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Bhutan Corporate Tax Guide: CIT 30% Standard Rate 2026

Bhutan's Corporate Income Tax (CIT) regime features a standard rate of 30% on taxable profits. There are no reduced rates for small businesses, but specific incentives exist for IT, tourism, and strategic sectors. The fiscal year runs July 1 to June 30. Here is how Bhutanese corporate tax works in 2026.

Corporate Income Tax in Bhutan is governed by the Income Tax Act of the Kingdom of Bhutan and administered by the Department of Revenue & Customs (DRC). The standard CIT rate of 30% applies to all companies and legal entities. Bhutan's CIT rate is higher than many regional peers (India 22-25%, Nepal 25%, Bangladesh 25-30%) but reflects the country's unique economic model based on Gross National Happiness principles. The tax year is the financial year from July 1 to June 30. Companies must file annual CIT returns by April 30 following the end of the fiscal year. Filing and compliance guide →

Real-world example: A Thimphu-based trading company with annual turnover of BTN 20 million and taxable profit of BTN 5 million pays CIT at 30% = BTN 1,500,000. A hotel in Paro with BTN 10 million profit pays BTN 3,000,000 in CIT. Compare this to India where the same profits would incur CIT at 22-25%, or Bangladesh at 25%. However, Bhutan's other taxes are minimal — no VAT/GST, no wealth tax, no capital gains tax — which offsets the higher CIT rate. IT sector incentives →

Corporate Tax Rate Structure

  • 30% (standard): All companies, branches, and legal entities — no reduced general rate
  • 15% (certain incentives): Reduced rate may apply for qualifying IT companies, tourism projects, and strategic investments under specific approval
  • Tax holidays: New enterprises in priority sectors (IT, manufacturing, hydropower) may qualify for temporary CIT exemptions

There is no differentiated rate for small vs. large companies. All corporations are subject to the standard 30% rate unless they qualify for sector-specific incentives. The DRC administers all corporate tax matters.

Taxable Income and Deductions

Corporate taxable income is calculated as accounting profit adjusted for tax purposes. Key rules include:

  • Depreciation: Standard rates apply — buildings 5%, machinery 20%, vehicles 20%, computers 33%
  • Interest deductibility: Thin capitalization rules may limit interest deductions in certain cases
  • Loss carryforward: Tax losses can be carried forward for up to 5 years
  • Dividends received: Dividends received from Bhutanese resident companies are generally exempt from CIT
  • Capital gains: Treated as ordinary income and taxed at the standard CIT rate of 30%

Transfer pricing rules follow international standards for transactions with related parties. The DRC may review cross-border transactions to ensure arm's length pricing. Cross-border taxation →

Withholding Taxes on Outbound Payments

Bhutan imposes withholding tax on certain payments to non-residents:

  • Dividends: 10% WHT (0% for residents)
  • Interest: 10% WHT (0% for residents)
  • Royalties: 10% WHT (10% for both residents and non-residents)

WHT rates may be reduced under Bhutan's limited Double Taxation Treaties (only with India and Bangladesh). Investment income guide →

Tax Incentives and Exemptions

Bhutan offers targeted incentives for priority sectors:

  • IT sector: Reduced CIT rates and exemptions for software development, IT services, and data centers
  • Tourism: Incentives for hotel development, eco-tourism, and high-end tourism infrastructure
  • Strategic investments: Tax holidays and customs duty exemptions for qualifying large investments in manufacturing, hydropower, and infrastructure
  • Export incentives: Reduced rates for export-oriented businesses under certain conditions

Incentives typically require prior approval from the DRC or the Ministry of Finance, with minimum investment thresholds and employment commitments. IT sector-specific incentives →

Who needs to register for CIT in Bhutan?

All legal entities (companies, partnerships, branches of foreign entities) must register for CIT with the DRC. Registration is required before starting business operations. Non-resident companies with a permanent establishment in Bhutan are also subject to CIT on Bhutan-source income.

What is the filing deadline for corporate tax?

Annual CIT returns must be filed by April 30 following the end of the fiscal year (June 30). Tax is paid in advance installments during the year based on estimated profits, with a final settlement upon filing. Late filing penalties apply.

Are there any regional or municipal taxes in Bhutan?

No. Bhutan has a unitary tax system with no regional or municipal corporate taxes. The 30% CIT is the only corporate-level tax at the national level. There is no trade tax, business tax, or local surcharge on corporate profits.

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