<img alt="" src="https://secure.intelligentcloudforesight.com/779425.png" style="display:none;">
Skip to content

Hiring In Bhutan

Hiring employees compliantly in Bhutan means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Bhutan so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Bhutan or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Need assistance hiring in Bhutan? Contact us about our International EOR Service

Labor Laws in Bhutan

Employee Probation Period

  • An employee who is employed for one year or more shall be on probation for 6 months days within which period either party may terminate the contract by giving the other party notice of 7 days.

Annual Leave in Bhutan

  • Employees who work for 6 months or more in continuous employment are entitled to paid annual leave.
  • Annual leave entitlements accrue at a minimum rate of 1.5 days per month, or a minimum of 18 working days per year, such accrual to commence after the employee has completed 6 months of service.
New call-to-action

Holidays in Bhutan

Nyilo 2nd January
Traditional Day of Offering 25th January
Birth Anniversary of His Majesty the King 21st to 23rd February
Losar  
Birth Anniversary of 3rd Druk Gyalpo 2nd May
Lord Buddha's Parinirvana  
Birth Anniversary of Guru Rinpoche  
The First Sermon of Lord Buddha  
Blessed Rainy Day  
Dashain  
Druk Gyalpo Coronation Anniversary 1st November
Lhabab Duchen 11th November
National Day 17th December

 

Onboard employees in days, anywhere in the world

Maternity Leave Bhutan

  • A pregnant employee who works for an employer continuously for 12 months or more shall be entitled to a minimum of 2 months paid maternity leave at the rate of last basic pay and such leave shall be for an unbroken period of time.
  • The employee shall be entitled to take a maximum of 3 periods of maternity leave during their service with an employer.
  • The employee on maternity leave shall be entitled to use any unused annual or sick leave entitlements to extend the period of paid leave.

Paternity Leave Bhutan

  • Male employees are entitled to 10 working days of paid paternity leave

Sick Leave in Bhutan

  • Employees who work for 6 months or more in continuous employment are entitled to be paid sick leave.
  • For full-time employees, sick leave entitlements accrue at a minimum rate of 5 working days per year, such accrual to commence after the employee has completed 6 months of service

Working Hours in Bhutan

  • The normal working hours for an employee of shall be:
    • 8 hours a day
    • 48 hours a week
    • 6 days a week

Overtime in Bhutan

  • An employee working overtime shall be paid overtime pay for the number of hours worked:
    • Normal rate of pay calculated on hourly basis for work other than between 10’O’ clock at night and 8’O’ clock in the following morning
    • 1.5 times the normal rate of pay calculated on hourly basis for work between 10’O’ clock at night and 8’O’ clock in the following morning

Termination of Employment in Bhutan

  • A minimum of one month's notice shall be issued by the Employer/Employee intending to terminate the contract before expiry of the term.
  • However, in the case of lecturers/teachers, three months’ notice shall be required.
  • In the event of failure to serve the notice in advance of the required period, the defaulting party shall pay to the other, the basic pay of the employee for the stipulated notice period.
  • A contract employee shall not be indispensable to the Government of Bhutan and hence shall be liable to be removed from service at any time when the Government finds his services redundant or on violation of any of these provisions.
  • An employee who retires on superannuation or after completion of 5 years’ service shall be eligible for receiving gratuity and other benefits
  • The amount of gratuity payable to an employee shall be an amount equivalent to one month’s last basic pay of the employee for every completed year of service with the employer times the number of years of his active service with the employer.
  • If at any time during his employment, the employee shall be tried for gross misconduct or breach or non-observance of any of the stipulation herein.
  • The employee shall, at the option and discretion of the employer, forfeit the gratuity.
  • In addition to such forfeiture, the employer may terminate the services of the employee forthwith and without any notice or payment in lieu thereof.
  • Upon such termination, the employee shall not be entitled to claim any compensation or damages.

Notice Period in Bhutan

  • A minimum of one month's notice shall be issued by the party intending to terminate the contract before expiry of the term.
  • However, in the case of lecturers/teachers, three months’ notice shall be required.

Severance in Bhutan

  • An employee who retires on superannuation or after completion of 5 years’ service shall be eligible for receiving gratuity and other benefits
  • The amount of gratuity payable to an employee shall be an amount equivalent to one month’s last basic pay of the employee for every completed year of service with the employer times the number of years of his active service with the employer.

Bhutan Salary and Wages

Start your Global Expansion

13th / 14th Month Pay

  • No
  • There is no statutory requirement to pay the 13th or 14th month salary.
  • However, the employee can accumulate the holidays for a period of three years.
  • Additionally, upon satisfactory completion of one year of work the employee is entitled to a Gratuity payment.
New call-to-action

Income Tax in Bhutan

  • Bhutanese citizens, residents and any other persons earning gross income exceeding Nu. 300,000 per annum in Bhutan from one or more of the six sources mentioned below shall be liable to pay PIT.
  • The six sources of income are:
  1. Employment Income
    • monthly basic salary allowances
    • fees & remuneration
    • bonus
    • commission
    • leave encashment
    • share of profits received by an employee
    • consultancy income by an non licensed consultant and
    • other benefits received free or at a concessional rate.
  2. Rental Income
    • land(s)
    • building(s)
    • house(s)
    • factory building(s)
    • warehouse(s) and
    • any other structures generating income.
  3. Dividend Income
    • Income received from holding of shares in a company registered in Bhutan.
    • However, dividend income does not include dividends received in the form of bonus shares.
    • Dividend income exceeding Nu. 10,000 shall be subjected to TDS @ 10% on the whole amount.
    • Dividend income shall be taxed on receipt basis.
  4. Interest Income
    • Exempted from year 2016.
  5. Income from sale of Cash Crops
    • Income from cash crop means income earned in a year from sale of apple, orange and cardamom.
    • The income shall be taxed on accrual basis
  6. Income from Other Sources
    • Income from other sources shall be taxed on accrual basis and its income is derived from any of the following sources:
    • Income from hire of privately owned vehicles, plants and machinery but excluding trucks and taxis;
    • Income from intellectual property rights such as copy rights, patent, trademark, design, model or any artistic work or scientific work.

Taxable Income

Tax Rate

Up to Nu. 300,000

0%

Nu. 300,001 to Nu. 400,000

10%

Nu. 400,001 to Nu. 650,000

15%

Nu. 650,001 to Nu. 1,000,000

20%

1,000,000 to 1,500,000

25%

Over 1,500,000

30%
Tap the world's talent pool

Social Security in Bhutan 

  • Bhutan has a provident fund system that encompasses old age benefit, disability benefit, and survivor benefit.
  • It covers persons employed for at least one year in firms with at least five employees.
  • There is a special system for military personnel, civil servants, and employees of public corporations. Employees must contribute at least 5% of monthly basic earnings.
  • There are no minimum and maximum earnings used to calculate contributions.
  • Self-employed individuals are not required to make contributions.
  • Employers must contribute at least 5% of monthly basic earnings.
  • There are no minimum and maximum earnings used to calculate contributions.

Contribution

Group 1083

Provident Fund System
Employee Group 1083 5%
Employer Group 1083 5%

Immigration Bhutan

  • Only skilled persons and technicians not available amongst Bhutanese will be approved for recruitment and employment by the Labor Recruitment Committee.
  • Permit to recruit foreign worker will not be approved if the category of workforce requested is locally available.
  • A foreigner who is between 20–50 years old only will be permitted for employment and will be issued with work permit.
  • A Work Permit will be issued for a maximum period of 12 months at a time and should be produced for inspection by the Labor and Immigration Inspectors.
  • The Work Permit will have information such as the foreign worker’s Name, Work Permit Number, Activity, and Validity of the Permit, the occupation in which the foreign worker is permitted to work, as well as the Employer’s Name and Address.
  • The foreign worker is only allowed to work for the employer at a specific work site and in the occupation as stated in the Work Permit.

Type of Visa/Permit

Documentation

Validity

Eligibility
Work Permit
  • Form ‘B(II)’ issued by Department of Immigration
  • Medical Fitness Certificate
  • Identification document (one of the following):
  • Passport
  • Election/Voters Card
  • Identity card issued by Central Government and State Government.
 12 years
  • Only skilled persons and technicians not available amongst Bhutanese will be approved for recruitment and employment by the Labor Recruitment Committee.
  • A foreigner who is between 20–50 years old only will be permitted for employment and will be issued with work permit.
  • Only those who have no criminal records and also who had not left Bhutan during his/her earlier employment without information/permission of the employer.
  • Only those who are physically and mentally fit and free from any communicable diseases supported by medical fitness certificate issued by a professional medical practitioner of a hospital in Bhutan.
Need assistance hiring in Bhutan? Contact us about our International EOR Service

Value Added Tax (VAT) in Bhutan

  • In Bhutan, the sales tax rate is a tax charged to consumers based on the purchase price of certain goods and services.
  • The sale tax ranges from 0 – 100% and levied on Free on Board (fob) value of imported goods.

VAT

Standard Rate

Group 1083

0% to 100%
Onboard employees in days, anywhere in the world

Mandatory Benefits in Bhutan

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
  • Statutory benefits also include social security benefits
Tap the world's talent pool

Mandatory Benefits overview

  • Probationary period

  • Annual Leave

  • Public Holidays

  • Maternity Leave

  • Paternity Leave

  • Sick Leave

  • Overtime Pay

  • Notice Period

  • Severance Pay

  • Social Security Benefits

New call-to-action

Payments And Invoicing

  • All citizens above 18 years of age and residents having personal income from one or more of the six sources during an income year shall register either online or by submitting the registration FORM PIT-1.
  • In case of manual registration, the registration form must be submitted to the RRCO where you prefer to be registered as the taxpayer along with a copy of your Citizenship ID card.
  • All incomes falling within the purview of BIT, CIT, and PIT under the Income Tax Act of the Kingdom of Bhutan 2001, are subject to Tax Deducted at Source (TDS).
  • Tax Deducted at Source (TDS) is:
    • a preliminary estimate of tax liability payable on a Pay As You Earn (PAYE) basis.
    • deducted at source from the payments made to a taxpayer by a withholding agent and deposited to the nearest RRCO.
    • adjusted against the final tax liability.
    • not a separate or new form of tax, but a mode of collection on a current income basis.
    • intended to ease the taxpayers from the burden of having to pay tax at one time during the time of filing.
    • an important source of information for ascertaining income and expenditure of a taxpayer during assessments.

Payroll Accrual in Bhutan

Country Accruals Additional information

Provident Fund     12.00%
Vacations 2.45%
Dont lose your competitive advantage

Payroll Accruals Additional Information

 

 

Employment Accruals
Annual Leave Annual leave entitlements accrue at a minimum rate of 1.5 days per month, or a minimum of 18 working days per year, such accrual to commence after the employee has completed 6 months of service.     This equals 4.93% (18/365 days) of annual income
Maternity Leave A female employee shall be entitled to three months’ maternity leave in addition to other leaves on production of a medical certificate duly signed by a recognized medical practitioner in Bhutan     This equals 25% (3/12 months) of annual income
Paternity Leave Male employees are entitled to 10 working days of paid paternity leave     This equals 2.7% (10/365 days) of annual income
Sick Leave For full-time employees, sick leave entitlements accrue at a minimum rate of 5 working days per year, such accrual to commence after the employee has completed 6 months of service.     This equals 1.36% (5/365 days) of annual income
Overtime An employee working overtime shall be paid overtime pay for the number of hours worked:
  • 1.5 times the normal rate of pay calculated on hourly basis for work between 10’O’ clock at night and 8’O’ clock in the following morning
 Normal hourly rate is around 232 BTN. Overtime is paid at an additional 116 BTN.
Severance The amount of gratuity payable to an employee shall be an amount equivalent to one month’s last basic pay of the employee for every completed year of service with the employer times the number of years of his active service with the employer. This equals 8.33% (1/12 months) of annual income
Social Security Employers must contribute at least 5% of monthly basic earnings. This equals 5% of monthly salary (multiply this by 12 to obtain annual amount)

Accrued Benefits in Bhutan

Christmas Bonus % 0%
Christmas Bonus Over Vacations % 0%
Severance per Year%

Applicable if under 5 years you will receive the amount on individual provident account
(calculations based on one year - contribution of employee 5% and 5% from employer)

 10%
Vacations %

Annual leave entitlements accrue at a minimum rate of 1.5 days per month, or a minimum of 18 working days per year (4.94% of annual salary)

 4.94%
Of annual
salary
Notice %

Employees are entitled to 30 days of notice period for one year of service or more (8.24%)

 8.24%
Christmas Bonus Over Notifications % 0%
Vacations Plus %

Gratuity to be paid to employees that are retiring or leaving the job after 10 years. For the equivalent of one month salary per completed year.

 0%

Total percentage of Salary (yearly)

The total employment accruals as a percentage of salary per anum are equal to 23.8%

23.8%

Why use Global Expansion to hire in Bhutan

Establishing a branch office or subsidiary in Bhutan can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Bhutan labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Bhutan law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Bhutan. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Bhutan Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.

 

New call-to-action

Ready to hire anywhere in the world?

Grow your team the right way with
Global Expansion.

Request a Proposal