The Bhutanese Leading the way.
During the sectoral consultation on tax differentials and impact on pre-GST stock at the Bhutan Chamber of Commerce & Industry (BCCI), several sectors, including automobile, ICT, and hardware businesses, have raised concerns over the government’s decision to implement the 5 percent Goods and Services Tax (GST) beginning January 2026.
According to these businesses, the transition to the new tax regime is expected to cause significant financial losses, especially for goods that have already been taxed under the current system.
In the automobile sector, companies reported a sharp rise in cancellations following the GST announcement. One automobile company said it has 75 cars in stock for which it will have to pay almost Nu 10 million (mn) in Excise Tax. The company added that 300 customers have already ordered vehicles for next year, and at the point of entry, they expect to pay approximately Nu 40 mn in taxes for those units.
The company also stated that the cars currently in stock have already been levied with the Green Tax (GT), which they have paid. With the GST regime coming into effect next year, they expressed concern that they would experience double taxation. They suggested that having a bonded warehouse could help address the issue. A bonded warehouse is a customs-controlled facility where imported goods can be stored until the applicable duties are paid.
Workshops and business owners dealing in vehicle spare parts also expressed similar concerns. They said they hold parts purchased years ago on which taxes have already been paid. When GST is implemented, they fear they will be forced to sell these items at a loss, as new imports brought in under the GST system will be cheaper, creating fierce competition.
The ICT sector also voiced similar concerns.
Businesses in the hardware sector reported that they have already paid the 10 percent Bhutan Sales Tax (BST) on their current stock. They said that starting January 2026, they would be required to pay the 5 percent GST, putting them at a disadvantage. They added that they have already appealed to the Ministry of Finance regarding this issue and although they received a response, no solutions or alternatives were provided.
