BHUTAN FOR BUSINESS
Bhutan for Business
Thimphu TechPark presents a great opportunity for the expansion of your business in a new and more profitable location. We have a data centre, several domestic companies and startups, and nine international IT/ITES companies (Scan Cafe from the USA, ZOOP from Canada, SELISE from Switzerland, MultiRational from Australia, Southtech from Bangladesh, Bid Ocean from Canada, Bhutan Data Scientists Pvt Ltd from Australia, and Gai Technologies and TRX Pvt. Ltd. from India) employing more than 700 people at the IT Park. We also have an incubation centre from where you can run a pilot operation to test the opportunities offered by Bhutan. The IT Park provides you with the state of the art facilities with high speed internet connection through redundant optical fibre plus a host of incentives and support from the Government.
This introductory deck presents important information for potential investors.
FDI Company Incorporation Procedure in Bhutan
The incorporation of an FDI (Foreign Direct Investment) Company in Bhutan is fairly easy and straight forward. The whole process can be completed within one month or even less if the documents required to be submitted are in order. Bhutan’s ranking on the World Bank’s Ease of Doing Business Index has also been improving thanks to the efforts of our government. Here, we have compiled the application procedure for incorporating an FDI Company in Bhutan based on “Schedule VI” of FDI Rules and Regulations (amended in 2014) issued by the Ministry of Economic Affairs. It consists of just four steps.
To download this document explaining the procedures for FDI company incorporation, click here to download
The prescribed Application Form for FDI Registration is found on Page 19 of FDI Rules and Regulations (Amended in 2014), Click here to see
Visa and Work Permit Application Procedures
Business Visa or Work Permit is required for all foreigners visiting Bhutan to engage in business activities with a company or organization in Bhutan. For Indians, Bangladeshis and Maldivians, visa or permit would be stamped on arrival at the airport without the need for prior approval, but they should clearly show the invitation letter from the organization in Bhutan to the Immigration Officer at the port of entry and state that the reason he or she is visiting Bhutan for so that this can be reflected in their ‘entry permit’ or visa. Foreigners engaging in business/official activities under ‘Tourist Visa’ are liable to be penalized.
To download the document explaining the procedures for visa and work permit application, click download from here
Incentives and Support from Government
The following are some of the incentives and support from the Government:
The Government would provide you financial support to train the people to work in your company or help pay part of the salary (INR 7500 per month per employee) for new employees for up to 1 or 2 years depending on the skill required under the Guaranteed Employment Program. (Please click here to see)
The average salaries for employees would be less in Bhutan compared to that in India for similar talents/positions. On top of that, attrition is very low in Bhutan as per the experience of our tenants.
You are eligible for tax holiday so that you would be exempt from Corporate Income Tax.
The Government provides subsidy for Internet connection to make the cost similar to that you would pay in the region.
The Ministry of Labour and Human Resources would help you in the recruitment of new employees.
A company can be 100% foreign owned if established at the IT Park. Outside of IT Park, it is necessary to have a Bhutanese partner.
The IT Park has dual feed power supply plus DG back-up at a fraction of the cost in the region.
For more details, please visit UNCTAD’s Investment Guide to Bhutan at http://www.theiguides.org/public-docs/guides/bhutan Or visit the website of the Ministry of Economic Affairs for FDI Policy and FDI Rules and Regulations: http://www.moea.gov.bt/documents/documents.php?Catid=1&unitid=2
For further details, please email us at email@example.com
Or Call +975-2-350052/350051
Frequently Asked Questions:
|How is the electricity supply situation in Thimphu?||Very reliable clean hydro power. Bhutan is a power surplus country that sells excess power to India. Thimphu TechPark has dual feed plus DG backup.|
|How is the water supply situation in Thimphu?||Thimphu TechPark has no issues with water. Tenants are not charged for water. It is free.|
|What are the different transport facilities available?||City bus service, taxi and car-pooling among employees.|
|How is the road transport condition (road-lights, security, traffic)?||Road transport condition is very good, especially in Thimphu.|
|Please elaborate on night-time commute safety||Generally very safe. Transportation to be arranged by companies themselves.|
|What is the situation of power supply & charges? How often do you have an outage?||Outage hardly happens. When it does, we have a DG backup. Rate applicable to tenants at IT Park is INR 3.53 per unit (KWh) as of March 2019, plus 4% surcharge for ransmission loss. We apply the same rate even for power from DG when there is outage.|
|What is the backup provision for electricity?||Dual feed from two different sub-stations plus DG backup|
|What Internet connectivity options do we have? Type, speed & charges||Redundant connectivity from Gelephu and Phuentsholing. You can go for leased line or ADSL broadband. For the leased line, as of March 2019, the cost is around INR 2500 per Mbps (negotiable). . Outage is uncommon. Reliability is good enough for the operations of IT/ITES companies already located at the Tech Park.|
|What is the backup provision for Internet? How often do you have an outage?||There are four operators. The first three have presence fibre terminaion at the Tech Park. ( www.bt.bt, www.tashicell.com, www.nano.bt, www.drukcom.com )|
|What are the provisions for premise security? Who handles security?||We have security guards 24×7. Plus we have CCTV cameras. TTPL looks after it.|
|What is the tech park’s maximum seat capacity and current occupancy? What are the expansion plans?||Available space in First building – 300 and 200 in New building (to be ready in June 2019), MR space – 25 seats in an independent fully managed environment (ready). Total capacity is about 1500 seats including both buildings.|
|What are the common facilities in the tech park? Cafetaria, library, etc.||There are shared training rooms, conference room, cafeteria and free parking facilities.|
|What are the developer/maintenance agency’s credentials?||Thimphu TechPark Ltd., a 100% DHI owned company. DHI is the commercial arm of the Government like Temasek in Singapore.|
|What is covered in maintenance and what are the CAM charges?||Nu 27/sft built-up area inclusive of CAM charges.|
|What are the tech park timings? Is there any restriction on coming or going in later shifts?||The Tech Park is open 24x7x365. No restrictions for night shifts.|
|What is the nearest hotel to stay? Is there a hotel/guest house inside the tech park?||No hotels or guest rooms inside the Tech Park, but there are some nearby within 1-2 km radius. The city centre is just 9 km away.|
|What are the options for commuting to-from Paro airport & City center?||Cabs and private cars|
|Where do most of the current tech park employees live? How do they commute to the tech park?||City bus services, but most stay in the vicinity and walk to office.|
|What are the options of public transport to & from the park? Timing?||Cabs and private cars. City buses run from 7 am to 7 pm.|
|Which is the nearest residential area, hospital, police station?||Residential – all around the park, hospital – JDW National Referral Hospital is 9 km away in the city, Basic health unit available within 3 km radius, Same as hospital with police station|
|Please provide information on talent pool availability – graduates and XII pass? Do you have tie-ups with colleges/universities to hire graduates?||This presentation here gives the information: https://thimphutechpark.bt/wp-content/uploads/2020/07/TTPL_BITC_presentation-_2020-v2.pdf. Yes, we do have tie ups with all the major colleges in Bhutan.|
|How many universities provide CS degrees (if any?)||4 colleges in Bhutan. Most IT/CS/BCA graduates come from colleges in India and abroad.|
|Legal & Regulatory|
|What is the suggested format for Company setup – structure options (Pvt. Ltd./LLP/Other)?||Pvt Ltd under Companies Act of Bhutan 2016. http://www.nab.gov.bt/assets/uploads/docs/acts/2016/Companies_act_ofBhutan2016.pdf|
|Do you have authorized agencies for Company setup? What are the timelines & charges?||TTPL could help. Charges may vary but it will be around USD 1,000 per company incorporation, excluding charges for legal services like drafting AOI etc. if needed by the client.|
|Which laws would be applicable if we set up an entity?||Companies Act, FDI Policy/Rules & Regulations, Labour Act|
|Which taxes would be applicable if we set up an entity? Which taxes would be applicable on Directors?||Corporate Income Tax for the company, and Personal Income Tax for the directors if they have a work permit and draw salaries from the company in Bhutan.|
|How to avail tax exemptions?||Once the company is incorporated, we need to apply for it at the Regional Revenue and Customs Office. Tech Park team will guide and help.|
|IPR/Copyright related issues||http://www.ipbhutan.gov.bt/ You can register with the IP Office in Bhutan.|
|What is the minimum age that someone can work legally?||18 and above|
|Are there any minimum salary laws?||There is minimum wage but that is below the average salaries paid by the most employers.|
|Which assistance schemes are applicable if we set up an entity?||Fiscal incentives and support from the Ministry of Labour & Human Resources|
|What is the quantum of financial assistance?||It may cover the cost of training employees.|
|Is financial assistance available for for training people?||Yes.|
|Is financial assistance provided to company for job creation?||Yes, for training employees.|
|What is process to avail financial assistance?||For training employees, you have to submit a proposal to the Labour Ministry.|
|Is there any financial assistance on software procurement (MS-Windows, MS-Office etc.)||Not really. Just tax exemption.|
|Which are the other kinds of assistance provided by TechPark team?||We will handhold and guide your team in Bhutan on regulatory and compliance matters. We also help if you face any issues.|
|Financial & Banking|
|What are the Inward remittance rules applicable?||Inward remittance may be generally ok. May be monitored by the central bank though if found suspicious.|
|What are the Outward remittance rules applicable?||Possible to remit from the banks after producing signed copy of invoice and customs clearance certifying goods have come into the country.|
|Is there a double-tax avoidance treaty with India and US?||With India but not with US|
|Is there a Dividend distribution tax?||As per the Rules on Income Tax, there is 10% tax on dividends. See page 28 of this document: https://www.mof.gov.bt/wp-content/uploads/2014/07/RulesIncomeTax2017.pdf for Please refer page 28 of this: https://www.moea.gov.bt/wp-content/uploads/2017/07/pub4wv968yk.pdf|
|What all Compliance requirements do we need to take care of?||Statutory reporting requirement as per the Companies Act|
|Are there any regulations/laws related to Transfer pricing?||Arms-length pricing as spelled out in the Income Tax Act/Rules|
|Import Regulations & Exemptions|
|What kind of exemptions can we get for import of IT equipment – Laptops etc.?||They are tax exempt.|
|What kind of exemptions can we get for import of software (MS-Windows, MS-Office etc.)?||Same as above.|
|Exemptions on things to run an office etc. Printers, Desks, IP Phones||IT Equipment like printers etc. may be tax exempt, but may not cover furniture.|
|Is the minimum daily tariff ($250) applicable even for people visiting for work?||No. Official/Business visa fee is only USD 40 one-time per visa.|
|What about their family members accompanying them?||No tourist tariff.|
|Is there exemption from minimum daily tariff for Indian citizens?||No tariff is applicable.|
|What about long term stays of family members? We would imagine that we would have people from India/US visiting for extended periods with/without family||Eligible to stay for longer periods without tariff. They can get long term visa as dependents of investors or work permit holders.|
|Can we start a small pilot operation before registering the company?||Yes, you can. You can try it immediately if you want. We can assist you.|
|Checking on the quality of manpower available:
How could we administer a test which checks candidates’ analytical skills and English understanding. Could you please suggest on how we can arrange the logistics for the same in the most efficient way?
|This can be done by giving an ad in local newspaper|
|Are there any laws governing maximum hours someone works in a week? Are these different for BPO Workers, Software engineers, Managers/Supervisors etc.?||Maximum working hours is 48 hours. Above that, you can engage the employees for overtime work too. Refer this link: http://www.molhr.gov.bt/molhr/wp-content/uploads/2017/07/Regulations-on-working-conditions-2012.pdf|
|Are there mandated breaks required? e.g. In some jurisdictions there are laws that after 4 hours of work an hour of lunch break is required||All employees shall be entitled to a meal break of 30 minutes after 4
hours of work, but the meal break shall not be included as part of the
employee’s working hours.
|What are the typical hours employees work? In India, in some cities the norm is 10 hours a day 5 days a week with a 1 hour lunch break.||Typically, it is from 9 am till 5 pm. However, you can decide working hours, provided it is within the 48 hours per week limit excluding overtime. Beyond that should be considered as overtime.|
|Are there any overtime pay laws that one needs to comply with (again for various class of workers: BPO workers, software engineers and managers?||This is covered on Page 106 of the regulations found at this link: http://www.molhr.gov.bt/molhr/wp-content/uploads/2017/07/Regulations-on-working-conditions-2012.pdf|
|Is there tax exemption for import of IT equipment and furniture to set up the office?||Found on page 26 of this document:
Computer and related hardware, and software are exempted from sales tax and customs duty.
|Salary/Government Assistance programs; These could make a big difference in our decision making; can you tell us what might be available||The Government may fund the training of employees under the condition that they will be employed after the training. Alternatively, the Govt. used to help to pay about 50% of the salary of new recruits for one year.|