The Bhutanese Leading the way.
The Department of Revenue and Customs (DRC) under the Ministry of Finance (MoF), in a letter addressed to 42 vehicle and bike dealers in the country on 15th July 2025, has come out with a solution on the difficulties faced by them in selling vehicles in 2025 due to the expected tax drop from 1st January 2026.
The main concern for the dealers was that they would be left with a huge stock of unsold and higher taxed vehicles in 2025.
DRC said it is fully aware of the difficult position many vehicle dealers currently face. The market reaction to the upcoming tax changes, particularly the expected drop in vehicle prices, has led to cancelled orders, unsold inventory, and tightening cash flows across the sector.
“In direct response to these concerns, the DRC is introducing a targeted, time-bound relief measure to support the automobile trade during this critical transition. Effective immediately, all licensed vehicle dealers are offered the opportunity to register as Warehouse Operators, without any conditions required for warehouse operators,” said the letter.
The main benefit is that Registered Warehouse Operators will not be required to pay Customs Duty, Green Tax, or any other applicable taxes at the time of import. Also, all showrooms and store rooms will be treated as warehouses.
Instead, tax obligations will arise only at the time of sale or removal of the vehicle from the warehouse.
This means that only if a customer buys a vehicle, then the dealer will have to pay the current taxes.
Importantly, this tax deferral facility may continue even after 1st January 2026, when Excise Tax becomes payable at the point of import for all others. Warehouse Operators will be required to pay the Excise Tax only when the vehicle is removed from stock, during the import declaration, thereby continuing to benefit from deferred tax payment treatment.
DRC said by deferring tax payments, dealers can retain working capital to meet day-to-day business expenses, settle liabilities, and manage payroll and inventory holding costs during a period of depressed sales. This financial flexibility is crucial to ensuring continuity of business operations through the transition.
All standard requirements for warehouse registration such as infrastructure conditions, licensing history, and financial bonds were temporarily waived.
This ensures that all dealers, regardless of prior experience with warehousing, can access the facility.
DRC said this relief measure is not a routine or normal facilitation. It is a strategic response to a market-wide disruption and a recognition of the operational strain faced by the vehicle trade.
The department said it expects all serious and responsible dealers to act promptly and take full advantage of this facility.
The dealers were requested to register by end of the business on 18th July 2025 which means this is cutoff date. DRC said failure to register within the time provided will result in the loss of tax deferral benefits and full upfront tax obligations at the time of import, under current tax law.
The relief measure by DRC has elicited a mainly positive, but still cautious reaction by dealers.
An official from Zimdra said that the above is a very small respite, as there will virtually be no sales for five months, and in this time, there will be operating costs like salaries, loans, etc.
Another dealer said that ‘something is better than nothing’ as warehousing will mean they can avoid paying upfront taxes, and so it gives them a little space to breathe. The dealer said that in the next five months, the business will be low and so they hope that the quota holders will buy their vehicles as quotas expire by 2025 December.
A STCBL official said that warehousing is very useful for them as they import vehicles based on orders, and so they do not have much of an old stock before 18th July 2025 and for the new entries, they can be warehoused and then picked up in January 2026 as customers have been convinced to postpone their orders.
Another dealer said the main worry is in the older stock before 18th July 2025 for which Green Tax is already paid, and so it is hoped that there is some refund or tax adjustment for them if they cannot be sold.
