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Taxation System in Bhutan

Historical Background

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:-

  • land

  • property

  • business income

  • consumption of good and services

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

Main features:

  • 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


  • Rationalisation of tax structure

  • Expansion of tax base

  • Simplification of administrative procedures for compliance and transparency


  • Business Income Tax (BIT) 30% on Net Profit

  • Corporate Income Tax (CIT) 30% on Net Profit

Personal Income Tax (PIT)

  • Income Slabs                    Tax Rate

  • 0 - 100,000                        0%

  • 100,001 - 250,000              10%

  • 250,001 - 500,000              15%

  • 500,001 - 1,000,000           20%

  • 1,000,001 and above          25%

Property Transfer Tax 5%

Rural Tax

  • Land Tax

  • House Tax

  • Cattle Tax

Other Direct Taxes

  • Motor Vehicle Tax

  • Foreign Travel Tax

  • Royalties

  • Municipal Tax

  • Business & Professional Licenses

  • Health Contribution

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 (MoEA).

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.

BIT/CIT Registration:

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.

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