Employer Tax Contributions

Tax Type	Rate	Base
Business Income Tax (BIT)	30%	Net profit
Corporate Income Tax (CIT)	25% (other companies); 30% (state enterprises)	Net profit
Provident Fund (PF)	10% (employer contribution)	Gross salary

Filing & Compliance

• Monthly remittance of Personal Income Tax (PIT) withheld and Provident Fund contributions: 15th day of the following month.
• Annual Withholding Tax Statement (Form 10T) filing: March 31st of the following year.
• Annual Business Income Tax (BIT)/Corporate Income Tax (CIT) return filing: March 31st following the end of the income year.

Employee tax deductions in Bhutan are determined by the Income Tax Act of 2001, encompassing various deductions and exemptions.

Direct Taxes

Personal Income Tax (PIT)

Bhutan employs a progressive income tax system, with rates escalating up to 30%. A tax-free personal allowance of Nu 300,000 is applicable. Deductions and exemptions from the PIT scheme include contributions to Provident Fund (PF) and Gratuity Insurance Scheme (GIS), insurance premiums, and specific allowances for education and rental expenses. The deadline for filing PIT returns is typically the end of February of the following year (e.g., February 28, 2025, for the 2024 income year).

Allowable Deductions & Exemptions

• Provident Fund (PF) and GIS Contributions: These contributions are deductible from salary income.
• Rental Income Deductions: 20% of rental income can be deducted for repairs, maintenance, interest payments, urban taxes, and insurance premiums.
• Dividend Income Exemption: The first Nu 10,000 of dividend income is exempt. Interest on loans taken for shareholding is also deductible. Any dividend income above Nu 30,000 is subject to a 10% tax deducted at source (TDS).
• Other Income Deduction: A 30% deduction is allowed on gross other income.
• Insurance Premiums: Premiums paid to recognized insurance companies are deductible.
• Education Allowance: Actual education costs for dependents (within Bhutan) up to Nu 50,000 per child are deductible. Supporting documentation, such as proof of school attendance, is required.
• Cash Crop Income Deduction: 30% of cash crop income is deductible.

Tax Deducted at Source (TDS)

TDS applies to various income categories, including salary, rental income exceeding a certain threshold, dividends above Nu 30,000, and interest from certain sources. Employers are responsible for deducting the appropriate tax amount from employee salaries and remitting it to the Revenue & Customs Office.

Indirect Taxes

Sales Tax

The Sales Tax, Customs and Excise Act 2000 governs sales tax in Bhutan. Various goods and services are subject to sales tax, with rates varying depending on the specific item. Some exemptions and zero-rated supplies exist.

Customs Duties

Customs duties are levied on imported goods, with rates determined by the Customs Act of 2017. The Fiscal Incentives Acts of 2017 and 2021 outline specific exemptions from customs duties for certain sectors.

Corporate and Business Income Tax

Corporate Income Tax (CIT)

CIT is levied on the net profits of companies at a rate of 25% as of 2025. Various deductions are permitted, including employment expenses, depreciation, and interest expenses. The Fiscal Incentives Act provides certain tax holidays and exemptions for eligible businesses. The deadline for filing CIT returns is typically at the end of March of the following year (e.g. March 31st, 2025, for income year 2024).

Business Income Tax (BIT)

BIT applies to unincorporated businesses, with similar deduction rules as CIT. The deadline for filing BIT returns is also typically the end of March of the following year (e.g. March 31st, 2025, for income year 2024).

Tax Administration

The Department of Revenue and Customs (DRC) is responsible for tax administration in Bhutan. Taxpayers are required to register with the DRC and file tax returns according to the prescribed deadlines. Penalties may be imposed for non-compliance. As of 2025, Bhutan also levies a Goods and Services Tax (GST), which is a consumption tax levied on most goods and services.

This information is current as of February 5, 2025, and may be subject to change. Consulting with a tax professional or referring to the latest official publications from the Bhutanese Ministry of Finance is recommended for the most up-to-date information.