Taxation System in Bhutan
Before 1960:- Taxes were collected in kind and in form of Labour contribution. Taxes in kind were gradually phased out to be replaced by nominal monetized tax on:-
First Major Tax Reform in 1989
To take stock of various tax measures
To develop a coherent and rational tax system
To establish a system of tax in fair, equitable and efficient manner that minimises the need for frequent change.
To fully document the system in a way that promotes tax payer awareness
BIT on net profit replaced 2% turnover tax
Export income exempted
Plant machinery exempted from sales tax and import duty
other nuisance taxes were abolished
Tax Reform in 1992
DIRECT TAX STRUCTURE:
Personal Income Tax (PIT)
1,000,001 and above
Property Transfer Tax 5%
Other Direct Taxes
Business Income Tax (BIT)/Corporate Income Tax (CIT)
BIT is a non-corporate business tax. It is levied @ of 30% on net profit. BIT is payable by all unincorporated business entities holding a trade license or registration certificate issued by the Ministry of Economic Affairs
CIT is a corporation tax. It is levied @ of 30% on net profit. CIT is payable by those entities registered under the
Company's Act of the Kingdom of Bhutan, 2000.
Every business or company must register with the Regional Revenue & Customs Office (RRCO) from where the trade license or permit is issued or wherever the Head office is located within 3 months from the date of obtaining such trade license or permit.