Gelephu Mindfulness City (GMC) is a Special Administrative Region of the Kingdom of Bhutan, established under Royal Charter No. 1 of 2024, granted on 10 February 2024, with its first laws in operation from December 2024 with full executive and legislative powers and an independent judiciary. It is planned as a regenerative, values-based city that attracts international investment by combining sustainability, Bhutanese culture and spirituality with modern infrastructure. This article sets out the tax regime under the Income Tax Act 2025, the legal framework and the company registration route for investors considering GMC.
Strategic Location and Vision
Strategically located in Gelephu, Bhutan, on the border with India, GMC aims to leverage regional connectivity between South Asia and Southeast Asia. This location positions it as an economic corridor for trade and investment flows across the region. The Special Administrative Region covers about one million acres, roughly 4,000 square kilometres and about 10% of Bhutan, on the southern plains bordering Assam, India.
The vision for Gelephu Mindfulness City was unveiled by His Majesty King Jigme Khesar Namgyel Wangchuck on December 17, 2023, during the 116th National Day celebration. The King's vision is a distinct special administrative region with its own laws and institutions, a business-friendly environment and Bhutan's core values of sustainability, culture and spirituality. That vision is now in force: GMC enacts its own laws in English, is administered by the Gelephu Mindfulness City Authority (GMCA), and is planned as a plastic-free, low-rise city powered by renewable energy, with food sourced from organic farms, cycling built into the urban design and a clean technology and AI innovation hub.
This ambitious project has garnered significant international attention and endorsement from prominent figures, including Nobel laureates Joseph Stiglitz and Michael Spence, renowned architect Bjarke Ingels, and Snap Inc. CEO Evan Spiegel, all of whom expressed their support at the Bhutan Innovation Forum in 2024.
Taxation and Incentives: A Cornerstone of GMC's Appeal
Income tax in GMC is charged under the Income Tax Act 2025 (Law No. 6 of 2025), administered by the Comptroller of Income Tax. The first year of assessment runs from 1 January 2026, tax is assessed on the preceding year's income, and computations are filed in United States dollars: "$" in the Act means the US dollar. Profits are taxed once, at company level. Dividends paid by a company resident in GMC are exempt in the recipient's hands (s. 13(1)(za)), so nothing further is charged when profits are distributed.
Key Tax Provisions and Benefits:
• Corporate Tax Rate: Every company or body of persons pays tax at 15% on every dollar of chargeable income (s. 43(1)(a)). The same rate applies to non-resident entities, trustees and executors (s. 43(1)(c)). There is no lower band and no small-company rate.
• Capital Gains Tax: GMC has no capital gains tax. The Act charges income (s. 10(1)); gains that are not of an income nature fall outside the charge, so the profit on a disposal of shares or other capital assets is not taxed as such.
• Withholding Tax on Dividends: There is no withholding tax on dividends. A dividend paid by a GMC-resident company is exempt income for the shareholder, resident or not (s. 13(1)(za)), so investors receive distributions in full.
• Royalties and Interest: Interest paid to non-residents carries 10% withholding (s. 43(3)), reduced to 0% for approved funds, family offices and their managers. Royalties and know-how payments to non-residents are taxed at 5% (s. 43(3A)). Employers deduct tax from salaries at source (s. 44B), which for non-citizen staff is at the 0% rate described below.
Individuals who are not citizens of Bhutan, whether resident in GMC or not, pay tax at 0% on chargeable income derived on or before 31 December 2030 (s. 43(1)(ba)). Bhutanese citizens not resident in GMC are treated the same way (s. 43(1)(b)); Bhutanese citizens resident in GMC pay progressive rates from nil on the first $10,000 to 15% above $500,000 (s. 42). Two reliefs lower the 15% company rate, each granted by approval only and each closed to new approvals after 31 December 2030: an approved founders company can be exempt on qualifying income for a total period of up to 15 years (s. 13Y), and an approved strategic and development company can be taxed at a concessionary rate of not less than 5% for up to 20 years (s. 43D). Fund and family office exemptions (ss. 13O, 13OA and 13U, 15 years), manager rates of 5% and 10% for up to 20 years, and advance rulings under s. 108 complete the incentive framework.
Two further points are relevant to planning. A company is resident in GMC where the control and management of its business is exercised in GMC, so board-level decisions should be taken in Gelephu. There are no foreign exchange controls on any currency other than the Ngultrum, and a double taxation agreement between Bhutan and Singapore was signed on 12 May 2026 and is in the process of ratification.
Legal and Regulatory Framework
GMC enacts its own laws, in English, under Royal Charter No. 1 of 2024. Through the Application of Laws Act 2024 (Law No. 1 of 2024), as amended in 2025 and 2026, the received common law and equity of established common law jurisdictions apply in GMC, together with the applied statutes listed in Schedule A and the applied financial services rules listed in Schedule B.
On that foundation GMC has enacted its own commercial code: the Companies Act 2025, Customs Act 2025, Employment Act 2025, Employment of Foreign Workforce Act 2025, Financial Services Act 2025 and Income Tax Act 2025, followed in 2026 by the Business Names Registration Act, Limited Liability Partnerships Act, Limited Partnerships Act, Partnership Act, Sale of Goods Act and Unfair Contract Terms Act. Financial services are supervised by the Gelephu Financial Services Office (GFSO), the single regulator for banking, capital markets, payments, insurance and digital assets under the Financial Services Act 2025. In-principle approval typically takes two to three months, funds and managers from recognised foreign jurisdictions can use a four-week no-objection route, and firms already licensed in an established international financial centre have an accelerated pathway.
Land in GMC is made available on lease. DK Bank, the first GMC-licensed bank, operates in nine currencies and offers digital asset services.
Business Setup: Navigating Registration and Compliance in GMC
Companies are formed under the Companies Act 2025 (Law No. 1 of 2025) by registration with the Gelephu Corporate Registration Office (GCRO), the digital portal for business registration, filing and information. Registration is a two-stage process: an expression of interest assessed against GMC's priority industries, then incorporation.
The Business Setup Process:
1. Initial Assessment by Gelephu Mindfulness City Authority (GMCA): The applicant files an expression of interest through the GCRO portal. The Gelephu Mindfulness City Authority (GMCA) assesses whether the proposed business fits GMC's eight priority industries: Spiritual; Health and Wellness; Education and Knowledge; Agri-Tech and Forestry; Green Energy and Technologies; Finance and Digital Assets; Aviation and Logistics; and Tourism.
2. Online Application Submission: Once the expression of interest is accepted, the applicant receives portal credentials and appoints a corporate service provider, which has been mandatory for every new incorporation since 1 November 2025. The provider reserves the company name, settles the constitution and files the incorporation documents through the GCRO system. Every company needs at least one member, at least one director ordinarily resident in GMC and a registered office in GMC.
3. Facilitated Review and Resolution by GCRO: The GCRO reviews the filing and raises any deficiencies with the applicant or its corporate service provider for correction before approval. From complete documents, registration of a private company limited by shares takes about one week.
4. Formal Approval and Certification: On approval and payment of the registration fee (US$2,000 for a private company limited by shares), the GCRO issues:
• A Certificate of Incorporation: Legally establishing the entity within GMC.
• A Certificate of Registered Business Name: Confirming the official name under which the business will operate.
•A Unique Entity Number (UEN): A distinct identifier for the business within the GMC regulatory framework.
These documents establish the company in Gelephu Mindfulness City and give it legal standing to commence operations. After incorporation the company keeps a register of controllers from the start, appoints an auditor within three months unless dormant, files officer changes within 14 days, holds its annual general meeting within six months of year end unless dispensed with, and files its annual return within seven months. Basnet Law Pte. Ltd., the first law firm incorporated in GMC, handles this process for clients from its office at Suite 413, Level 4, ChoeGo Building, Phendey Street, Gelephu.
Recent Developments and Future Outlook
Gelephu Mindfulness City is an operating jurisdiction, not a concept. Since its establishment in December 2024 its Acts have come into force, the GCRO and GFSO are registering and licensing businesses, Gelephu International Airport received its first international flight in December 2025, and the 10,000 BTC Development Pledge was announced in the same month. GMC is positioned as an economic hub for Bhutan on the corridor connecting South Asia and Southeast Asia.
The development follows a sustainable urban model that combines modern technology with Bhutanese culture: walking and cycling, green spaces for meditation and relaxation, and mindfulness-based education in the urban fabric. The city is being built in phases, and Bhutanese officials have stated that the quality and integrity of the development take priority over speed.
Community involvement is a cornerstone of the GMC project, with citizens encouraged to join volunteer services. The authorities have refined the investment criteria and the registration route as the jurisdiction has come into operation, and work passes for foreign staff are issued under the Employment of Foreign Workforce Act 2025 alongside a Digital Nomad Visa programme of 12 months, renewable to 24.
Conclusion
Gelephu Mindfulness City presents a clear investment case: a 15% company rate with no capital gains tax and no tax on dividends, 0% for non-citizen individuals to 31 December 2030, a common law framework enacted in English, and a registrar and a regulator that are open for business. Bhutan's commitment to the project and its approach to urban planning position GMC as a significant participant in the economic future of South Asia.
The city offers a stable, predictable, and highly supportive environment for businesses seeking to expand into a region poised for significant growth, all while aligning with principles of sustainability and social responsibility.
Disclaimer: Please note that the information provided in this article is sourced from legitimate and publicly available resources. While every effort has been made to ensure accuracy and relevance, this content is intended for general informational purposes only and does not constitute financial, legal, or investment advice.
Prospective investors are strongly advised to conduct their own due diligence and kindly verify all information, including but not limited to investment plans, tax implications, and regulatory requirements, directly with the relevant official agencies and authorities in Gelephu Mindfulness City or Bhutan. It is crucial to consult with qualified legal and financial professionals before making any investment decisions.
Basnet Law Pte. Ltd. is not responsible for any investment decisions made based on the information presented herein, nor for any direct or indirect losses or damages that may arise from reliance on this content. Your investment decisions are solely your responsibility.
