An accused claims that there was no reason to forward the tax evasion issue to ACC

While it is expected to take some time to look into the fiscal incentive granted to Le Meridien, Anti-Corruption Commission (ACC) has decided to conduct a preliminary investigation on alleged misuse of import exemption granted to the Hotel Riverside.

ACC officials said the decision was arrived at after reviewing the case by its legal division.

“We will conduct preliminary investigation to determine whether there is an element of corruption as indicated by the finance secretary, who had forwarded the case to the commission,” Commissioner Jamtsho said. “If it is only the case of tax evasion, we will not pursue further and send back to the finance ministry to deal with as per the Tax Act 2000.”

Finance Secretary Nim Dorji wrote to ACC on September 18 last year after the Tax Appeal Board recommended finance ministry to forward the case to the commission.

The letter stated that the exempted goods were not found at the premises of the Hotel Riverside during the post clearance audit and the co-proprietor of the hotel, Pema Namgyal, denied having imported goods from China.

According to the Tax Act, all exempted goods shall be subjected to post clearance audit at any point of time.

Pema Namgyal, who sold the Hotel Riverside to the new management, alleged that Thinley Wangchuk had illegally imported goods in the name of the hotel and misused the tax exemption of Nu 6.3 million. In his earlier interview, Pema Namgyal had said that he had given supply order worth Nu 12.2 million to furnish 60 bedrooms, including supply of beds and mattresses to Thinley Wangchuk based on quotation submitted in the name of Lhathing Enterprises.

Refuting the allegation, Thinley Wangchuk argued that it was Pema Namgyal who evaded tax of Nu 6.27M, which was corroborated by Regional Revenue and Customs Office’s (RRCO) letter of October 21, 2016 to the proprietor of the Hotel Riverside.  “The case has been fully and clearly studied by RRCO and Pema Namgyal was imposed a fine of Nu 6,275,786,” he said. “Pema Namgyal then made an issue and dragged me to the Thimphu district court in December 2016.”

The RRCO’s letter stated that the items which were imported from China were not available at the time of inspection in the hotel and accordingly imposed a fine of 50 percent of the value of the goods in addition to the amount of sales tax, customs and excise duty for the misuse of tax or duty exemption as per the Sales Tax, Customs and Excise Act.

Pema Namgyal alleged that Thinley Wangchuk had availed of fiscal incentive or the tax exemption of Nu 6.3 million based on the quotation of Nu 12.2 million by forging his and co-proprietor Wangchuk’s signatures and documents.

Thinley Wangchuk, who claimed that he was fully involved in construction of Hotel Riverside in 2014, said that it was not possible to get easily or manipulate tax exemption certificate. He said that tax exemption certificate was issued to the hotel by revenue and customs department based on Thromde’s approval of building structures plan, and import licence by the trade department based on estimated cost of invoice. “Finally the Tourism Council of Bhutan will have to make recommendation for tax exemption,” he said.

He said that all papers were necessary for the all the relevant agencies to approve and owner has to be there personally to get tax exemption certificate.

Pema Namgyal had earlier said that he knew about the misuse of tax exemption only after he applied to TCB for tax exemption certification worth Nu 1.2 million for two elevators, curtains and kitchen utensils.

Thinley Wangchuk claimed that the issue was resolved by the court last December and ruled out of any forgery or manipulation of tax exemption. During the trial proceedings, he claimed that he submitted before the court to investigate on tax evasion and how Pema Namgyal and his partner lobbied to avail loans from Royal Insurance Corporation of Bhutan Ltd. (RICBL).

“However, the court asked me to report the case to the ACC which I did,” he said.

He alleged that Pema Namgyal, who had taken advantage of finance minister and played with the system to avoid tax issues, also submitted a complaint letter to the ACC after his submission.

“The letter the finance minsitry forwarded to ACC for investigation, therefore, was procedural corruption for which ACC should investigate it,” Thinley Wangchuk said.

He said that the tax evasion issue has to be resolved by the tax appeal board as per the tax act. “If the person fails to abide by the board decision, then they should forward to the court.”

Rinzin Wangchuk