Taxes in Bhutan

Income tax in Bhutan covers income from employment, business activities, investments and other sources. For individuals, the rate is 0 percent on annual income up to Nu 300,000. The rate then rises to 5 percent on the amount above Nu 300,000 up to Nu 500,000, followed by bands of 10, 15, 20, 25 and 30 percent; the highest rate applies to income above Nu 3,500,000. Statutory deductions and exemptions may change the taxable base. These include, among other items, fixed-deposit interest of up to Nu 400,000 annually for individuals who are not engaged in business, dividends of up to Nu 300,000 annually, and lottery, betting or gambling winnings of up to Nu 5,000 per win, provided the applicable legal requirements are met. Companies and corporations generally pay 22 percent on taxable income, while trusts pay 30 percent. A partnership is generally treated as tax-transparent, so income and losses are attributed to the partners. For certain individuals resident in Bhutan who operate a domestic business, a presumptive tax of 15 percent of turnover may apply where turnover does not exceed Nu 5,000,000 and the other requirements are met. Non-resident digital providers may be subject to 22 percent where they have a significant economic presence, or under certain conditions to a final withholding tax of 5 percent.