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12.2. VAT on the Supply of Services by Non-Residents

GST is levied on the basis of consumption in Bhutan; hence, the supply of services made by the non-resident is subject to GST in Bhutan if it is consumed in Bhutan. The supply of services by a non-resident is subject to GST, if the non-resident carries on an economic activity at or through a fixed place in Bhutan and the supply is made in the course of that economic activity, or at or through that fixed place.

The supply of services by a non-resident is considered as a supply made in Bhutan, if:

  • the services are physically performed by a person who is in Bhutan;
  • the services are directly related to land located in Bhutan; or
  • the services are imported B2B services or imported B2C services.

A non-resident is required to appoint a GST representative in Bhutan to comply with the GST obligations.

Supply of Digital Services

Electronic services rendered by a non-resident to resident taxpayers (B2B) are taxable on a reverse charge basis and the receiver of services is liable to pay GST. In case of supply of services to a non-taxable person (B2C) electronically, the liability to invoice and remit GST lies with  the operator of the electronic distribution platform if the supply is made through a single electronic distribution platform, or the supplier if the supply is not made through an electronic distribution platform.

Electronic distribution platforms include services provided by a website, internet portal, gateway, store or market place, satisfying the following conditions:

  • the service allows persons to make supplies available to end-users;
  • the service is delivered by means of electronic communication; and
  • any of the supplies that are imported B2B services are to be made by means of electronic
  • communication.

Electronic services mean any of the following, when provided or delivered on or through a telecommunications network:

  • 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.