Bhutan has seen an uptick in economic growth in foreign investments over the last few years. Since the government launched its Vision 2020, the country has had 100 plus foreign investments of Nu 43.62 billion value to date.
Bhutan offers tons of scope for investors. The traditional sector of tourism and hydropower has always been a revenue earner for the country. Still, IT, ITeS and agriculture, hotels and pharmaceutical industries have been important FDI earners of late. The government is politically stable, ensuring a peaceful country and an economy with high ranks in terms of Transparency International’s Corruption Index (25th rank) and (19th rank) Peace Index charts. No wonder the country chooses to measure its Gross National Happiness instead of traditional Gross Domestic Product. The latter has grown at around 7.5% since the Eighties every year. The latest figure for GDP in 2021 is $2.54 billion. For the year July 2021 to the end of 2022, the economy saw around 4.6% growth.
The visa structure in Bhutan is such that investors easily get add-on visas for family and parents. Companies can expand their business in Bhutan and set up a sole proprietorship in Bhutan in compliance with related rules and laws. Setting up a sole proprietorship in Bhutan is the best option for small and medium-scale businesses. Read further to understand the process of establishing a sole proprietorship in Bhutan.
Who can be a Sole Proprietor in Bhutan?
A sole proprietorship means any singly-owned business that has complete individual control. There is no difference made between such a business entity and its owner. This also entails the owner paying personal income taxes on all profits the proprietorship earns. Setting up a sole proprietorship in Bhutan is easy but requires some industry-linked approvals. Foreign nationals can set up a sole proprietorship in Bhutan.
A person can have only a single sole proprietorship registered in their name. However, every business owner or inverse in Bhutan must understand that their businesses must be environmentally sustainable. This is consistent with the fact that Bhutan is the only country that is carbon-negative. The government mentions that maintaining a minimum of 60% forest cover in the country is a key goal.
Benefits of Sole Proprietorship in Bhutan
Setting up a sole proprietorship in Bhutan and working in its market comes with several benefits-
- Welcome ambience: When you set up a sole proprietorship in Bhutan, you will realize that the government is welcoming towards foreign investors.
- Affordability: Registering your business as a sole proprietorship in Bhutan is relatively inexpensive. Registering a sole proprietorship is a common practice that ensures rare procedural delays.
- Complete control: When setting up a sole proprietorship in Bhutan, you keep complete company ownership. Setting up a sole proprietorship in Bhutan signifies that you enjoy all profits without any sharing.
- Incentives and backing: Setting up a company as a sole proprietor in Bhutan ensures you enjoy tax holidays for five to ten years, as per the operational sector. In addition, foreign businesses get exemptions on customs and sale taxes in specific industries such as packaging, machinery and raw materials. Entrepreneurs may also enjoy allowances for reinvestments.
Bhutan ensures that business owners from offshore enjoy business predictability and excellent investment returns. This becomes possible via the overall business impact and its contribution to reaching Sustainable Development targets.
Documents Required for Starting Your Business in Bhutan
The documents you need to start a sole proprietorship in Bhutan are as follows:
- The business owner’s ID and photos
- The certificates for Name Approval Form, business outline approval and Business Identification Code
- Article of incorporation
- Security and Compliance certificates
- Sector certificate
Other Criteria for Registering a Sole Proprietorship in Bhutan
When setting up a sole proprietorship in Bhutan, there are a few more pointers to bear in mind-
- Aside from business registrations, Bhutanese businesses could need additional licenses to operate in their specific domains.
- The Bhutan government provides tax holidays provided the business can prove its track record and maintains regular accounts of business transactions.
- Once a sole proprietorship in Bhutan registration gets completed, the following step is applying for the BIC or Business Identification Code for tax purposes.
- You must also get a Location Clearance from Thimphu City Corporation in Dzongkhag or Thromde.
- All forms for setting up a sole proprietorship in Bhutan are available at https://www.moea.gov.bt/.
How to Register a Sole Proprietorship Firm in Bhutan?
The steps to register a sole proprietorship in Bhutan are simple but must be carried out carefully. Here are the steps to setting up a sole proprietorship in Bhutan:
Name approval
- Before you apply for the process to register a self-employed Bhutan business, check if the preferred name is available for business registration.
- Search the Registry and seek approval at https://bhutan.eregulations.org/procedure/16/19/step/20?l=en.
- Reserve the name at https://www.cra.gov.bt/ for a fee of BTN 2000.
- The name for the proprietorship needs to be unique and not in conflict with an existing business name in Bhutan.
Licensing
- Once the sole proprietorship registration ends, apply for a Security Clearance Certificate in Bhutan.
- The Ministry of Economic Affairs, combined with
- the Ministry of Industry and Trade grant this certificate. It is available online at https://www.cra.gov.bt/ and takes a day to process.
- Also, apply for an industry-specific Specific Operations certificate.
- The Security Clearance Certificate needs an annual renewal.
Submit a sole proprietorship business plan-
- Once you complete the application, the Ministry of Economic Affairs’ Industrial Department Division must verify all documents and approve the business outline or plan you submit online at https://www.moea.gov.bt/?page_id=1134.
Application for registration and document submissions
- After Steps 2 and 3 are over, submit the Bhutanese ID, article of Incorporation, name clearance form, compliance declaration, and security clearance, along with details of business ownership.
- Submit two copies of your photograph too.
- The Registrar of Companies verifies the documents and processes the application before announcing the Company Incorporation certificate.
- Once a sole proprietorship in Bhutan registration is complete, the immediate step is to apply for Business Identification Code for corporate tax purposes.
- Apply for a Location Clearance from Thimphu City Corporation.
Opening a bank account
- You need to open a sole proprietorship Bhutan bank account using the registration certificate of the business.
- This sole proprietorship Bhutan bank account is helpful for all business transactions and taxation purposes.
Conclusion
Multiplier is a trusted and well-known global employment solutions provider. You can partner with the company to set up a sole proprietor anywhere. Multiplier offers EOR solutions to smooth out the recruitment processes for international needs. Our services help all companies comply with local laws for setting up a sole proprietorship in Bhutan.