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1.1.1. Main Forms of Doing Business

Bhutan stipulates the following legal forms for doing business in the country:

  • Company (Public company or Private company)
  • Sole Proprietorship (sole-owner company)
  • Partnership
  • Foreign Business

All companies and businesses are liable to pay tax under the Act. Companies registered under the laws of the Company’s Act of the Kingdom of Bhutan, 2000 are liable to pay Corporate Income Tax (CIT).  Unincorporated business entities holding a trade license or registration certificate issued by the Ministry of Economic Affairs or any other competent authority are liable to pay Business Income Tax (BIT).


Companies can be formed either as public companies or private companies. All companies formed under the Companies Act of Bhutan, 2016 are limited by shares.

Public Company

The key aspects of a public company include:

  • Authorized to offer shares to the public, subject to conditions imposed by Regulatory Authority and Securities Exchange
  • Minimum prescribed allotted share capital is required
  • Minimum 3 directors are required
  • A company secretary is required
  • Public companies should suffix ‘Limited’ at the end of their company name
  • A public company can be re-registered as a private company by passing a special resolution, making changes in Articles of Incorporation, complying with additional requirements, if any and applying for re-registration

Private Company

The key aspects of a private company include:

  • Not permitted to offer its shares to the public
  • Minimum 2 directors are required
  • A private company can be re-registered as a public company by satisfying all formation requirements of a public company, changing Articles of Incorporation, passing a special resolution, complying with additional requirements if any and applying for re-registration
  • Private companies should suffix ‘Private Limited’ at the end of their company name

Sole Proprietorship

It is formed by a single person, subject to a condition that there shall be another person who would act as a member of such company in the event of death or otherwise of the subscriber through written consent. These firms are liable to Business Income Tax as against CIT.


A partnership is another prominent form of organization structure that is permitted in Bhutan. Firms carrying on commercial and industrial activity in the form of Partnerships are required to obtain a license from the Ministry of Economic Affairs.

Foreign Business

Companies incorporated outside the territory of Bhutan are known as foreign companies. Ownership and transfer of shares of a foreign owner are both required to be registered in the name of the beneficial owner which is reviewed and registered by the registrar of companies.

Foreign companies can conduct business through a PE or may participate in business activities in collaboration or on a partnership basis with their counterparts in Bhutan.

Further information on the general investment, tax and regulatory regime about the country is available at the following external references: