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8.2.2. Withholding Taxes

Tax withheld / collected on incomes derived from Bhutanese sources by non-residents are treated as final tax and are exempted from filing tax returns.

Dividend

Tax is withheld at 10% on dividends paid by Bhutan resident entities to non-residents.

Interest

Tax is withheld at 5% on interest paid by Bhutan resident entities to non-residents.

Royalty Copyright

Tax is withheld at the rate of 5% on royalties paid to non-residents.

Royalty Patent

Tax is withheld at the rate of 5% on royalties paid to non-residents.

Royalty Trademark

Tax is withheld at the rate of 5% on royalties paid to non-residents.

Service Management

NA

Service Technical

NA

Other

Any other income like income from contract services or consultancy services earned by non-residents are subject to withholding tax at 3%.

Rental income earned by non-residents from Bhutanese sources is subject to withholding tax at 5%.

Below is a discussion of domestic withholding tax rules for most of the common cross border payments.

Capital Gains 30.0 %
Dividends 10.0 %
Interest 5.0 %
Royalty Copyright 5.0 %
Royalty Patent 5.0 %
Royalty Trademark 5.0 %
Sales 0.0 %
Service Management 3.0 %
Service Technical 3.0 %

* Rates are current as of 02 October 2022