 15 percent mainly due to increase in taxes from companies in hydropower, banking, telecom and mining sector. For the income year (IY) 2015 the total number of corporate units increased to 307 from 286 in IY 2014. It contributed 26.6 percent to the total domestic revenue.

2)   Business Income Tax ( BIT ) :- Business income tax contributed Nu 1,175.298 million, which was a decrease of 25.9 percent from the previous year. With the implementation of RAMIS, segregation of tax deducted at source for various types of taxes has become easier resulting in the change in the pattern of collection of BIT. Total number of registered BIT units increased from 30,549 in IY 2014 to 30,924 units in IY 2015. BIT contributed 4.2 percent to the total domestic revenue.

3)   Personal Income Tax ( PIT ) :- PIT collection was Nu 1,770. 362 million, an increase of 15.3 percent over the previous year. The increase in the number of PIT payers in addition to the effective assessment carried out with information captured by RAMIS had also contributed to the increase. The number of PIT payers increased to 1,07,678 in IY 2015 from IY 71,559 in 2014. PIT contributed 6.3 percent to the total domestic revenue. 

Details of Collection under PIT

Nu in Million

4)   Other Direct Taxes :- The total of various taxes under this source amounted to Nu 1,794. 855 million which was a decrease of 11 percent. Major decline was from motor vehicle tax and royalty from tourism as explained in the subsequent paragraph. Other direct tax contributed 6.4 percent of the total domestic revenue.

Other Direct Tax Collection

 Royalties :- Total contribution from the four source of royalties amounted to Nu 1,538.829 million. Royalty from tourism contributed Nu 1,161.767 a decrease of 11.9 percent. In the previous fiscal year the royalty from tourism which included the Thai tourist package had brought in significant royalty. Comparatively, the arrival of international tourist during the current year declined. Royalty from forest products amounting to Nu 56.877 million had a nominal increase of 2.6 percent. Royalty from mines & minerals brought in Nu 231.416 million, an increase of 31.7 percent. Royalty from hydropower was recorded at Nu 88.769 million from Dagachhu hydropower plant. Although royalty from three other sources increased, it could not offset the decline in tourism royalty. Revenue from Royalties contributed 5.5 percent to the total domestic revenue.

Collection from Royalties

Motor Vehicle Tax :-  Motor vehicle tax amounted to Nu 42.853 million which was a decrease of 82.7 percent. The adoption of the chart of accounts as per Government Finance Statistic 2014 developed by IMF to classify the various sources of revenue under specific categories has changed the pattern of the record of such collection. The motor vehicle registration fees which used to be earlier recorded under motor vehicle tax is now reflected under motor vehicle fees and charges. Motor vehicle tax contributed 0.2 percent to the total domestic revenue.

Business and Professional License :- Revenue collection under this source was Nu 87.398 million, a decline of 16.7 percent. Revenue from business and professional license constituted 0.3 percent of the domestic revenue.

Dzongkhag Municipal Tax  :-This revenue source contributed Nu 4.242 million which was 0.02 percent of the domestic revenue. It has declined by 49.8 percent. It is likely to decline in future if more Dzongkhags are converted to Thromdes due to administrative and financial decentralization of Thromdes.

Health Contribution :- Gross collection of health contribution was Nu 197.605 million. It constituted 0.2 percent of the domestic revenue.

Airport Service Tax :- Collection under this tax has increased by 8.5 percent to Nu 64.143 million. The increase can be attributed to the increase in the number of passengers. This tax constituted 0.2 percent of the total domestic revenue.

B)   Indirect Tax :-

With the introduction of tax measures from July 2014 and the lift of import ban on selected commodities, revenue from indirect taxes had significantly increased. As compared to 2014, imports from India and countries other than India increased by 19.6 percent in 20153 . Indirect tax collection during the year was Nu 7,684.533 million which shows an increase of 13.7 percent from the previous year.

1)   Sales Tax :- Sales Tax increased by 16.9 percent to Nu 3,576.482 million. Sales tax collected from good & commodities, beer, aerated water & alcoholic drinks and telecom services contributed to the increase. there was decrease in the global price of fossil fuel during the year which decreased the Sales Tax from petroleum products by 39.5 percent. Sales Tax contributed 12.7 percent to the total domestic revenue.

Collection from Sales Tax

2)   Excise Duty :- Excise Duty contributed Nu 2,483.068 million which constituted 8.9 percent of the total domestic revenue.

3)   Excise Duty from Distillery products :- With the launch of new products and re-engineering their marketing strategies, AWP had performed well during the year increasing its revenue by 12 percent to Nu 539.079 million. It contributed 1.9 percent to the total domestic revenue.

4)   Excise Duty Refund from GoI  :- Excise Duty receipt in FY 2014-15 was for the year 2013 amounting to Nu 1,756.537 million and arrear for past year of Nu 449 million. Excise Duty refund receipt in FY 2015-16 was for the imports pertaining to the year 2014 amounting to Nu 1,943.989 million. Excise duty refund from GoI constituted 6.9 percent of the total domestic revenue.

Tax Collection from Excise Duty

5)   Customs Duty :- Revenue from Customs Duty amounted to Nu 597.392 million, which was an increase of 33.5 percent. Trade with countries other than India (COTI) increased by 58.2 percent from the past year resulting in the significant increase in collection. Customs duty constituted 2.1 percent of total domestic revenue.

6)   Green Tax :- During the year, Green Tax contributed Nu 1,007.121 million an increase of 84.5 percent. Of the total Green Tax, vehicle import contributed Nu 659.383 million and 174.340 million litre of fuel import contributed Nu 347.738 million. Green Tax contributed 3.6 percent of the total domestic revenue.

7)   Other Indirect Tax Revenue :-  Total revenue collected from other indirect tax revenue was Nu 20.469 million which was a increase of 1.4 percent. It constituted 0.07 percent to the total domestic revenue.

Non – Tax Revenue

With a collection of Nu 8,149.186 million, non-tax revenue contributed 29 percent of the domestic revenue. Revenue under this source increased by Nu 1,395.491 million mainly from RMA’s transfer of profit, Adm. fees & charges and Interest on loan from corporations.

Comparison of Non – Tax Revenue for Fiscal Year

Administrative Fees and Charges :-  Revenue under this source amounted to Nu 714.227 million. The increase of 103.8 percent was mostly from depot surcharge and motor vehicle fees and charges. The classification of the motor vehicle registration fees under motor vehicle fees and charges increased the collection under this source. It constituted 2.5 percent of the total domestic revenue.

Dividend  :- Total dividend from DHI, DGPC and other companies during the year was Nu 3,785.694 million, which was an increase of 2.5 percent. Of the total dividend, DHI contributed Nu 1,848.454 million. DGPC (THPA) dividend increased by 3 percent to Nu 1,932.100 million. During the year the total electricity generation by Tala, Chukha, Kurichhu and Bashochhu power plants under DGPC increased by 3.28 percent to 7,381.60 million units4 due to good hydrology. Revenue from dividend constituted 13.5 percent of the total domestic revenue.

Transfer of Profit :- After not contributing for three years, RMA eventually remitted their transfer from profits amounting to Nu. 788.678 million during this fiscal year. It constituted 2.8 percent of the total domestic revenue.

Revenue from Government :-  Departments Total revenue under this source was Nu 498.478 million, an increase of 9.8 percent. Increase was mainly on account of rent from lease of industrial plot/shed, fees and charges collected by Department of Forest and fines on violation of the Environment Assessment Act (EAA). Revenue from government departments constituted 1.8 percent of total domestic revenue.

Capital Revenue :-  Total capital revenue was Nu 120.450 million, increase by 9.4 percent. The increase was mainly from the auction/sale of government properties. It constituted 0.4 percent of the total domestic revenue.

Other Non-Tax Revenue :-  Other non-tax revenue amounted to Nu 86.706 million during the year. There was decline in collection from Audit Recovery Account and other dues and recoveries. It constituted 0.3 percent of the total domestic revenue.

Interest on Loan from Corporations :- During the year, the interest receipts from loan to corporations was Nu 2,154.954 million which was an increase of 6.1 percent. Of the total, Nu 1,344.561 million was from GOI loans and Nu 810.394 million was from on-lend loans. This includes the last installment of interest receipts from Kurichhu hydropower plant.

Sectoral Revenue :-

Sectoral revenue consists of total gross revenue excluding the remittances from DHI, PIT and interest receipts. During the year sectoral revenue contributed 76.1 percent to the total revenue. Sectoral revenue increased by 16.7 percent from the previous year mostly from finance, electricity, trade and service sectors.

a) Electricity :-  Hydropower is one of the most important sector in the country and it has significant contribution to the domestic revenue. This sector contributed Nu 5,427. 283 million which constituted 25 percent of the sectoral revenue and 19 percent of the total domestic revenue. Increase in the current year was due to higher remittances from DGPC and BPC on account of good hydrology and increase in the domestic consumption of electricity.

b) Trade :- Trade sector made the highest contribution with Nu 8,227.399 million which was 28.8 percent of the domestic revenue and 37.9 percent of the sectoral revenue. It increased by 10.5 percent from the previous year mainly due to better collection from Sales Tax and CIT & BIT from trading sector.

c) Service :- Service sector contributed Nu 5,152.814 million to domestic revenue and increased by 8 percent from the previous year. It had the third largest share within the sectoral revenue at 23.7 percent. Better performance of sales tax on services, CIT & BIT on services boosted the growth of this sector.

d) Manufacturing  :- Manufacturing sector contributed Nu. 1.9 percent to the domestic revenue with Nu 554.676 million. Collection declined by 18.7 percent because major manufacturing companies like PCAL did not perform well. During the year, the gear Cement Mill II of PCAL which had the highest production capacity broke down for four months in 2015 which reduced their cement production.

e) Finance :- The contribution from this sector to domestic revenue increased by Nu 1,318.924 million to Nu 1,960.085 million. It contributed 6.9 percent to the domestic revenue. The increase was mainly due to the RMA’s remittance of profit transfer for the first time after three years of nil remittance. Financial institutions like BoBL, BNBL and RICBL performed better during the year. BNBL’s overall profit growth in 2015 was primarily because of increase in interest income from loans and foreign exchange.

f) Primary :- Primary sector contributed Nu 403.309 million which was a decrease of 36 percent from the previous year. It accounted for 1.4 percent of the domestic revenue. The value of forest products exported in 2015-16 decreased by 44.7 percent