The Bhutanese Leading the way.
The Ministry of Industry, Commerce and Employment (MoICE) has proposed a comprehensive set of fiscal incentives for industrial development.
Concessionary tax rates are proposed at 5% for priority industries that generate strong employment, adopt sustainable practices, or operate in districts with high poverty levels, and 10% for businesses in sectors listed under the industrial development strategy.
Investment allowances are proposed to be expanded to cover fixed capital goods, intangible assets such as R&D and intellectual property rights, green technologies, and digital systems. Exemptions on GST and customs duties would include plants and machinery, raw materials, inputs for circular economy initiatives, eco-label certified materials, and energy-efficient technologies.
For creative industries, tax exemptions are for those employing a minimum of five national employees.
Relevant sectors targeted by these incentives include renewable energy; data centers, ICT and IT-enabled services; medical products encompassing modern and traditional medicine; agro-processing for organic and high-value crops; forestry-based engineered and value-added wood products; tourism focused on eco-tourism and wellness; creative industries including film, music, digital content, and OTT platforms. Mineral-based industries beyond basic processing, and education industries.
Businesses employing at least 20% nationals with skill training would receive an additional 100% deduction on employee emoluments for up to three years. Export growth of a minimum 15% year-on-year would qualify companies for a tax credit of up to 5% on the incremental export value for agricultural and value-added products.
Industries sourcing at least 50% of their raw materials domestically would be eligible for a GST refund or a 5% tax credit. Companies investing at least 5% of their revenue in research and development would qualify for a 5% tax credit on 10% of the eligible R&D expenditure. Sustainable producers with third-party green certification would receive a two-year income tax holiday.
Businesses that replace 30% or more of the value of imported final products with local production would gain an additional 10% deduction on net sales revenue related to those products. Investments in recognized industry-specific capacity building and training would qualify for a 100% deduction of related expenditures. Income generated from commercialization of patents, or traditional knowledge products would be exempt from income tax for the first three years, provided relevant authorities approve the patents.
