Finance Minister Lekey Dorji introduces Income Tax Bill 2025, introducing reforms including revised personal income tax, lower corporate tax rates, and modernization of tax administration. The proposed tax reform in Bhutan introduces a graduated system with seven income brackets, ensuring a fairer distribution of tax burden. The proposed Income Tax Bill 2025 aims to reduce government revenue by Nu 252.43 million, exempt 34,397 individual taxpayers, and introduce a uniform corporate tax rate of 22%, eliminating taxes on inter-corporate dividend payments.
The bill introduces a 10% final withholding tax on dividend and interest income, potentially causing a revenue loss of Nu 2.95 billion from 39 companies, with increased dividend payouts potentially offset. The Bhutanese government plans to streamline the tax system for the 2025 GST introduction, including housing loan interest deductions and Parenthood Tax Deductions, to boost productivity and domestic revenue.