The Gelephu Mindfulness City has a complete framework for family offices, investment funds and the managers who run them, in force from 1 October 2026. A single-family office is not licensed at all. It notifies the Gelephu Financial Services Office and, with US$10 million of assets and a short set of conditions, is exempt from tax on its investment income for up to 15 years. Funds enjoy the same exemption for their life, managers pay 5% or 10% for up to 20 years, and an early mover approved before the end of 2027 pays nothing for its first five. Approvals are measured in weeks. This guide explains each element of the framework, who qualifies, what it costs to comply, and how a family or a fund promoter moves from decision to operation.
In short
- A single-family office needs no licence and no incentive application. It notifies the Gelephu Financial Services Office (GFSO) of its activities, and if it holds at least US$10 million of assets and meets the qualifying conditions it is an approved family office with a tax exemption for up to 15 years.
- Funds and their investment holding vehicles are exempt from tax on income from designated investments for the life of the fund, up to 15 years. The minimum assets under management is US$10 million, or US$50 million for funds investing in real estate, energy and infrastructure.
- Approved investment managers pay 5% where they manage US$25 million or more and 10% below that, for 10 years renewable to 20. A manager approved on or before 31 December 2027 pays nothing for the first five years. Carried interest is exempt.
- Managers licensed in a Recognised Foreign Jurisdiction manage GMC domestic funds on a no-objection basis rather than a separate GMC licence. GFSO targets a response within four weeks. A full GMC licence reaches in-principle approval in two to three months on average.
- No withholding tax on dividends, a 0% withholding rate on interest paid by approved entities to non-residents, no capital gains tax, no foreign exchange controls outside the Ngultrum, and no restrictions on investor profile.
- Family offices, funds and managers may be companies, variable capital companies, partnerships or trusts. Trusts are recognised under the received common law and equity that the Application of Laws Act 2024 makes part of GMC law.
Who the framework is for
The framework distinguishes three actors. A family office manages the wealth of one family. A fund pools capital from investors under a defined strategy. An investment manager runs the assets of either, in-house or as a separate firm. Each has its own regulatory position and its own incentive, and the conditions are calibrated to the size of the business, so a family office managing US$12 million and a manager running US$200 million are not held to the same hiring and spending thresholds.
The purpose is stated plainly. The incentives exist to bring international capital and wealth management capability into GMC, and the local hiring and spending conditions are how that capability takes root. Pang Yee Ean, Co-Chief Executive Officer of the GMC Authority, described wealth management as a natural extension of what GMC is building, with the capital meant to fund entrepreneurship, innovation and infrastructure in Bhutan while creating high-value careers at home.
Single-family offices: notification, not licensing
A single-family office set up in GMC is a GMC-incorporated entity managing the assets of one family, often held through a trust. It serves no third-party customers and manages no third-party money, and for that reason it is exempt from licensing. Its only regulatory step is to notify GFSO of its activities in GMC.
Two refinements matter in practice. A single-family office that engages a dedicated trustee of its own stays exempt. A single-family office that engages the trustee services of a multi-family office needs GFSO approval for that arrangement. A multi-family office, which manages the assets of more than one family, is a different business: depending on its activities it needs a Financial Services Licence covering dealing in investments, managing assets or managing a collective investment fund, and GFSO may add further regulated activities to the licence, for example where trustee services are part of the model.
The tax side follows the same logic. A single-family office that meets the qualifying conditions is an approved family office without applying for anything. A multi-family office applies.
The family office exemption
An approved family office enjoys three things for up to 15 years, counted from its first full financial year: exemption from tax on all income from designated investments; exemption for its investment manager, whether the manager sits inside the family office or is a separate legal entity; and exemption from withholding tax on interest it pays to non-residents of GMC. Dividends carry no withholding tax in GMC in any case. A non-resident who merely invests in or receives distributions from a GMC family office does not acquire a taxable presence in GMC by doing so.
The qualifying conditions are short:
- Assets. At least US$10 million of assets under management at the point of qualifying. Committed capital counts where the commitment is legally enforceable, and the test is applied once, at entry.
- Management and control. The family office must be managed and controlled in GMC from its second year, and its representatives must reside in GMC or the rest of Bhutan for at least 30 days a year. Any part of a day counts as a day.
- Local hiring and spending. By its third year, and throughout the incentive period, the family office employs at least two Bhutanese residing in GMC in front or middle office roles and spends more than US$50,000 a year in GMC, salaries included. Local spending covers office rent, administrative and professional fees paid locally, and donations to an approved GMC charity.
- Banking. The family office maintains an account with a GMC-licensed bank.
Compliance is reported once a year in the corporate tax return. An entity that misses the conditions in one year keeps the incentive for that year. Only a second consecutive year of non-compliance ends it, from that second year, and nothing already enjoyed is clawed back.
Funds: three types, one door
A fund established or domiciled in GMC is a domestic fund and takes one of three forms under the Fund Rulebook.
- Public fund. Open to retail and professional clients, no minimum subscription, full prospectus, public and private placement, GFSO approval before launch.
- Exempt fund. Professional clients only, US$50,000 minimum subscription, a shorter prospectus, private placement only, and a no-objection from GFSO rather than an approval.
- Qualified investor fund. Professional clients only, US$500,000 minimum subscription, otherwise on the same footing as the exempt fund.
For an exempt fund or a qualified investor fund the promoter sends GFSO the simplified prospectus and factsheets at least four weeks before launch, and GFSO targets its no-objection within four weeks of the submission. A public fund is discussed with GFSO or the case officer first, and GFSO sets out the approval route. A carried interest vehicle, set up solely so that a manager's officers, directors or employees can share in fund profits, is not a fund.
The fund exemption mirrors the family office exemption: no tax on income from designated investments for the life of the fund up to 15 years, and no withholding tax on interest paid to non-residents. The minimum assets under management is US$10 million, rising to US$50 million for funds investing in capital-intensive industries such as real estate, energy and infrastructure. The fund's manager must itself be an approved investment manager.
Investment managers: licence, or no-objection
A firm that will manage assets or manage a collective investment fund in GMC needs a Financial Services Licence covering those activities, unless it qualifies for the foreign-manager route.
The foreign-manager route. GFSO recognises that GMC benefits from experienced managers arriving from established financial centres. A manager licensed or regulated by the competent authority of a Recognised Foreign Jurisdiction may manage assets for a GMC domestic fund without a separate GMC fund management licence, provided its home licence is valid and subsisting, it has faced no material regulatory action, sanction or disciplinary proceeding at home in the preceding three years, and it complies with GMC's anti-money laundering, counter-terrorist financing and sanctions requirements. The initial list of Recognised Foreign Jurisdictions is Singapore, Japan, the Abu Dhabi Global Market, the Dubai International Financial Centre, Hong Kong and India, and GFSO will extend it by notice. The manager seeks a no-objection at least four weeks before it starts, and GFSO targets its answer within four weeks.
The full GMC licence. An applicant shows that it or its group has a five-year track record in investment management or a related business in a jurisdiction with a comparable regulatory framework. Where the firm itself is younger, GFSO looks at the track record of its controllers and substantial shareholders and the experience of its key management. The firm appoints one licensed Senior Executive Officer and at least two licensed directors, each with at least five years of relevant experience, ten for the Senior Executive Officer of a public fund. Relevant experience is read in context: proprietary trading counts towards discretionary portfolio management, and sector experience counts for private equity and venture capital. GFSO prescribes no particular academic or professional qualification and imposes no regulatory examination on approved persons, and it will consider exemptions case by case for applicants with substantial experience. For a fund, at least one individual other than the Senior Executive Officer carries senior manager functions such as operational risk and internal controls, and every key person satisfies the fit and proper assessment in the GEN Rulebook: integrity, competence and capability, financial soundness and the proposed role.
Successful applicants can expect in-principle approval within two to three months of submission on average, depending on the activities and the quality of the file. In-principle approval is the point at which the firm incorporates in GMC, opens its GMC bank account and completes the remaining conditions before it trades.
The manager's tax position
An approved investment manager pays tax at a concessionary rate fixed by its assets under management at the point of application: 10% below US$25 million and 5% at US$25 million or more. The rate runs for an incentive period of 10 years and is renewable to a total of 20. A manager approved by the Authority on or before 31 December 2027 is fully exempt for the first five years of its incentive period and moves to its concessionary rate thereafter, subject to the same conditions throughout. Carried interest received from a qualifying fund is exempt in the manager's hands, because it is paid out of fund profits that are themselves exempt.
The conditions scale with size:
- Below US$25 million. Managed and controlled in GMC from the second year; representatives resident in GMC or the rest of Bhutan for at least 30 days a year; by the third year at least two Bhutanese hired in GMC in front or middle office roles and more than US$50,000 a year spent in GMC.
- US$25 million and above. Managed and controlled in GMC from the second year; representatives resident for at least 60 days a year and holding an employment pass; by the third year at least three Bhutanese hired in front or middle office roles and more than US$100,000 a year spent in GMC.
A manager appoints up to two employees as representatives for each approved fund, and no individual represents more than ten funds. The days of all appointed representatives aggregate, so two representatives spending seven days each in GMC in the same week count as 14. Achievement against the conditions is reported annually in the corporate tax return, and the incentives for managers and fund vehicles are granted on application to the Authority.
Vehicles, investors and designated investments
There is no prescribed vehicle. A family office, fund or manager may be a company, a variable capital company, a partnership or a trust, and the Authority has issued separate guidelines on the governance and management of variable capital companies. There are no restrictions on investors or investor profile, and no restrictions on what an approved family office or fund may invest in. The exemption attaches to income from designated investments, and the annexed list is broad: shares, bonds and money-market instruments; digital assets; real estate investment trusts and exchange-traded funds; futures, options, swaps and other derivatives; immovable property wherever situated; deposits and foreign exchange; loans and credit facilities; commodity and freight derivatives and physical commodities; emission allowances; structured products; units in unit trusts, business trusts and publicly-traded partnerships; private trusts and non-publicly-traded partnerships that invest wholly in designated investments; limited liability company interests; bankers' acceptances, receivables and letters of credit; and physical precious metals. The one exclusion is a digital token that represents an interest in an underlying asset outside the list.
Partnerships are tax transparent, with profit taxed in the partners' hands. The sale of units or shares and the receipt of liquidation proceeds are returns of capital, and GMC has no capital gains tax. Where an approved entity pays interest to a non-resident, the domestic 10% withholding rate is replaced by the incentive's 0% rate, the full amount is paid, and a nil withholding return is filed with the Authority by the 15th day of the second month after payment. GMC imposes no foreign exchange controls other than on transactions in Ngultrum, so a family office or fund transacting in other currencies faces no exchange rules and no restriction on repatriating profit beyond the ordinary Companies Act rules on retained profits.
Trusts and the family office structure
Trusts are recognised in GMC through the received common law and equity that the Application of Laws Act 2024 makes part of GMC law. An express trust is properly constituted when it satisfies the three certainties of intention, subject matter and objects, and it divides property into a legal interest held by the trustee and an equitable interest held for the beneficiaries. Where GMC law governs the trust, the settlor may retain, or give to someone else, the investment and asset management powers over the trust without invalidating it. The trustee may sit in one jurisdiction while the trust is governed by the law of another. These are the features that let a single-family office be owned by a trust, with succession, estate planning and asset protection built into the structure from the start, and the Authority has signalled a GMC Trustees Act to give trustees a dedicated statutory framework for administration and duties.
Families that are not GMC tax residents should take home-country advice before assets move into the structure. Basnet Law coordinates that advice with counsel in the family's home jurisdiction.
Banking and custody
DK Bank, the main GMC-licensed bank, offers multi-currency corporate accounts in US dollars, pounds sterling, euro, yen, Australian dollars, Hong Kong dollars, Singapore dollars, Indian rupees and Ngultrum, with Fedwire access for US dollars and local real-time gross settlement access for Singapore dollars and rupees. It opens accounts for offshore corporate vehicles, including Cayman Islands and British Virgin Islands entities, while declining jurisdictions on major sanctions lists. It receives and sends selected stablecoins, is connected to liquidity providers for on- and off-ramping, provides custody in the customer's name for fixed income and equities listed on major exchanges, and facilitates trading in treasury bills and government and corporate bonds through its panel of counterparties. A family office's bank account condition and a manager's in-principle approval condition are both met at the same institution.
How GMC compares
The regime was designed with reference to the treatment in Singapore, Hong Kong, GIFT City and Dubai, and it stands apart in four respects. Single-family offices qualify automatically on meeting the conditions, with no application and no wait. The list of designated investments extends to immovable property wherever it sits and to digital assets. The manager rates of 5% and 10% run to 20 years, with five years at nil for early movers. No capital deployment requirement is imposed, and the conditions allow time for a new entrant to build up its presence. Siddharth Shah, Senior Partner at Khaitan & Co and a Board Director of the Authority, put the test a family office or fund manager in India applies to a new jurisdiction in three parts: how long approval takes, how clearly the conditions are set out, and whether there is a real regulator behind them. A framework that grants relief on notification, tests assets once at entry and publishes its response times answers all three.
GMC is also extending its treaty network. The first double taxation agreement with provisions specific to GMC, the Bhutan and Singapore agreement, has been signed and is in the ratification process.
How Basnet Law runs the engagement
- Scoping. We confirm whether the client is a single-family office, a multi-family office, a fund promoter or a manager, and therefore whether the route is notification, no-objection or licence, and which asset threshold and condition set applies.
- Structure. We choose the vehicle, a GMC company, variable capital company, partnership or trust, and where a trust holds the family office we settle the trust with the three certainties and the governing law fixed.
- Incorporation and banking. We incorporate through the Gelephu Corporate Registration Office with a resident director and registered office, and open the DK Bank account in parallel, because the account is both a family office condition and an in-principle approval condition.
- Regulatory step. We file the GFSO notification for a single-family office, prepare the no-objection pack for an exempt or qualified investor fund or a foreign-licensed manager, or build the full licence application with the Senior Executive Officer, directors and senior manager appointments.
- Incentive and compliance. We lodge the incentive application where one is needed, record the assets under management at entry, and set up the annual reporting against the management and control, hiring, spending and banking conditions so the incentive runs its full term.
Frequently asked questions
Family offices
Does a single-family office need a licence in GMC?
No. A single-family office manages the assets of one family, serves no third-party customers and manages no third-party money, so it is exempt from licensing. It notifies GFSO of its activities and that is the whole regulatory step. The exemption continues where the family office engages its own dedicated trustee. It needs GFSO approval only where it engages the trustee services of a multi-family office. A multi-family office is licensed for the regulated activities it carries on.
Does a single-family office have to apply for the tax incentive?
No. A single-family office that meets the qualifying conditions is an approved family office and takes the exemption without an application. It reports its achievement against the conditions in its annual corporate tax return. Multi-family offices, funds and investment managers apply to the Authority.
What counts towards the US$10 million asset test, and when is it measured?
Assets under management measured once, at the point of qualifying for or applying for the incentive. Legally enforceable committed capital counts, so a family that has committed capital to the structure but not yet drawn it down can qualify. The conditions the entity must then meet are fixed by its assets at that point and are not re-tested as the portfolio moves.
Can the family office be owned by a trust, and can the family keep control of investment decisions?
Yes to both. Trusts are recognised in GMC through the received common law and equity, and a properly constituted trust with GMC law as its governing law may leave the investment and asset management powers with the settlor or with a person the settlor chooses. The trustee may be in one jurisdiction and the trust governed by the law of another. A trust-owned single-family office is the structure the framework anticipates.
What must the family office do locally each year?
From its second year it is managed and controlled in GMC, and its representatives spend at least 30 days a year in GMC or the rest of Bhutan, with any part of a day counting as a day. From its third year it employs at least two Bhutanese residing in GMC in front or middle office roles and spends more than US$50,000 a year in GMC, including salaries, office rent, locally paid professional fees and donations to an approved GMC charity. It keeps an account with a GMC-licensed bank throughout.
What happens if a condition is missed after the incentive starts?
The incentive continues for the first year of non-compliance and ends only after a second consecutive year, with effect from that second year. Nothing enjoyed in earlier years is clawed back.
Funds
Which fund type should I use?
A public fund is open to retail and professional clients, has no minimum subscription, requires a full prospectus and needs GFSO approval before launch. An exempt fund is for professional clients with a US$50,000 minimum subscription, a shorter prospectus, private placement only and a no-objection from GFSO. A qualified investor fund is the same as an exempt fund with a US$500,000 minimum subscription. Most private funds arriving in GMC launch as exempt or qualified investor funds.
How long does a fund launch take?
For an exempt fund or a qualified investor fund the promoter files the simplified prospectus and factsheets at least four weeks before launch, and GFSO targets its no-objection within four weeks of the submission. A public fund is discussed with GFSO or the case officer first, and GFSO sets out the approval route.
Are there restrictions on who may invest or on what the fund may hold?
No. There are no restrictions on investors or investor profile and none on the investments a fund or family office may make. The exemption attaches to income from designated investments, and the list runs from shares, bonds and deposits through derivatives, immovable property anywhere in the world, physical commodities and precious metals to digital assets. The one exclusion is a digital token representing an interest in an asset outside the list.
Does a fund investing in real estate, energy or infrastructure face a higher threshold?
Yes. The minimum assets under management is US$50 million for funds investing in capital-intensive industries such as real estate, energy and infrastructure projects, against US$10 million for all other strategies. The fund's manager must also be an approved investment manager.
Is a carried interest vehicle treated as a fund?
No. An arrangement set up solely so that the officers, directors or employees of an investment manager, or related persons, can share in carried interest or similar profits of one or more funds is not a fund and is not regulated as one.
Investment managers
Can a manager licensed abroad run a GMC fund without a GMC licence?
Yes, where its home regulator is in a Recognised Foreign Jurisdiction, its licence is valid and subsisting, it has faced no material regulatory action, sanction or disciplinary proceeding at home in the preceding three years, and it complies with GMC's anti-money laundering, counter-terrorist financing and sanctions requirements. It seeks a no-objection from GFSO at least four weeks before starting, and GFSO targets a response within four weeks. The initial list of Recognised Foreign Jurisdictions is Singapore, Japan, the Abu Dhabi Global Market, the Dubai International Financial Centre, Hong Kong and India, and GFSO extends it by notice.
What does a full GMC licence require, and how long does it take?
A five-year track record in investment management or a related business in a comparably regulated jurisdiction, held by the firm or its group, with the track record of controllers and the experience of key management taken into account where the firm is younger. One licensed Senior Executive Officer and at least two licensed directors, each with five years of relevant experience, ten for the Senior Executive Officer of a public fund. At least one senior manager other than the Senior Executive Officer for a fund. No prescribed qualification and no regulatory examination. Successful applicants receive in-principle approval within two to three months on average, then incorporate, open the bank account and satisfy the remaining conditions before trading.
What do the 5% and 10% rates depend on, and how does a manager qualify for the five tax-free years?
The rate is fixed by assets under management at the point of application: 10% below US$25 million and 5% at US$25 million or more, for 10 years renewable to 20. A manager managing a fund and approved by the Authority on or before 31 December 2027 is fully exempt for the first five years of its incentive period, on the same conditions as the concessionary rate that follows.
How is carried interest taxed?
It is exempt in the manager's hands. Carried interest is paid out of fund profits that are themselves exempt, so the exemption follows the profit to the manager.
How is the residence condition counted for a manager's representatives?
A manager appoints up to two employees as representatives for each approved fund, and no individual represents more than ten funds. The days of all appointed representatives aggregate, so two representatives spending seven days each in GMC in the same week count as 14. Any part of a day counts as a day. A manager at or above US$25 million needs 60 days a year and its representatives hold employment passes; below that, 30 days.
Tax, banking and structure
Is there withholding tax, capital gains tax or exchange control?
No withholding tax on dividends. The domestic 10% withholding rate on interest paid to non-residents is replaced by a 0% rate for approved family offices, funds and managers, with a nil return filed by the 15th day of the second month after payment. No capital gains tax, so the sale of units or shares and liquidation proceeds are returns of capital. No foreign exchange controls other than on transactions in Ngultrum, and no restriction on repatriating profit beyond the ordinary Companies Act rules on retained profits. Partnerships are tax transparent.
Which vehicle should I choose?
A company, a variable capital company, a partnership or a trust, with no prescribed choice. A company suits a single operating family office; a variable capital company suits a fund with several sub-funds or share classes; a limited partnership suits a private equity or venture strategy with a general partner and passive investors; a trust holds the family office where succession and asset protection lead the design. We choose on the family's or promoter's home-country tax position as much as on GMC law.
Where does the entity bank, and does the bank handle digital assets?
DK Bank, the main GMC-licensed bank, opens multi-currency corporate accounts in nine currencies with Fedwire access for US dollars, accepts offshore vehicles from jurisdictions such as the Cayman Islands and the British Virgin Islands, receives and sends selected stablecoins, is connected to liquidity providers for on- and off-ramping, and provides custody in the customer's name for listed fixed income and equities. The family office bank account condition and the manager's in-principle approval condition are met at the same institution.
How does GMC compare with Singapore and Hong Kong?
The regime was designed against the treatment in Singapore, Hong Kong, GIFT City and Dubai. Single-family offices qualify automatically with no application. The designated investments include immovable property anywhere in the world and digital assets. Manager rates of 5% and 10% run to 20 years with five years at nil for early movers. No capital deployment requirement is imposed, and the conditions allow time to build a presence. Relief is granted on notification, assets are tested once at entry, and the regulator publishes its response times.
When does the framework start?
It takes effect on or after 1 October 2026.
The bottom line
GMC now has a complete wealth management framework: a regulator that answers within four weeks, a family office regime that works on notification, fund and manager exemptions that run for 15 and 20 years, and a bank that opens the accounts the regulator requires. The early-mover window is precise. A manager approved on or before 31 December 2027 pays no tax for its first five years, and the founders company and strategic and development company routes elsewhere in the Income Tax Act close to new approvals after 31 December 2030. Families and managers that move in the next fifteen months secure the most generous terms the jurisdiction will offer.
Related guides
Sources
- Gelephu Mindfulness City Authority, Guidelines on Regulatory Requirements and Tax Incentives for Family Offices, released 20 September 2026, effective on or after 1 October 2026.
- Gelephu Mindfulness City Authority, Guidelines on Regulatory Requirements and Tax Incentives for Funds and Investment Managers, released 20 September 2026.
- Gelephu Mindfulness City Authority, Frequently Asked Questions: Family Offices, Funds and Investment Managers, released 20 September 2026, including the Annex of designated investments.
- Gelephu Mindfulness City Authority, Guidelines on Governance and Management of Variable Capital Companies, released 20 September 2026.
- Gelephu Mindfulness City Authority press release, "Gelephu Mindfulness City opens its doors to family offices and investment funds", 20 September 2026.
- Income Tax Act 2025 (Law No. 6 of 2025), ss. 13O, 13OA and 13U (fund and family office exemptions), s. 13Y and s. 43D (founders company and strategic and development company routes closing to new approvals after 31 December 2030).
- Application of Laws Act 2024 (Law No. 1 of 2024), s. 3 (received common law and equity).
- Fund Rulebook (Funds) 2026 and GEN Rulebook 2026, Chapter 5 (fit and proper assessment of approved persons).
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
