Bhutan is a small kingdom located in the southern foothills of the Eastern Himalayas. A constitutional monarchy rules the country. Setting up a company in Thimphu or any other city in Bhutan will interest entrepreneurs who plan to do business east of the continent. The kingdom is a member of the South Asian Association for Regional Cooperation. Foreigners can open a company in Bhutan, but the procedure is complicated.
Advantages of registering a company in Bhutan
- the political stability of the jurisdiction;
- existing free trade agreements with India give entrepreneurs access to a large and promising market;
- the availability of a wide range of economic incentives.
Main forms of legal presence and doing business
- public company;
- private company.
At the same time, the owner can buy a company in Bhutan and change its legal form.
Business registration procedure
- reserve a unique company name;
- obtain an SCC security certificate from the Royal Bhutan Police;
- form a commercial proposal for submission to the Industrial Department (IDD) of the Ministry of Economy;
- register a company in Bhutan with the Registrar of Companies;
- obtain a business license from the Regional Trade and Industry Department of the Ministry of Economy;
- apply for a taxpayer identification number and register with the tax office;
- open a local bank account to conduct business.
Company registration in Bhutan may vary depending on the form of land ownership, environmental permit, and whether the company will be located within a municipality.
Legislation and regulatory environment
The Companies Act is the primary legal act regulating companies' opening and operation.
Bhutan's legislation defines the allowable share of foreign capital in starting a business. With 100% foreign investment, companies engaged in health care, infrastructure projects, IT, and others can be established. If a non-resident entrepreneur wants to open a firm in Bhutan involved in other activities, the local state-owned Druk Holding and Investments (DHI) can be chosen as a partner.
- corporate tax - 30%;
- sales tax - from 5 to 100% (on tobacco products);
- personal income tax - flexible rate from 0% for income below 100,000 Bhutanese Ngultrums (about US$1,200) to 152,500 Bhutanese Ngultrums (about US$1,850)+ 25% if income exceeds 1 million Bhutanese Ngultrums.
The Department of Revenue and Customs administers all taxes.
Companies must submit annual financial statements to the supervisory authority and be audited.
Starting a company in Bhutan has become more profitable since the enactment of the Tax Incentives Act 2021, which establishes tax vacations for up to 10 years and a 5-year tax rate reduction for selected economic sectors, as well as many other preferences.
Opening a business in Bhutan: how the lawyers of Prifinance can assist
The current legislation of the Kingdom allows foreign investors to get significant tax advantages and build profitable relationships with Asian partners. Prifinance lawyers will advise on all the nuances of doing business in the jurisdiction, support you to register a company in Bhutan, and keep accounting records.