Rural businesses now required to pay BIT after exemption ends

2026-03-30 - 13:01

The exemption given for years to Rural Businesses has now come to an end, and so businesses in rural areas are required to pay Business Income Tax (BIT) by 31st March 2026. According to sources, around 6,000 businesses in Thimphu, Punakha and Wangdue areas that were previously exempt have not yet come forward to file their BIT. There are more from other regions. Small and micro businesses in rural areas of Bhutan had been exempted from paying BIT to support local economies, with the Ministry of Finance (MoF) giving exemption until 31st December 2024. The Department of Revenue and Customs said it had issued a notification formalising the extension. The exemption was introduced as part of the government’s broader COVID-19 economic response to cushion the impact of the pandemic on small and micro businesses, particularly in rural areas. Many of these businesses, including small retail shops and family-run enterprises, were affected by supply chain disruptions, reduced customer flow, and limited access to financial support. The measure was also aimed at supporting rural livelihoods, reducing income disparities, and encouraging economic activity outside urban centers. In the income year 2024 there were 45,657 businesses listed under BIT. Of these 15,652 small businesses in rural areas were exempt of paying BIT until 31st December 2024. The tax relief applied specifically to businesses operating outside thromdes, targeting rural economies, while certain sectors were excluded from the exemption. The tax waiver to rural businesses started under the second government and was extended by the former government till 31st December 2024 which means the income year of 2025 comes under taxes. A DRC official said that there will be an issue only for the income year of 2025 for the rural businesses but from 2026 onwards since BIT and PIT is merged many small rural businesses earning at or below Nu 300,000 a year profit will not even have to file taxes. However, those earning proft above this will have to file taxes.