Authorities target unregistered eligible GST businesses

2026-03-23 - 08:51

According to the Ministry of Finance (MoF), several eligible sole proprietorship businesses remain outside the Goods and Services Tax (GST) system, prompting the Department of Revenue and Customs (DRC) to intensify targeted outreach, education, and enforcement efforts to improve compliance. As of 19th March 2026, a total of 3,612 businesses is registered under GST, an increase from 2,982 taxpayers recorded on 1st January 2026, excluding government entities. The initial registrations primarily comprised taxpayers with an annual turnover exceeding Nu 5 million (mn). Over time, the number of registered businesses has changed due to voluntary registrations, divisional registrations, and cases of deregistration. Deregistration has occurred for several reasons, according to the MoF, including the removal of businesses located in Gelephu that were initially registered under GST, as the tax is not being implemented under the Gelephu Mindfulness City. Businesses that have ceased operations or are no longer engaged in economic activity have also been deregistered. In addition, taxpayers found to be engaged exclusively in the supply of goods or services that are exempt from GST have been removed from the system to reduce administrative burden and ensure proper classification. The distribution of GST-registered businesses shows a concentration in Thimphu, which accounts for 1,947 businesses, representing 53.90 percent of the total GST taxpayer population. Other regions contribute smaller shares in comparison, reflecting variations in regional economic activity and market structures. Of the total registered businesses, 3,491 have an annual turnover of Nu 5 mn and above, representing approximately 96.65 percent of all GST registrants. This indicates that the majority fall under compulsory registration, while a smaller number are voluntary registrants with annual turnover exceeding Nu 2.5 mn but below Nu 5 mn. The MoF noted that GST registration figures vary across regions and sectors due to differences in demographic composition, market structure, and overall economic profiles. To better identify gaps in registration, a detailed review of Income Tax data for Income Year 2025 is being conducted to determine the number of potential registrants who meet the GST threshold but have yet to come forward. In response, the DRC is carrying out targeted outreach and education programs aimed at raising awareness among sole proprietors about their registration obligations and the benefits of being part of the GST system. The department is also planning to combine enforcement measures with intelligence gathering to promote compliance among non-compliant entities, while ensuring that businesses are supported and well-informed throughout the process. Taking into account prevailing economic conditions, market structure, and current trends, a moderate increase in GST registrations is expected. Once the filing season concludes and data analysis is complete, businesses with annual turnover above Nu 5 mn that were not registered earlier are expected to be identified and brought under the GST system, strengthening coverage and ensuring that all eligible taxpayers are included accordingly to the MoF.