What’s changing

Bhutan has confirmed the implementation of its Goods and Services Tax (GST) from 1 January 2026, formally replacing the existing sales and excise tax framework. The regime will apply a single 5% GST rate and introduce VAT registration thresholds and explicit rules for digital services and online marketplaces.

Implementation date

Bhutan’s Goods and Services Tax (GST) will enter into force on 1 January 2026.

IMPACT: What changes under Bhutan’s GST

A single 5% GST rate for goods and services

The GST will apply at a single standard rate of 5%, reduced from the originally planned 7%, and will apply to taxable supplies and imports of goods and services.

GST registration threshold for local and foreign businesses

Mandatory GST registration applies where annual turnover exceeds Nu. 5 million, with an option for voluntary registration from Nu. 2.5 million. Foreign suppliers of digital services and online marketplaces must also assess this threshold and, once exceeded, register for GST and charge Bhutanese GST on B2C supplies through a locally appointed representative.

Electronic services covered under the 2026 GST

Under the Goods and Services Tax Act of Bhutan 2020, as amended by the GST (Amendment) Act 2025, electronic services include:

• Websites, web-hosting, or remote maintenance of programmes and equipment,
• Software and the updating thereof,
• Virtual currencies,
• Images, text, and information,
• Access to databases,
• Self-education packages,
• Music, films, and games,
• Political, cultural, artistic, sporting, scientific, and other broadcasts and events including broadcast television services delivered by means of electronic communication, and
• Any other supplies that are imported B2C services that are to be made by means of electronic communication.

GST rules for B2C vs. B2B digital services

This definition brings most digitally delivered B2C services into the scope of Bhutanese GST, regardless of where the supplier is established. As a result, foreign digital service providers supplying these services to consumers in Bhutan must assess GST registration thresholds and charge GST once the regime goes live on 1 January 2026. For B2B supplies, foreign suppliers do not charge GST where the Bhutanese customer is GST-registered, as the tax is accounted for by the customer under the reverse charge mechanism.

GST obligation of electronic distribution platforms

“Electronic distribution platform” means a medium (including but not limited to a website, internet portal, gateway, web store or web marketplace) that satisfies the following conditions:

• the medium allows persons to make supplies available to customers by electronic means,
• the medium is operated by electronic means, and
• the medium is not solely for processing any payment for any supply.

This definition captures online platforms that facilitate the sale or supply of goods or services, rather than merely processing payments. Under Bhutan’s GST regime, such platforms may be treated as the deemed supplier for B2C transactions, meaning the platform itself is responsible for GST registration, calculation, collection, and remittance when supplies are made to Bhutanese consumers through the platform.

Businesses supplying goods or services to Bhutan, particularly digital providers and marketplaces, should assess whether their activities fall within the GST scope, monitor the Nu. 5 million registration threshold, and ensure their systems are ready to charge, collect, and report 5% GST from 1 January 2026.

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