This hub collects our guides to the Income Tax Act 2025 (Law No. 6 of 2025), which governs income tax in the Gelephu Mindfulness City Special Administrative Region (GMC). The Act is deemed in operation from 26 December 2024, except for the provisions listed in s. 1(3), which commence only on a date appointed by Gazette notification. Where an article below concerns one of those provisions, we say so.

What this guide covers

Three numbers define the regime. Every company or body of persons pays tax "at the rate of 15% on every dollar of the chargeable income" (s. 43(1)(a)). Every individual who is not a citizen of Bhutan, whether resident in GMC or not, pays 0% on chargeable income derived on or before 31 December 2030 (s. 43(1)(ba)); the same 0% applies to Bhutanese citizens not resident in GMC (s. 43(1)(b)). Bhutanese citizens resident in GMC pay under the banded table in s. 42 and the Second Schedule: nil on the first $10,000, then 5%, 7%, 9%, 11% and 13% in bands, and 15% above $500,000. All amounts are in United States dollars (s. 2AA), and tax computations must be denominated in US dollars (s. 62A).

Two approvals with a fixed closing date sit on top. A founders company may have its income from a qualifying business in a founders industry exempted for up to 15 years in total (s. 13Y(1) and (8)); no approval may be granted after 31 December 2030 (s. 13Y(5)). A strategic and development company may be taxed "at a concessionary rate of not less than 5%" (s. 43D(1)); again, no approval after 31 December 2030 (s. 43D(4)).

Rates and the headline regime

• The GMC Tax Regime in Full: 15% on Companies, 0% on Individuals Until 2030 — s. 43(1)(a), (b), (ba) and (c), and the s. 42 bands for resident Bhutanese citizens.
• The Dollar Jurisdiction — s. 2AA, the US dollar rule for computations (s. 62A) and when another functional currency may be used (s. 62B).

Incentives with a 2030 deadline

• The Founders Company Exemption: Full Tax Exemption for Up to 15 Years Under Section 13Y — the founders industry test (s. 13Y(2)), the application (s. 13Y(3)), the letter of approval (s. 13Y(6)) and the 15-year cap (s. 13Y(8)).
• The Strategic and Development Company Concession: Negotiating Down to 5% Under Section 43D — the public interest test, the written application (s. 43D(2)) and what the letter of approval must specify (s. 43D(5)).

Holding, investment and wealth structures

• Zero Tax on Dividends and Share Disposals in GMC: Section 13W — gains from disposal of ordinary or preference shares held at 20% or more for at least 24 months (s. 13W(1A)). Gains from sale of foreign assets (s. 10L) are enacted but commence on a date to be appointed by Gazette notification.
• Setting Up a Family Office in GMC: The Section 13T Eligible Family-Owned Investment Holding Company — s. 13T is on the statute book but commences on Gazette notification; the article explains what it will provide and how to prepare.
• The Section 13O, 13OA and 13U Fund Exemptions — all three are enacted but await Gazette commencement; the GMC fund manager condition is common to each.
• Trusts, Foundations and Wealth Structuring in GMC — beneficiary income (ss. 13Q, 13QA) and concessionary trust and estate rates (ss. 43M, 43MA), alongside the not-yet-commenced foreign trust (s. 13F) and locally-administered trust (s. 13N) exemptions.

Cross-border and compliance

• Withholding Tax in GMC — interest to non-residents (s. 45), royalties and management fees (s. 45A), non-resident directors' remuneration (s. 45B), real property gains (s. 45D) and non-resident professionals (s. 45F), plus approved foreign loans and royalties (ss. 43Y, 43Z).
• Double Taxation Relief for GMC Companies — arrangements (s. 49), tax credits (s. 50) and pooling (s. 50C). Unilateral credits (s. 50A) await Gazette commencement.
• Transfer Pricing in GMC — arm's length (s. 34D), the surcharge (s. 34E), documentation (s. 34F), and the general anti-avoidance rule (s. 33) with its surcharge (s. 33A).
• Advance Rulings from the GMC Comptroller — s. 108 and the Seventh Schedule are enacted but commence on Gazette notification.
• Group Relief, Amalgamations and R&D Incentives — group relief (s. 37B), amalgamation (s. 34C), R&D (s. 14C) and employee equity-based remuneration deductions (ss. 14L, 14M, 14MA).
• Redomiciliation to GMC — the tax provisions for redomiciled companies (s. 34G) and tax credits for approved redomiciled companies (s. 34H).

Frequently asked questions

Is the 0% personal rate only for residents of GMC?

No. Section 43(1)(ba) applies to every individual who is not a citizen of Bhutan "whether resident in GMC or not", on chargeable income derived on or before 31 December 2030.

What happens after 31 December 2030?

The Act fixes the 0% rate and the two approval windows by reference to that date. What follows is a matter for future legislation; nothing in the current Act sets a post-2030 rate for non-citizen individuals.

Can a company apply for both s. 13Y and s. 43D?

Each is a separate written application to the designated officer (ss. 13Y(3), 43D(2)) resulting in a letter of approval for a specified qualifying business. The Act leaves the conditions of each approval to the designated officer and regulations.

Are advance rulings available today?

No. Section 108 is enacted but commences on a date to be appointed by Gazette notification (s. 1(3)(y)).

Is there a capital gains tax?

There is no separate capital gains tax in the Income Tax Act 2025. The question is whether a gain is income; s. 13W then exempts qualifying share disposals.

You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.

References

• Income Tax Act 2025, ss. 1(3), 2AA, 10L, 13F, 13N, 13O, 13OA, 13Q, 13QA, 13T, 13U, 13W, 13Y, 14C, 14L, 14M, 14MA, 33, 33A, 34C, 34D, 34E, 34F, 34G, 34H, 37B, 42, 43, 43D, 43M, 43MA, 43Y, 43Z, 45, 45A, 45B, 45D, 45F, 45G, 49, 50, 50A, 50C, 62A, 62B, 108, Second Schedule, Seventh Schedule