The Income Tax Act 2025 contains something unusual for a new jurisdiction competing for capital. The Act contains its own expiry dates. Not a review clause, not a policy statement about future intentions, but hard statutory cut-offs written into the operative provisions: no founders company approvals after 31 December 2030, no strategic and development company approvals after 31 December 2030, no fund-related exemption approvals after 31 December 2029, and several trust and holding company reliefs that already exclude vehicles constituted or incorporated on or after 1 January 2028. A jurisdiction that publishes its own closing time is telling you something. The question is whether you are listening early enough to act on it.
In short
- The headline company rate in GMC is 15%. Every incentive below is an exception to that, and every exception is dated.
- Individuals who are not citizens of Bhutan pay 0% on chargeable income derived on or before 31 December 2030. That is a date on the income, not on the approval.
- No company may be approved as a founders company after 31 December 2030. The exemption itself, once granted, can run up to fifteen years including extensions.
- No company may be approved as a strategic and development company after 31 December 2030. Its concessionary rate is not less than 5%, for a relief period capped at twenty years.
- The fund manager and sovereign fund exemption provisions permit approvals only up to 31 December 2029.
- Three trust-related exemptions already exclude trusts constituted, and companies incorporated, on or after 1 January 2028.
First, correct the premise
GMC does not have 0% corporate tax. The Income Tax Act 2025 levies tax for each year of assessment on the chargeable income of every company or body of persons at 15% on every dollar. Non-resident persons other than individuals, trustees and executors are taxed at the same 15%. Everything described below is a statutory exception to that rate, available by approval, on conditions, for a limited period, and with a deadline for entering. The rate is 15% until an approval says otherwise.
The four sunsets, in date order
1 January 2028: the trust and holding structures close to new vehicles
Three exemptions in the Income Tax Act contain the same exclusion, expressed in nearly identical language. The exemption of income of a foreign trust does not apply to a trust constituted on or after 1 January 2028, or to a company incorporated on or after that date, and imposes further conditions by reference to the position in the basis period in which 31 December 2027 falls. The exemption for a philanthropic purpose trust's foreign account income carries the same exclusion. So does the exemption of relevant income of a prescribed locally-administered trust.
These are not transitional grandfathering of a relief being withdrawn. They are reliefs enacted with a fixed entry window from the outset. A trust settled on 2 January 2028 is outside them, regardless of how well it would otherwise qualify. The date attaches to the constitution of the vehicle, not to the income. A further condition is easy to miss and expensive to miss: these provisions also cease to apply where, in a basis period beginning on or after 1 January 2028, the trust or company stops satisfying the relevant requirements, and in some cases they cease permanently rather than for that year alone.
31 December 2029: the fund and asset management approvals close
Four provisions of the Act that matter to fund managers, fund platforms and sovereign or institutional capital permit approvals only within a defined period ending 31 December 2029.
The exemption for income of an approved company arising from funds managed in GMC by a fund manager provides that no approval may be granted after 31 December 2029. The parallel provision for an approved limited partnership structure, covering master funds, feeder funds and approved special purpose vehicles, contains the same cut-off. The enhanced tier exemption permits approvals only during the period from commencement of the section to 31 December 2029, both dates inclusive, and the exemption for prescribed sovereign fund entities and international organisations permits approval at any time between commencement and that date. For a fund promoter this is the tightest of the windows.
31 December 2030: the two headline company regimes close
Founders company. The Act exempts from tax the income of an approved founders company derived from a qualifying business carried on in a founders industry, being an industry the designated officer approves because it is not being carried on in GMC on a scale adequate to GMC's economic needs and, in the officer's opinion, has favourable prospects for development. Approval is granted where the officer is satisfied it is expedient in the public interest, subject to conditions, by a letter specifying the qualifying business, the date the exemption commences and its period. The total period of exemption, with all extensions, must not exceed fifteen years. No company may be approved as a founders company after 31 December 2030.
Strategic and development company. The Act permits a concessionary rate of not less than 5% on income derived from a specified trade or business by an approved strategic and development company. The letter of approval specifies the qualifying business, the rate, the commencement date and the relief period. The rate may later be substituted, but never below 5%. The total relief period with all extensions must not exceed twenty years. No company may be approved after 31 December 2030.
Read together, these are the provisions behind the 0% headline. Both are discretionary public-interest judgements by the designated officer, and both close to new entrants from 1 January 2031. Two further 2030 dates deserve a mention: no approval may be granted after that date under the innovation cost-sharing deduction, and no loan may be approved as an approved foreign loan after it.
31 December 2030: the personal tax window, which works differently
Every individual who is not a citizen of Bhutan, whether resident in GMC or not, is taxed at 0% on every dollar of chargeable income derived on or before 31 December 2030. Bhutanese citizens not resident in GMC are treated the same way. Bhutanese citizens resident in GMC pay a progressive scale beginning with a nil band on the first ten thousand dollars and rising to 15% above five hundred thousand dollars. All dollar figures in these statutes are United States dollars.
The difference in mechanism is worth noting. The company regimes close a door to new applicants in 2030 but let those already inside run for years afterwards. The personal regime has no approval at all: the relief attaches to income derived on or before 31 December 2030 and stops there. An executive who relocates in 2031 gets nothing from this provision, and an executive who relocated in 2026 gets nothing from it in respect of 2031 income either.
Why the approval date is the thing to plan around
| Relief | Closing date | What the date attaches to | Length once inside |
|---|---|---|---|
| Founders company | 31 Dec 2030 | Date of approval | Up to 15 years including extensions |
| Strategic and development company | 31 Dec 2030 | Date of approval | Up to 20 years including extensions |
| Fund and sovereign fund exemptions | 31 Dec 2029 | Date of approval | Set by the approval and regulations |
| Foreign, philanthropic and locally-administered trust reliefs | 1 Jan 2028 | Date the vehicle is constituted or incorporated | Ongoing while conditions met |
| Non-citizen individual 0% rate | 31 Dec 2030 | Date the income is derived | Ends with the date |
The planning consequence is blunt. For the company and fund regimes, what expires is admission, not entitlement. A strategic and development company approved in December 2030 can, in principle, hold a rate of not less than 5% into the 2040s. A company that files in January 2031 cannot obtain that rate at all.
Applications take time to process. Both company routes require the designated officer to be satisfied that approval is expedient in the public interest, on prescribed forms and particulars. For a regulated business the tax approval sits alongside incorporation and, where relevant, a licensing process that runs through in-principle approval and pre-conditions before a licence issues. A group that intends to be inside the founders company regime should be working backwards from 31 December 2030 with years, not months, of margin.
The founders company and strategic and development company regimes are both discretionary public-interest approvals. Conditions attached to an approval can be added, varied or deleted afterwards, and approvals can be revoked for contravention of the Act or of the conditions. An incentive is a continuing compliance obligation, not a one-off event.
None of this operates in isolation from the rest of the Act. The general anti-avoidance rule and its surcharge, the arm's length requirement, the transfer pricing documentation obligations and surcharge, and the exchange of information provisions all apply to companies holding incentives. A structure built purely to capture a rate is precisely the structure those provisions exist to address.
Frequently asked questions
Does GMC have 0% corporate tax?
No. The Income Tax Act 2025 sets the company rate at 15%. A full exemption is possible only for an approved founders company, for a capped period, and a concessionary rate of not less than 5% is possible only for an approved strategic and development company. Both close to new approvals on 31 December 2030.
If I am approved in 2030, does my exemption end in 2030?
No. The 2030 date is the last date on which an approval may be granted. The exemption or concessionary rate then runs for the period specified in the letter of approval, capped at fifteen years for a founders company and twenty years for a strategic and development company, including extensions.
I am relocating to GMC as an employee. What do I pay?
If you are not a citizen of Bhutan, the rate on your chargeable income derived on or before 31 December 2030 is 0%. The rate attaches to the date the income is derived, so the timing of a relocation matters.
Why is 1 January 2028 relevant to trusts?
Three trust-related exemptions exclude trusts constituted, and companies incorporated, on or after that date. A client who intends to rely on them needs the vehicle to exist before 2028.
The bottom line
GMC's incentive regime is generous, conditional and openly finite. The generosity is real: a full exemption for up to fifteen years, or a rate of not less than 5% for up to twenty, on a statutory basis rather than a concession letter. The conditionality is also real, because each regime turns on a public interest judgement and continues only while its conditions are met. What is not negotiable is the calendar. The trust window is already inside eighteen months. The fund window closes at the end of 2029. The two company regimes close at the end of 2030. Groups that intend to be inside those windows should be building the application now, and groups that cannot be should model 15% and be pleasantly surprised.
This article is general information about the law of the Gelephu Mindfulness City Special Administrative Region as at the date above. It is not legal advice and does not create a lawyer-client relationship.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
Sources
- Income Tax Act 2025 (Law No. 6 of 2025): s. 2AA (United States dollars); s. 13F(6) (foreign trust, 1 January 2028); s. 13L (philanthropic purpose trust foreign account, 1 January 2028); s. 13N (prescribed locally-administered trust, 1 January 2028); s. 13O(2) (no approval after 31 December 2029); s. 13OA(5) (no approval after 31 December 2029); s. 13T (eligible family-owned investment holding company); s. 13U(2) (approvals to 31 December 2029); s. 13V(2) (approvals to 31 December 2029); s. 13Y (founders company; s. 13Y(5) no approval after 31 December 2030; s. 13Y(8) fifteen-year cap); s. 14EB(5) (no approval after 31 December 2030); s. 33 and s. 33A (general anti-avoidance rule and surcharge); s. 34D, s. 34E, s. 34F (arm's length, transfer pricing surcharge and documentation); s. 37O (merger and acquisition allowance, capital expenditure to 31 December 2030); s. 42 and Second Schedule Part A Table 3; s. 43(1)(a), 43(1)(b), 43(1)(ba), 43(1)(c); s. 43D (strategic and development company; s. 43D(4) no approval after 31 December 2030; s. 43D(7) twenty-year cap); s. 43Y(4) (approved foreign loans, no approval after 31 December 2030); s. 108 and Seventh Schedule (advance rulings).
- Financial Services Act 2025 (Law No. 5 of 2025), Schedule 1.
