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Subsidiaries in Bhutan

Owing to its increasing foreign investment, Bhutan has become a preferred location for businesses to establish legal entities. The country offers high political stability, transparency, and a sustainable approach to business development. 

Establishing a subsidiary in Bhutan allows companies to grow their business there and acquire the outstanding benefits of their progressing economy. Also, it boasts one of the most reasonable and easily approachable methods for exploring the Bhutan market. Maintaining compliance with the relevant laws while establishing a subsidiary in Bhutan is easy.

The following sections guide you through all the vital details you must know before setting up a subsidiary in Bhutan.

What are the Types of Subsidiaries in Bhutan?

The following section describes the different types of subsidiaries you should know before setting up a subsidiary system in Bhutan.

Public Company

  • This form of subsidiary business in Bhutan is sanctioned to offer shares to the public, but by following the conditions laid by the Regulatory Authority and Securities Exchange.
  • A public company needs the minimum prescribed allotted share capital.
  • It requires at least a company secretary and three directors.
  • Public companies should have ‘Limited’ as the suffix at the end of the company name.
  • It is allowed to re-register a public company as a private company. For that, it is necessary to pass a special resolution, make changes in the Articles of Incorporation, comply with supplementary requirements (if any), and apply for re-registration.

Private Company

  • This type of subsidiary business in Bhutan cannot offer its shares to the public.
  • A private company in Bhutan must have at least two directors.
  • Private companies should have ‘Private Limited’ as the suffix at the end of the company name.
  • It is allowed to re-register a private company as a public company for this type of subsidiary business in Bhutan. For that, it is essential to fulfil all formation requirements defined for a public company, change the Articles of Incorporation, pass a special resolution, comply with supplementary requirements (if any), and apply for re-registration.


  • Firms undertaking industrial and commercial activity in this form of subsidiary business in Bhutan should acquire a licence from the Ministry of Economic Affairs.

How to Set Up a Subsidiary in Bhutan?

The following steps will help you establish a subsidiary company in Bhutan: 

Step 1: Select a company name 

  • Prepare multiple names for your company to register its subsidiary business in Bhutan. It helps if the first proposed name is inaccessible for registration.
  • Register the business with the Corporate Regulatory Authority of Bhutan. Confirm that the company name doesn’t resemble the already registered ones.

Step 2: Prepare the required documents

  • For registration of subsidiary business in Bhutan, the foreign company should provide Powers of Attorney (POA) to its local authorized agent for registration.
  • Prepare the memorandum and articles of association with company and shareholders’ details in it. 

Step 3: Designate directors

  • Designate at least one director and one shareholder for your subsidiary. They can be individuals or companies.

Step 4: Obtain business approval from the Bhutan Investment Promotion Authority (BIPA)

  • Companies establishing a business in Bhutan need to get approval from BIPA. 
  • For this, they have to submit an application with the necessary documents and pay the required fees. 

Step 5: Company registration

Step 6: Business bank account

  • Open a bank account for your subsidiary in Bhutan.
  • You must deposit the minimum required share capital in your bank account, as per the type of your subsidiary.

Step 7: Register for TPN

  • Obtain a Taxpayer Number (TPN) from the Department of Revenue and Customs (DRC).
  • Attach documents like a Certificate of Incorporation, a Certificate to commence business,  and a Company’s Regulation. 

Benefits of Setting Up a Bhutan Subsidiary

Here are the benefits of setting up a subsidiary company in Bhutan.

  • The taxes, liabilities, and governance are independent of any subsidiary company.
  • One of the prominent benefits of setting up a subsidiary company in Bhutan is that it can raise funds by borrowing from financial institutions and banks.
  • The incorporation of a foreign subsidiary in Bhutan allows the parent company to increase its reach and gain high profits. Also, it lets them access more prospects and explore different markets.
  • It lets the parent company offer shares as their own portion and boosts investments. The parent company can raise the fund without the risk of altering its stock value.
  • Once the subsidiary business in Bhutan is set up, the businesses can recruit local employees who are experienced in exploring the local market and relevant opportunities.

Documents to Prepare When Opening a Subsidiary in Bhutan

Companies must prepare the following documents when applying for incorporation of subsidiary business in Bhutan :

  • Articles of Association and Memorandum
  • Certificate of Incorporation of the foreign investor company (must be notarized by a licensed public notary)
  • Article of Incorporation of the foreign investor company (must be notarized by a licensed public notary)
  • The company name’s consultation certificate
  • Identification documents (ID card or passport) of the company secretary,  shareholders,  directors, and legal representative
  • Tax Identification Number (TIN)
  • Application letter from the investor that claims participation in bidding for a license
  • Company partners’ proof of residence
  • A reference letter from a bank stating that the shareholders, directors, and company secretary have an account registered with the bank
  • Bank certificate validating the deposit of capital
  • The proposal from the investor involves a business plan and technical specification.
  • Company’s income statement and balance sheet 
  • Legal police clearance certificate (SCC)

What Business Forms Can Bhutan Subsidiaries Take?

Generally, subsidiaries in Bhutan can adopt one of the below standard subsidiary forms:

  • Public Limited Companies
  • Private Limited Companies
  • Partnerships

As per the requirements and the business plan, the company can select the most appropriate subsidiary form for setting up a subsidiary in Bhutan. 

Bhutan Subsidiary Laws

The company’s director and investor must be at least 18 to start a subsidiary business in Bhutan. Some other subsidiary laws include: 

  • The Ministry of Trade and Industry and its subsidiary agencies administer corporations and other legal bodies.
  • License to start a business as a Bhutan corporation demands the discretional approval of the Minister of Trade and Industry.
  • Bhutanese law disallows the employment of foreigners without obtaining permits from the Chief Labour Administrator.
  • If any individual(s) illegally conducts business under any name in which the words like “Limited” or“Private Limited”  are included, then the Registrar may levy a fine on those individual(s). The fine can be up to  Nu. 1000 or an additional fine up to  Nu. 50 days till the default is fixed.

Post-Incorporation Compliance

The following aspects are important to consider under the compliance checklist for the incorporation of foreign subsidiaries in Bhutan:

  • Obtain the unique company number
  • Obtain the incorporation certificate from the Registrar of Companies
  • The shareholder must acquire a share certificate
  • The shares of a wholly owned subsidiary may be subscribed by the holding company and its candidates for and in lieu of the holding company.
  • After establishing a subsidiary business in Bhutan, you must manage payroll withholdings, banking principles, local tax laws, and employment requirements.
  • Submit all the data of the shareholders to the Registrar.

Taxes on Subsidiaries in Bhutan

A subsidiary in Bhutan is subject to the following taxes:



Capital gains


Personal income tax

0% – 30% (based on income)

Corporate income tax


Withholding tax

10% on dividends funded by Bhutan resident entities to non-residents

5% on interest funded by Bhutan resident entities to non-residents

Property transfer tax


Sales tax rate




Tax Incentives for Businesses Setting Up a Subsidiary in Bhutan

Irrespective of the business sector, here are the benefits of incentives for taxation of foreign subsidiaries in Bhutan:

  • In Bhutan, the term ‘bonus’ covers all incentives or productivity-focused payments released to an employee. The total bonus entitled to an employee is either up to 10% of the estimated net profit or three months’ basic pay per employee, whichever is lesser.
  • Tax exemption is provided on all income for small and micro businesses in rural areas until 31st December 2024.
  • Tax exemption is provided on interest income gained from discriminatory money lending by financial institutions until 31st December 2026.
  • An extra 100% deduction is offered for the employment of further Bhutanese nationals for three years, until 31st December 2026.
  • An extra 30% deduction is offered for locally manufactured construction materials procured for construction projects up to 31st December 2026.
  • A 3% withholding tax deduction for domestic airline companies is provided on aircraft lease payments.
  • Customs Duty (CD) and Several Sales Tax (ST)  incentives are offered upon fulfilling certain conditions and after Ministry approval. 
  • A concessionary CD rate of 3% applies to primary packaging material and permissible raw material.

Other Important Considerations

In addition to the compliance checklist for incorporation of foreign subsidiaries in Bhutan, keep in mind the considerations below.

  • You must be thoroughly familiar with your business undertakings and the intention behind registering. These aspects should be clarified before starting the procedure of subsidiary company formation in Bhutan.
  • The process of incorporation of a foreign subsidiary in Bhutan must be error-free and reliable. In contrast, it can lead to fines, penalties, and a delayed setup process.
  • While establishing a subsidiary system in Bhutan, you should consider residence permits, account insurance, registration with the federal tax governance, and registration for any required licences.
  • You must consider the total expenses and travel costs before incorporating a subsidiary system in Bhutan.

How Can Multiplier’s Employer of Record Help You Hire & Expand in Bhutan?

Multiplier administers all the applicable regulations, from onboarding skilled employees to payroll processing, when developing the business in a foreign country. Moreover, it eliminates the need to establish a subsidiary allowing companies to explore newer markets. Multiplier also helps you to recruit local and global talent while adhering to Bhutan’s regulations and labor laws.

Frequently Asked Questions

The time required to incorporate a company in Bhutan relies on the company type you intend to register. If all the necessary documents are sent to the Registrar and other relevant legal authorities, it takes approx. 12 days to start a subsidiary business in Bhutan.

Two accounting standards are used in Bhutan to encourage superior quality financial reporting and auditing standards consistent with international best practices. These are the Bhutanese Standards on Auditing (BSA) and Bhutanese Accounting Standards (BAS).

A Bhutan subsidiary’s three key accounting requirements are stated below:

(i) Get a Taxpayer Number (TPN) from the Department of Revenue and Customs (DRC).

(ii) The company’s registered office must regularly maintain the accounting records.

(iii) Register for VAT.

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