March 15, 2025
Incorporating an LLC in Bhutan: Essential Steps and Insights for Entrepreneurs
Bhutan, known for its breathtaking landscapes, rich cultural heritage, and commitment to sustainability, is also becoming an increasingly attractive destination for business ventures. With its emphasis on Gross National Happiness (GNH) and a growing economy, the Kingdom of Bhutan offers unique opportunities for entrepreneurs seeking to establish a business. This guide provides an insightful overview of the process, benefits, and key considerations for incorporating a Limited Liability Company (LLC) in Bhutan.
Why Choose Bhutan for Incorporating an LLC?
Before diving into the practicalities of incorporation, it’s essential to explore why Bhutan may be an appealing destination for businesses:
- Political Stability: Bhutan is known for its stable political environment, with a well-established monarchy and democratic governance. The country’s commitment to sustainable development and focus on GNH make it an attractive location for businesses that align with these values.
- Growing Economy: Bhutan’s economy has experienced steady growth, primarily driven by hydropower, tourism, and agriculture. The government has been making efforts to diversify its economy by encouraging foreign investment and entrepreneurship in sectors such as technology, retail, and services.
- Favorable Business Environment: Bhutan’s government offers various incentives for foreign investment, including tax exemptions and preferential policies for companies contributing to the country’s sustainable development.
- Strategic Location: Bhutan’s proximity to major markets such as India, China, and Southeast Asia offers great potential for regional trade and access to international supply chains.
What is an LLC?
A Limited Liability Company (LLC) is one of the most common business structures worldwide. An LLC in Bhutan is a private company with limited liability, which means that the shareholders’ personal assets are protected from the company’s debts and liabilities. LLCs are suited for small and medium-sized businesses that want flexibility in management and ownership, without the need for a large, formal corporate structure.
The Legal Framework for LLCs in Bhutan
The primary legal framework governing LLCs in Bhutan is the Companies Act of Bhutan, 2000. This legislation provides the legal foundation for the registration, management, and operation of companies in Bhutan. The Ministry of Economic Affairs (MoEA) and the Department of Industry (DoI) are the primary authorities responsible for overseeing the incorporation and regulation of businesses.
Key regulations include:
- Foreign Direct Investment (FDI): Bhutan allows foreign ownership of companies, though certain industries are restricted for foreign investment. Foreign investors are permitted to hold up to 100% ownership in an LLC, subject to certain conditions.
- Registered Office: Every LLC must have a registered office in Bhutan.
- Directors and Shareholders: An LLC in Bhutan must have at least two directors, one of whom must be a resident of Bhutan. The company can be owned by foreign nationals, with the only condition being that the directors and shareholders comply with Bhutanese law.
Steps to Incorporate an LLC in Bhutan
The process of incorporating an LLC in Bhutan involves several steps, many of which can be completed relatively quickly. Here’s a step-by-step guide:
Step 1: Choose a Business Name
A unique name must be chosen for the LLC that complies with Bhutanese regulations. The name must not be identical to an existing company, and it should reflect the nature of the business.
Step 2: Prepare Required Documents
Several key documents must be prepared, including:
- A completed application form
- Copies of identification for shareholders and directors (valid passports or national IDs)
- Proof of address (residential or business)
- A business plan outlining the company’s objectives
- The company’s Articles of Association (AOA), which defines the internal management structure and operational rules for the LLC.
Step 3: Register with the Department of Industry (DoI)
The application and required documents must be submitted to the Department of Industry (DoI) for approval. The DoI will process the application, check for compliance with Bhutanese regulations, and ensure the business activities align with national policies.
Step 4: Obtain a Business License
Once the company is registered, a business license must be obtained from the Ministry of Economic Affairs (MoEA). This license allows the business to operate legally in Bhutan.
Step 5: Register for Taxes
After obtaining the business license, the LLC must be registered for taxes with the Bhutanese tax authorities. This includes acquiring a Tax Identification Number (TIN) and registering for the Goods and Services Tax (GST) if the company’s annual turnover exceeds a certain threshold.
Step 6: Open a Corporate Bank Account
A corporate bank account must be opened in Bhutan to manage the company’s finances. Most banks in Bhutan offer services to LLCs, and business registration documents and identification will be required when opening an account.
Step 7: Comply with Local Employment Laws
If employees are hired in Bhutan, the company must comply with the country’s labor laws. This includes adhering to wage laws, employee benefits, and work permits for expatriate staff.
- Taxation and Financial Considerations
Bhutan’s tax regime for LLCs is relatively straightforward. The key taxes to consider when operating an LLC in Bhutan include:
- Corporate Income Tax: Bhutan’s corporate tax rate is set at 30%, with potential exemptions or reductions available for businesses that contribute to the country’s sustainable development, such as those involved in renewable energy, technology, or tourism.
- Goods and Services Tax (GST): Companies that earn more than a certain threshold in revenue must register for GST, which is currently set at a rate of 5% for most goods and services.
- Dividend Tax: Bhutan does not impose a dividend tax on profits distributed to shareholders.
- Customs Duties and Import Taxes: Bhutan imposes customs duties on imported goods, although there are exceptions for certain industries that align with national development goals.
Benefits of Incorporating an LLC in Bhutan
- Limited Liability Protection: Shareholders’ liability is limited to the extent of their investment in the company, protecting personal assets from business debts.
- Flexible Business Structure: An LLC offers flexibility in ownership, management, and operations, allowing owners to define the structure and functions that suit their needs.
- Supportive Government Policies: The government’s focus on sustainable development, economic diversification, and foreign investment makes it easier for businesses to thrive.
Conclusion: Unlocking Business Potential in Bhutan
Incorporating an LLC in Bhutan presents an exciting opportunity for entrepreneurs seeking to tap into a growing economy with a focus on sustainability and innovation. The process is relatively straightforward, though careful attention must be paid to regulatory requirements and local business practices. With the right approach and a strategic business plan, Bhutan offers a unique environment for companies that value political stability, a favorable business environment, and a commitment to sustainable development.
Understanding the process, legal framework, and advantages of incorporating an LLC in Bhutan allows for making informed decisions and setting the business on the path to success in this beautiful and increasingly dynamic nation.
For more information or queries, please email us at
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Key Contact
Surendra Singh Chandrawat
Managing Partner
