The Duty Free Shop formerly known as Foreign Drinks Store was established in 1972 under the Department of Revenue and Customs of the Finance Ministry.The Company has been delinked from the civil service upon Royal Civil Service Commission’s recommendation. Bhutan Duty Free Limited(BDFL), Thimphu is corporatized/ inaugurated on 16th May 2016. BDFL runs as a separate entity, the mode of sales includes tax exclusion for diplomats and privileged individuals. However, others will also have access to duty paid goods.
Corporate: All duty free outlets throughout the country will now operate under Bhutan Duty Free Ltd, a new state enterprise.The company has already been incorporated under the Companies Act.The modus operandi of the business however is the same as before, when it was operated as a division in the revenue and customs department. Consequently, only privileged individuals and diplomats would enjoy duty concession on goods purchased at the outlets.The chairman of the new enterprise and director of revenue and customs department, Yonten Namgyel said the company’s mandate empowers it with exclusive rights to operate all duty free outlets in the country including the airport. Drukair, who runs the current duty free shop at Paro international airport will surrender the shop to Bhutan Duty Free Ltd.
“There is a perception that duty free shop serves as liquor outlets for an elite group of people,” he said adding the company will now diversify its business to expunge this perception among the people.
The company, he said, would look beyond alcohol and explore a whole range of high value luxury items such as electronics and cosmetics. “Corporatising brings in flexibility in management and investment decision which will make the shop operate with efficiency,” an official said. The finance minister, Namgay Dorji said the decision to corporatise was also in the interest of enhancing revenue, earning foreign currency and generating employment for the government. While private entities expressed their interests to operate duty free outlets, Lyonpo Namgay Dorji said the nature of ownership of the company would make it easier for the government to monitor and regulate imports of alcohol and sale of other duty free items in the country.
“Corporatising the duty free shops will not affect the private businesses because the company will deal in items of high brand that are not available in the country,” Lyonpo said.Corporatising the duty free shop is also in keeping with public finance Act, 2007, that states, “if a budgetary body manufactures and/or delivers goods and services in a commercial environment,unless there are compelling reasons to do otherwise, the government shall establish a state enterprise… or transfer those activities to an existing state enterprise.” Duty free shops under the government contribute about Nu 94M from sales every year. As of June last year, the duty free shop division under revenue and customs department had Nu 186.94M in liquid assets, or those assets, which could be easily converted into cash. Including the fixed and current assets, the value comes to Nu 260M. This would be the government equity in the company, which is again expected to increase with expansion and implementation of new ideas. Should the assumptions on business expansion materialise, the company’s revenue is expected grow by 40 percent on an average annually. The duty free shop in the country was first established in 1972 and was operated by the government as the “foreign drink shop”.