Read the Income Tax Act 2025 of the Gelephu Mindfulness City Special Administrative Region from the front and the first number you meet is 15%. That is the company rate, charged on every dollar of chargeable income, and it is the number that governs unless you have a letter of approval in your file saying otherwise. Everything that follows in this article is about how you get that letter, who is realistically going to get one, and which of these reliefs fits your business. The answer is less generous than the headlines and considerably more useful than they suggest.
In short
- The headline company rate in GMC is 15%. The widely repeated claim of "0% corporate tax" is wrong as a general statement.
- An approved founders company pays no tax on income from a qualifying business in an approved founders industry. Approvals close on 31 December 2030 and the total exemption period, including every extension, cannot exceed 15 years.
- A strategic and development company can be approved for a concessionary rate of not less than 5%, with approvals also closing on 31 December 2030 and a total relief period capped at 20 years.
- An eligible family-owned investment holding company enjoys an exemption of its relevant income, with the shareholder relationship test set by regulations.
- The fund manager exemptions for GMC companies, for partners of approved limited partnerships and for approved master-feeder and SPV structures share a hard approval window that ends on 31 December 2029, earlier than the founders and strategic windows.
- Dollar figures in GMC law mean United States dollars. That is written into the Act, not a market convention.
Persona one: the founder who is moving the operating business
The founders company exemption is the most aggressive relief in the Act and the most misunderstood. It does not exempt founders. It exempts a company, and only its income from a trade or business carried on in a founders industry.
A founders industry is not a list you can look up. Under the Income Tax Act 2025 the designated officer may approve an industry as a founders industry where the industry is not being carried on in GMC on a scale adequate to the economic needs of GMC, and in the officer's opinion there are favourable prospects for its development. The approval must also be expedient in the public interest. That is a policy test, not an accounting test, and it is designed to reward the firm that brings a new industry to GMC.
The mechanics matter. The company applies in writing in the prescribed form. If approved, it receives a letter of approval specifying the qualifying business, the date the exemption commences and the period of exemption. The officer can later amend that letter, moving the commencement date, changing the qualifying business, or extending the exemption. The outer limit is absolute: the total exemption period, with all extensions, cannot exceed 15 years.
Two conditions catch people out. First, if the founders company carries on any trade or business other than the approved qualifying business, it must maintain separate accounts for that separate business for the same accounting period, and that other income is taxed normally. Second, capital allowances are deemed taken into account in computing the exempt income whether or not you claimed them. Approval can be revoked for breach, and the Comptroller can raise an additional assessment to claw back income that should not have been exempted.
The strategic and development company route is the sibling provision and the more realistic one for an established business. It gives a concessionary rate specified in the letter of approval, which must be not less than 5%, on income from a specified qualifying business. The letter sets the rate, the commencement date and the relief period, with extensions possible up to a total of 20 years.
Both windows close to new approvals on 31 December 2030. A founder planning a 2031 move should assume the 15% rate.
| Vehicle | Rate | Approval cut-off | Maximum period |
|---|---|---|---|
| Founders company | Exempt | 31 December 2030 | 15 years including extensions |
| Strategic and development company | Not less than 5% | 31 December 2030 | 20 years including extensions |
| Default company rate | 15% | Not applicable | Not applicable |
Persona two: the family office
The Income Tax Act 2025 contains a dedicated exemption for the relevant income of an eligible family-owned investment holding company. The structure of the provision is worth understanding before you plan around it.
An eligible family-owned investment holding company is a company whose shareholders are related to each other in the manner prescribed by regulations, whose operation consists wholly or mainly of the holding or making of investments, and which satisfies such other conditions as may be prescribed. Relevant income is defined by reference to specified categories of income accrued in or derived from GMC, together with certain foreign income received in GMC.
The Act leaves the family relationship, any asset threshold, local spend or headcount requirement to regulations made by the designated officer. The Act also contains a severe cliff: if a company fails to satisfy the definition in any basis period, the section stops applying in every subsequent basis period, even if the company satisfies the definition again later. A structure that drifts out of compliance for one year loses the relief permanently.
The ordinary rules are attractive in themselves: dividends paid by a company resident in GMC are exempt, and there is a specific exemption for gains or profits on the disposal of ordinary and preference shares where the divesting company has held at least 20% for a continuous period of at least 24 months, subject to the conditions and exclusions in the Act.
For most families that combination already does a great deal of work. Build the structure so that it qualifies for the family office exemption from the outset.
Persona three: the fund manager
There are three fund-related exemptions and they map onto three different structures.
The first exempts prescribed income of an approved company incorporated and resident in GMC arising from funds managed in GMC by a fund manager, or by a person approved by the designated officer or an authorised body. This is the single-vehicle fund.
The second does the same work for a limited partnership. It exempts prescribed income of a partner of an approved limited partnership registered under written laws providing for the establishment and regulation of limited partnerships, again arising from funds managed in GMC by a fund manager. GMC now has its own Limited Partnerships Act 2026, so the vehicle referred to exists locally.
The third is the structural provision. It covers approved persons, approved master-feeder fund structures, master-feeder fund-SPV structures and master fund-SPV structures, reaching companies, trustees of trust funds, partners of partnerships including limited partnerships and limited liability partnerships, and taxable entities where the fund is not a legal entity. If you are running an institutional structure with a master fund, feeder funds and special purpose vehicles, this is the provision that matters.
Three features are common to all three and should drive your timetable.
- The exemption is approval based. Nothing is automatic. Approval carries conditions that the designated officer or an authorised body may add to, vary or delete at any time, communicated to the holder or published.
- The approval window closes on 31 December 2029. That is a year earlier than the founders and strategic windows. It is the tightest deadline in the Act for asset managers.
- The regulations define the exempt income. Each exemption applies to such income as the designated officer may by regulations prescribe, so the regulations are not optional detail, they are load bearing.
There is also a concentration penalty built into the company and limited partnership versions. Where a single owner, alone or with associates, beneficially owns more than a prescribed percentage of the issued securities or equity interests on the relevant day, that owner becomes liable to a penalty computed by reference to the fund's income and the 15% company rate. The percentage is prescribed rather than stated in the Act. The policy is plain enough: these are exemptions for pooled money, not for a single principal's balance sheet in a fund wrapper.
The Act defines a fund manager as a company holding a licence to carry on fund management business under the written laws regulating the securities and derivatives industry, or a company exempted from holding such a licence. In GMC that licence comes from the Gelephu Financial Services Office. The tax relief and the regulatory licence are a single project, not two.
Frequently asked questions
Is corporate tax really 0% in GMC?
No. The Income Tax Act 2025 sets the company rate at 15% on every dollar of chargeable income. Zero is available only to an approved founders company, only for income from the approved qualifying business, and only for a period stated in the letter of approval that cannot exceed 15 years in total.
What is the deadline to apply for the founders company exemption?
No company may be approved as a founders company after 31 December 2030. The same date applies to approvals as a strategic and development company. The fund manager exemptions have an earlier window, closing on 31 December 2029.
Can I set up a family office in GMC now?
You can incorporate and operate a family investment holding company now. The dedicated exemption for an eligible family-owned investment holding company exempts its relevant income, and the dividend exemption for GMC-resident company dividends and the share disposal exemption are available under the general rules.
Do I need a licence as well as tax approval to run a fund in GMC?
In practice yes. The tax definition of a fund manager points to a licensed fund management business, and managing a collective investment fund and managing assets are regulated activities under the Financial Services Act 2025. Plan the licence application and the tax approval together.
Which currency do these thresholds use?
United States dollars. The Income Tax Act requires tax computations and particulars of income to be denominated in US dollars, with a defined exception where a person's functional currency under financial reporting standards is something else.
The bottom line
GMC has built three distinct doors and labelled them clearly: a discretionary full exemption for businesses that bring a new industry to the city, a negotiated concessionary rate of at least 5% for strategically important companies, and a set of fund and family office exemptions modelled on the architecture of a mature asset management centre. Two of those doors close to new applicants at the end of 2030, and the fund doors close a year earlier. The correct response to a regime with dated windows is to move early, engage the tax team at GMCA, and build the structure so that it qualifies under the regulations. Basnet Law Pte. Ltd. is on the ground in Gelephu and advises international clients on exactly these questions.
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.13(1)(za) (dividends of GMC-resident companies); s.13O (exemption for approved company, funds managed by fund manager, approvals to 31 December 2029); s.13OA (partners of approved limited partnership, approvals to 31 December 2029); s.13T (eligible family-owned investment holding company); s.13U (approved persons and master-feeder and SPV structures, approvals to 31 December 2029); s.13W (disposal of ordinary and preference shares); s.13Y (founders company; s.13Y(5) approval cut-off 31 December 2030; s.13Y(8) 15 year cap); s.43(1)(a) (15% company rate); s.43D (strategic and development company, not less than 5%; s.43D(4) cut-off 31 December 2030; s.43D(7) 20 year cap); s.62A and s.62B (US dollar); s.108 (advance rulings); definition of "fund manager" in s.2.
- Companies Act 2025 (Law No. 1 of 2025).
- Limited Partnerships Act 2026 (Law No. 3 of 2026).
- Financial Services Act 2025 (Law No. 5 of 2025): Schedule 1 Part 2 paragraphs 56 and 59.
