A family looking at the Gelephu Mindfulness City Special Administrative Region (GMC) for a trust gets a common-law jurisdiction with a US-dollar tax code, statutory beneficiary relief and three trust exemptions written into the statute. GMC applies the common law and equity of established common law jurisdictions, including the law of trusts, under the Application of Laws Act 2024, and its Income Tax Act 2025 contains a full set of trust provisions. Basnet Law Pte. Ltd. is the first law firm incorporated in GMC. We structure trusts and holding arrangements for international families and explain precisely how the tax rules apply. This page sets out those rules and how we build a structure around them.
Our legal advisory
- Advise on the design of trust and holding company structures under GMC's received common law and equity.
- Advise on how the trustee is taxed under the Income Tax Act 2025 and how beneficiaries resident in GMC are treated.
- Advise on structures for the foreign trust, philanthropic purpose trust and locally-administered trust exemptions.
- Identify whether a trustee needs GFSO permissions, including the trustee and nominee exclusion and the Trust Service Provider rules in the GEN Rulebook.
- Advise on underlying GMC companies, LPs or LLPs and document succession, protector and reserved-power provisions.
How GMC trust law works, in plain terms
Trustees are taxable persons under the Act. The Income Tax Act 2025 charges a "trustee (other than the trustee of an incapacitated person) and executor" at 15% on every dollar of chargeable income. Where a trustee proves that a beneficiary is entitled to a share of the trust income, the Comptroller may charge that share at a lower rate or not at all. A receiver, trustee, guardian or curator managing property for an incapacitated person is chargeable as that person would be, and not for more.
Beneficiary-level relief is built in. Where a GMC-resident beneficiary is entitled to a share of trust statutory income, that share is exempt in the beneficiary's hands if it would have been exempt had it been received directly, and a concessionary rate flows through in the same way. Estates administered in GMC receive parallel treatment.
Three further exemptions are provided by the Act. The foreign trust exemption covers prescribed income of a foreign trust, and of an eligible holding company for it, administered by a trustee company in GMC, with beneficiaries who are neither citizens of Bhutan nor resident in GMC. The philanthropic purpose trust exemption covers income of the foreign account of a philanthropic purpose trust administered by a trustee company. The locally-administered trust exemption covers relevant income of a prescribed locally-administered trust whose settlors are individuals and whose beneficiaries are individuals or charities. Each excludes trusts constituted, and companies incorporated, on or after 1 January 2028. "Trustee company" means a company licensed under laws providing for the licensing of trust companies, or exempted from that licence, and we confirm the applicable licensing regime at engagement.
Who this is for
- International families using a GMC trust or trust-owned holding company for succession.
- Settlors who want a common-law trust in a USD jurisdiction with statutory beneficiary relief.
- Philanthropists establishing purpose trusts with GMC administration.
- Trust companies considering GMC as a place of administration.
How a legal advisory engagement runs
- Objectives review: settlor and beneficiary residence and citizenship, asset classes, control and succession aims.
- Structure paper: advice on trust type, trustee, underlying vehicles, and which exemptions the structure is designed to qualify for, so you can decide on a single document.
- Regulatory check: trustee licensing needs and the trustee and nominee exclusion analysis.
- Drafting: trust deed, letters of wishes, company constitutions, and advice on any GCRO registrations.
- Advice on tax filing plan for the trustee and the beneficiaries, designed around the three trust exemptions.
Frequently asked questions
Is a trust recognised in GMC?
Yes. The Application of Laws Act 2024 applies the received common law and equity in GMC so far as suited to its circumstances, and the Income Tax Act 2025 addresses trustees and beneficiaries expressly.
How is a GMC trust taxed?
The trustee pays 15% on chargeable income, subject to the Comptroller's power to tax a beneficiary's share at a lower rate. GMC-resident beneficiaries benefit from the flow-through of exemptions and concessionary rates. We model the position for each beneficiary before the trust is settled.
When should a trust be constituted to use the foreign trust and local trust exemptions?
The foreign trust, philanthropic purpose trust and locally-administered trust exemptions apply only to trusts constituted before 1 January 2028, which makes early establishment relevant, and we plan the timetable around it.
Does a private trustee need a GFSO licence?
Acting as a bare trustee on instructions is excluded from dealing, and the same exclusion is applied to custody. A professional trust business is different, and a Trust Service Provider's compliance officer and MLRO may not also act as trustees under the GEN Rulebook. We check which side of that line your trustee falls on.
Contact
Basnet Law Pte. Ltd. is the first law firm incorporated in the Gelephu Mindfulness City.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
