Post by : Meena Ariff

Photo: AFP

The National Assembly recently discussed the Excise Tax Bill of Bhutan 2025, which will introduce new taxes on harmful and non-essential products, including tobacco, alcohol, pan masala, and soft drinks. The law, if passed, will go into effect on January 1 next year.

The Economic and Finance Committee (EFC) introduced the Bill to focus on targeted taxation to protect public health and the environment. The proposed taxes aim to reduce the consumption of addictive substances and discourage unnecessary or luxury spending while promoting responsible use of goods. The Bill will apply the same excise tax to both imported and locally produced items to ensure fairness.

A total of 170 items will be taxed under the Bill, with 262 items exempt from taxes or rated at a lower tax rate. The government proposed to impose a tax of Nu 1,200 per liter on alcoholic beverages based on their alcohol content. Tobacco products, including chewing tobacco, scented tobacco, snuff, and cigarettes, will face varying tax rates. For example, tobacco will be taxed at Nu 1,500 per kilogram, while cigarettes will be taxed at Nu 10 per stick.

Nicotine-containing products will face a 100% tax, and pan masala and supari will be taxed at Nu 1,500 per kilogram. The Bill also reduces the tax on aerated drinks (carbonated beverages) from 27% to 20%, following a proposal from an MP.

In terms of vehicles, electric cars will be exempt from excise tax, and hybrid vehicles will face a 9% tax. Petrol vehicles will face excise tax based on their engine capacity, with a higher tax on vehicles with larger engines. Diesel cars will also be taxed according to engine size, with rates ranging from 54% to 90%.

Before the Bill is put to a final vote, the House directed the EFC to review the penalties for offenses under the Bill and report its findings. This Bill is part of Bhutan's ongoing efforts to address public health and environmental concerns while encouraging sustainable consumption.