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This section identifies the bureaucratic and legal hurdles an entrepreneur must overcome to incorporate and register a new firm in Bhutan.
The country data appearing on this page was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 183 economies. The most recent round of data collection for the project was completed in June 2009.
The table below provides a summary of the procedures and the associated completion time and cost for setting up a standardized company. The table is followed by additional country-specific information on business registration requirements.
* Takes place simultaneously with another procedure.
Registration Requirements Details
Procedure 1.
Obtain a clearance from the Royal Bhutan Police
Time to complete:
1 day to 30 days (1 day if it is a investor from Thimpu)
Cost to complete:
no charge
Name of Agency:
Comment:
The Royal Bhutan Police checks the criminal record with the criminal branch and the respective district where the applicant originally lived. This clearance can be sought up to a year in advance.
Procedure 2.
The company submits project proposal to Department of Industry, Project Development Services Division
Time to complete:
4 days for activities requiring no sector / environmental clearance; up to 6 months for activities requiring sector clearance
Cost to complete:
no charge
Name of Agency:
Comment:
The Project Development Services Division (PDSD) reviews the project proposal. At the same time, if required, the Department of Industry sends a letter (with a copy of the project proposal) for sectoral clearance to the National Environment Commission for Environment Clearance (which takes at most 3 months) and other sectors. If sectoral clearance is required, the promoter usually waits for 2 to 3 months for a PDSD response, after which a detailed report must be filed. The promoter may take 1 to 2 months to prepare the report.
On August 24, 2005, the Regional Trade and Industry Office (RTIO) was empowered to issue environmental clearances for seventeen listed sectors (in lieu of the Environmental Unit).
Since September 26, 2005, the RTIO (in lieu of the PDSD) can also approve small and cottage-scale projects with a fixed investment of up to BTN 10 million in the listed sectors. However, companies to be registered by the Registrar of Companies still must obtain the Environment Clearance from the National Environment Commission (NEC) before registering at the Registrar of Companies, if applicable.
Procedure 3.
Register with the Registrar of Companies
Time to complete:
3 days
Cost to complete:
BTN 2000
Name of Agency:
Comment:
The following six documents must be attached to the articles of incorporation: 1. Company name availability form. 2. Consent to act as director, duly filed by all directors. 3. Security clearance from the Royal Bhutan Police for all the directors. 4. Copy of citizenship identification card for all directors. 5. Declaration of compliance form signed by all directors. 6. Project approval from the Ministry of Industry (that is, the PDSD).
If required and if every formality is fulfilled in about 30 days, the Registrar of Companies will issue the letter of registration. At present, only local companies can be registered. Advertisement is optional. A company may choose to publish a notice in the weekly newspaper, the Kuensel, by booking at least a week in advance.
If the articles of association or incorporation are satisfactory, the Registrar of Companies will record all information in its computer database, CREG, and print two copies of the certificate of incorporation. A hard copy file is also opened for the new company.
Registration Incorporation Fee by Authorized Share Capital (as established by Schedule 4 of the Companies Act of the Kingdom of Bhutan, 2000): - Authorized share capital not exceeding BTN 1 million: BTN 1,000. - Authorized share capital not exceeding BTN 1 million but less than BTN 2 million BTN 1,500. - Authorized share capital not exceeding BTN 2 million: BTN 2,000.
Upon incorporation, companies must obtain a trade or industry operating license. As of 2007, the process was reformed. Only industrial companies must obtain an additional clearance from (a) the City Council (known as the City Corporation) in the urban areas and (b) the Office of the District Administrators in the districts. The City Corporation verifies the site location and whether it is legally owned. A form is presented to the City Council or to the Office of the District Administrator, depending on the location, and to the Regional Trade and Industry Office. This form can be obtained for a fee of BTN 50 from the Office of the Regional Director, Regional Trade and Industry Office in Thimphu, Pheuntsholing, Gelephu, Samdrup Jongkhar, Traongsa, and Trashigang. No fee is charged for the additional clearance by the City Council or the District Administrator.
Procedure 4.
Apply for a trade/industrial license at the Regional Trade and Industrial Office (under Ministry of Trade)
Time to complete:
2 days
Cost to complete:
Registration fee, license fee, booklet charge (see comment)
Name of Agency:
Comment:
No business activity can be carried out before obtaining a trade or industrial license. Sectoral approvals (if required) must be obtained. Businesses with more than BTN1 million must present a project report, according to guidelines issued by the Ministry of Trade and Industry.
Fee Schedule
Scale
Investment (BTN million)
Registration fees
License fees
License cost
Booklets
Large
More than 100
8,000
4,000
100
12,100
Medium
10 –100
4,000
2,000
100
6,100
Small
1–10
2,000
1,000
100
3,100
Cottage
Less than 1
1,000
500
100
1,600
Since July 1, 2005, applications forms for trade and industrial licenses can be downloaded from the Ministry of Trade and Industry’s website (www.mti.gov.bt). Photocopies of application forms are accepted.
Procedure 5.
Apply for taxpayer identification number and register the company for specific taxes
Time to complete:
1 - 3 days
Cost to complete:
no charge
Name of Agency:
Comment:
Every company must register for business income tax, for which a business identification code (BIC) is given. This BIC number must be presented to obtain a business license and to participate in public tenders and works. In practice, companies may register when they pay their first tax installment.
Procedure 6.
Make a company seal
Time to complete:
5 days
Cost to complete:
BTN 879
Name of Agency:
Comment:
Companies must have a seal within 1 year of incorporation. This is verified by the Registrar during the annual inspection.
Procedure 7.
Open a bank account
Time to complete:
1 day (simultaneously with procedure 8)
Cost to complete:
no charge
Name of Agency:
Comment:
Under the Company Act 2000, a bank account under the company’s name must be opened within a month of incorporation.
Procedure 8.
File the evidence of operating a bank account with the Registrar of Companies
Time to complete:
1 day (simultaneously with procedure 8)
Cost to complete:
no charge
Name of Agency:
Comment:
Evidence of bank account operation must be presented and filed with the Registrar of Companies once the certificate is issued and upon obtaining the license.
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