Bhutan's corporate income tax rate of 30% and its diverse range of business taxes reflect the country's efforts to create a sustainable and balanced economy. Businesses operating in Bhutan should familiarize themselves with corporate income tax, personal income tax, GST, customs duties, excise duty, and any relevant industry-specific taxes. Seeking guidance from tax professionals and referring to the official Bhutanese tax authority website will ensure compliance with tax obligations and enable businesses to thrive in this unique Himalayan nation.
Corporate Income Tax:
Bhutan's corporate income tax is based on the Income Tax Act of Bhutan, which governs the taxation of corporate entities. As of the knowledge cutoff date in September 2021, the corporate income tax rate in Bhutan is a flat 30%. This rate applies to both resident and non-resident companies conducting business activities in the country.
Types of Business Taxes in Bhutan:
- Corporate Income Tax: The corporate income tax is the primary tax applicable to profits generated by businesses in Bhutan. The rate of 30% is applied to the taxable income derived from business activities conducted within the country.
- Personal Income Tax: While not directly a business tax, it is worth noting that Bhutan imposes personal income tax on individuals residing in the country. The personal income tax rates in Bhutan are progressive, ranging from 5% to 30% depending on the income bracket.
- Goods and Services Tax (GST): Bhutan implemented the Goods and Services Tax (GST) system in 2020. The GST is a value-added tax levied on the supply of goods and services within Bhutan. The standard GST rate is 7%, with certain goods and services attracting a lower rate of 5%.
- Customs Duties: Bhutan imposes customs duties on imported goods. The rates vary depending on the type of goods and are designed to protect domestic industries and promote self-reliance.
- Excise Duty: Excise duty is levied on specific goods such as alcohol, tobacco, and petroleum products. The rates vary depending on the type of goods and are primarily intended to discourage excessive consumption and promote public health.
- Business Income Tax for Small and Cottage Industries: Bhutan offers a reduced tax rate of 10% on the business income of small and cottage industries to support and promote the growth of these enterprises.
- Royalty and Dividend Tax: Companies in Bhutan making payments of royalties or dividends to non-residents are subject to withholding tax. The rates vary based on the nature of the payment and any applicable tax treaties.
Bhutanese Tax Authority Website:
For comprehensive information on business taxes and to stay up to date with the latest tax regulations in Bhutan, it is recommended to visit the official website of the Bhutanese tax authority.
Bhutanese Tax Authority Website: Official Bhutanese Tax Authority Website