- Introduction of GST: Bhutan’s National Assembly has approved a 5% Goods and Services Tax (GST), set to take effect in January 2026, replacing the existing sales and excise tax systems while eliminating various tax exemptions.
- Input Tax Deduction and Foreign Provider Registration: The new GST framework will grant businesses the right to input tax deductions and require foreign digital service providers to register with local tax authorities and charge GST on their services.
- Implementation Preparation: Companies operating in Bhutan should prepare for the January 2026 rollout, which includes a BTN 5 million annual registration threshold; while the standard GST rate will be 5% on domestic supplies and imports, exports and specific other supplies will be either zero-rated or exempt.
Source Anrok
- GST Launch Date and Structure: Bhutan’s Goods and Services Tax (GST) will be implemented on January 1, 2026, with a flat rate of 5% on most goods and services, while essential items such as rice, salt, cooking oil, and various health and education services will be exempt.
- Preparation Over Immediate Implementation: Lawmakers opted against the immediate implementation proposed by the National Council, emphasizing the need for adequate public awareness and preparation to prevent confusion among businesses.
- Concerns Over Past Failures: The timeline for the GST has been affected by delays related to the unsuccessful Bhutan Integrated Taxation System (BITS), which faced significant cost overruns and was ultimately terminated. Parliament members expressed concerns about accountability for this failure and the importance of monitoring future projects, while also deciding to keep tax dispute appeals within the finance ministry rather than moving them to an independent tribunal.
Source The Bhutanese
Summary of the Third Reading of the GST (Amendment) Bill of Bhutan 2025
- Objectives of the Bill: The Goods and Services Tax (Amendment) Bill aims to enhance the tax framework’s simplicity, efficiency, and neutrality by addressing structural issues related to exemptions, excise integration, and administrative processes, facilitating effective GST implementation by January 1, 2026.
- Key Amendments and Proposals: During the deliberation, the House endorsed proposals to include representatives from the Bhutan Chamber of Commerce and Industry in the Review Board, introduced immunity for witnesses, and clarified the Review Board’s authority. Additionally, the appeal process was amended to allow appeals to the Royal Court of Justice instead of the High Court.
- Revised GST Rates and Exemptions: The GST rate on taxable supplies and imports was reduced to 5% from the previously proposed 7%, while retaining tax on electricity with existing subsidies for rural households. Essential food items like rice, cooking oil, salt, sanitary pads, and electronic wheelchairs for persons with disabilities will remain exempt from GST. The House is scheduled to vote on the Bill on June 16, 2025
Source gov.bt
- Goods and Services Tax in Bhutan will start in January 2026
- The standard GST rate will be 5 percent
- The GST Amendment Bill was passed by Parliament on 2 July 2025
- The bill is awaiting royal approval
- Current Sales Tax exemptions will be removed from many goods and services
- Businesses can deduct input GST they incur
Source: vatcalc.com
