Tobacco and tobacco products were among the top 10 import items

Bhutan imported tobacco and tobacco products worth Nu 1.59 billion (B) in 2022, three times more than the import figure for 2021.

The country imported tobacco and tobacco products worth Nu 453.53 million (M) in 2021.

The Department of Revenue and Customs stats show that Bhutan imported tobacco and tobacco products worth Nu 144.23M in 2020, Nu 0.66M in 2019, and Nu 1.07M in 2018.

Going by the stats, the tobacco black market was growing prior to the cancellation of the ban on import and sale of tobacco products from July 2021.

The rationale behind lifting the ban was the risks of Covid-19 transmission as there was continuous tobacco smuggling from across the border.

With the lifting of the ban and the amendment of the Tax Act of Bhutan 2021, which came into force in July 2021, the sales tax on tobacco was revised from 100 percent to zero.

However, in November 2022, the government reinstated the 100 percent sales tax on tobacco and increased customs duty on tobacco import by 10 percent under the Tax Act of Bhutan 2022.

With the lifting of the ban with 100 percent sales tax and 10 percent customs duty, Bhutan earned more than Nu 1.59B in 2022 as tax revenue.

Before the ban, an individual was allowed to import only 800 sticks of cigarettes, 1,200 sticks of bidis, 150 pieces of cigars, or 750 grams of other tobacco or tobacco products.

Considering the population of 763,249 in the country in 2022, the per capita consumption of tobacco works out to around Nu 2, 079 per person per year.   

According to the Bhutan STEPS survey of 2014 and 2019, the prevalence of tobacco use was 24.8 percent and 23.9 percent, respectively.

The production and manufacturing of tobacco and tobacco products stands banned in the country; smoking in public places is still prohibited and defaulters are liable for a fine.

The sale of tobacco and tobacco products to minors is still prohibited. Tobacco business near schools, monasteries, hospitals, clinics, basic health units, and heritage sites is a criminal offence.