New Tax Changes in Bhutan: All You Need to Know

The Bhutan Government has announced new amendments to its taxation regime on 16 January 2020. The most important among all is the introduction of Goods and Service Tax Bill 2020 which imposes a flat rate of 7% GST on goods and services. It is expected that this would eliminate tax leakage and bring in additional tax revenue of Nu 3 billion a year.

Other important amendments to be noted:

• Personal Income Tax (PIT): Personal Income Tax ceiling increased from Nu200,000 to Nu300,000.

TAXABLE INCOME	TAX RATE
Nu300,000 and below	Nil
Above Nu300,000 to Nu400,000	10% of the amount by which the taxable income exceeds Nu300,000
Above Nu400,000 to Nu650,000	Nu10,000 plus 15% of the amount by which the total taxable income exceeds Nu400,000
Above Nu650,000 to Nu1,000,000	Nu47,500 plus 20% of the amount by which the total taxable income exceeds Nu650,000
Above Nu1,000,000 toNu1,500,000	Nu117500 plus 25% of the amount by which the taxable income exceeds Nu1,000,000
Above Nu.1,5000,000	Nu242,499 plus 30% of the amount by which the total taxable income exceeds Nu1,500,000

In Bhutan, there will be a 10% surcharge if the income is NU1,000,000 and above.

The total dividend receipt of Nu30,000 per annum will be exempt from PIT. Income tax of 20% will be imposed on lottery prizes equal or above Nu5,000.

• Reduction in Corporate Tax from 30% to 25%
• Tax exemption on education is increased to Nu250,000 which was Nu150,000 earlier
• No will be levied tax on mobile devices, energy-saving devices, and cash crops
• Voucher tax of 5% removed for pre-paid users but post-paid and tourist SIM will suffer an increased tax rate of 7%
• Hybrid vehicles will have a 50% tax reduction
• Sustainable Development Fee for Regional Tourists will be 25% of the USD 65 SDF for tariff paying tourists
• The Fiscal Incentives Amendment bill 2020 exempts small businesses in rural areas from tax till 2023
• As per the Property Tax Bill of 2020 Property or Land transfer tax will be reduced from 5% to 3%. Vehicle transfer tax will also be the same rate (3%)
• As per the GST Bill 2020, unhealthy goods and plastic wrapping will suffer 20% Excise Equalization Tax and for alcohol/tobacco the tax rate will be 100%