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, beneficiary relief that operates today and three trust exemptions that are written into the statute but not yet switched on. Knowing which of those rules is live matters more than anything else in the planning. 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 which tax rules operate today. This page sets out those rules and how we build a structure around them.
How we help
- Design 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.
- Prepare structures for the foreign trust, philanthropic purpose trust and locally-administered trust exemptions, which are enacted but not yet commenced.
- Identify whether a trustee needs GFSO permissions, including the trustee and nominee exclusion and the Trust Service Provider rules in the GEN Rulebook.
- Establish 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. 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 exists now. 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 exemptions are on the statute book but commence only on a date appointed by the designated officer by Gazette notification. 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. Regulations under each exemption have not yet been made.
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 an engagement runs
- Objectives review: settlor and beneficiary residence and citizenship, asset classes, control and succession aims.
- Structure paper: 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 any GCRO registrations.
- Tax filing plan for the trustee and the beneficiaries, with monitoring of the Gazette for commencement of 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 today?
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.
Are the foreign trust and local trust exemptions in force?
No. The foreign trust, philanthropic purpose trust and locally-administered trust exemptions commence on a date to be appointed by Gazette notification. They also 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.
Talk to GMC counsel on the ground
Basnet Law Pte. Ltd. is the first law firm incorporated in the Gelephu Mindfulness City. A short conversation early in a matter usually saves time and cost later. Write to basnet@basnetgmc.com or office@basnetgmc.com with a few lines about your plans, and we will tell you plainly what is needed, how long it takes, and whether we are the right fit.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
