Summary
- A foreign company that "establishes a place of business or carries on business in GMC" must register under Division 2 of Part 11 of the Companies Act 2025 before it starts (ss. 365, 368(1)). Registration creates a branch; it does not create a separate legal person.
- Section 366(2) lists activities that do not count as carrying on business, including holding board meetings, maintaining a bank account, investing funds, and isolated transactions completed within 31 days.
- A registered foreign company needs a GMC registered office open at least five hours each business day (s. 370(1)) and at least one authorised representative resident in GMC or holding a work visa or pass, who is personally answerable for compliance (ss. 368(1)(e), 370(2)).
- A regulated financial institution wanting only to market in GMC may apply for a licence to operate a Representative Office under GEN Chapter 9, which requires a Principal Representative and prohibits any other regulated activity.
- A branch is a permanent establishment for tax purposes (Income Tax Act 2025, s. 2) and its GMC-source profits are taxed at 15% (s. 43(1)).
Three ways in, and what each one is
A foreign business that wants a presence in the Gelephu Mindfulness City without a local subsidiary has three routes, and they are not interchangeable.
- Foreign company registration (a branch). The foreign company registers under Division 2 of Part 11 of the Companies Act 2025 and trades in GMC in its own name. There is one legal entity; the parent stands behind GMC liabilities.
- Representative Office (regulated financial firms only). A financial institution regulated abroad obtains a Financial Services Licence from the Gelephu Financial Services Office (GFSO) limited to operating a Representative Office under GEN Chapter 9. It may market; it may not carry on any other regulated activity.
- No local presence. Some activities can be carried on from abroad without registration, because s. 366(2) says they are not "carrying on business" in GMC.
A fourth route, transferring the company itself into GMC, is covered in our guide to redomiciliation to GMC. Throughout, "$" means United States dollars (Companies Act 2025, s. 4A).
When registration is compulsory: "carrying on business"
Division 2 applies to a foreign company which "establishes a place of business or carries on business in GMC" or intends to (s. 365). Section 368(1) requires the lodgment "before it establishes a place of business or commences to carry on business in GMC". The obligation is therefore prospective, and trading first and registering later is a default.
"Carrying on business" is defined inclusively. It "includes the administration, management or otherwise dealing with property situated in GMC as an agent, a legal personal representative, or a trustee", and "does not exclude activities carried on without a view to any profit" (s. 366(1)). A non-profit or a trustee holding GMC property is within scope.
The safe harbours in s. 366(2) matter more in practice. A foreign company is not regarded as carrying on business in GMC "for the reason only" that in GMC it:
- is a party to proceedings or settles a claim;
- holds board or shareholder meetings or conducts other internal affairs;
- maintains a bank account;
- sells through an independent contractor;
- solicits orders that become binding only on acceptance outside GMC;
- creates evidence of a debt or a charge, or collects debts and enforces security;
- conducts an isolated transaction completed within 31 days, not being one of a series;
- invests funds or holds property;
- establishes a share transfer or registration office;
- transacts through a GFSO-licensed related corporation under a GFSO-approved arrangement; or
- carries on any other prescribed activity.
A foreign holding company that owns shares in a GMC subsidiary and banks in GMC is within paragraphs (c) and (i) and need not register. A foreign seller whose GMC orders are accepted abroad is within paragraph (e). The line is crossed when staff in GMC conclude contracts, deliver services or run the business from an office.
What a registered foreign company must file and maintain
Registration documents (s. 368)
The lodgment must include the company's name and home registered office; certified copies of its certificate of incorporation and (where home law requires lodgment) its constitution; a list of directors; a notice naming one or more authorised representatives and their consent statement; notice of the GMC registered office and hours; the home registration number, business description and legal form; and, where home law requires audited head-office accounts, the latest ones (s. 368(1)(a)–(i)). The Registrar must refuse registration where the company is likely to be used for an unlawful purpose or registration would be contrary to national security or interest (s. 369(1)), subject to a 30-day appeal (s. 369(2)).
Authorised representative
Authorised representatives must be natural persons "resident in GMC or who hold any valid work visa or work pass", authorised to accept service (s. 368(1)(e)). The role carries real exposure: a representative "is answerable for the doing of all such acts, matters and things, as are required to be done by the company under this Act" and "shall be personally liable to all penalties imposed on the company" unless the court is satisfied otherwise (s. 370(2)). A sole representative ceases only when a replacement's consent is lodged (s. 370(6)); on death, a replacement must be appointed within 21 days (s. 370(7)). The representative may be any employee holding a valid GMCA employment pass, or a Bhutanese citizen; the transitional waiver of the requirement ended on 30 April 2026, after which the Registrar may revoke a branch's registration for non-compliance.
Process, fees and timing in practice
Both foreign-incorporated and GMC-incorporated companies may register a branch by submitting an Expression of Interest through the GCRO portal, and that the process, timeline and cost are the same as for incorporating a company: an empanelled Corporate Service Provider (CSP), a US$2,000 registration fee and US$2,000 annual renewal on the anniversary, and about one week from complete documents. A "foreign company" for this purpose includes a Bhutanese entity registered with the Corporate Regulatory Authority of Bhutan. No paid-up capital is required for a branch.
Registered office
The GMC registered office must be "open and accessible to the public for not less than 5 hours between the hours of 9 a.m. and 5 p.m. each business day" (s. 370(1)), a stricter rule than for a local company (s. 143(1)).
Continuing obligations
Changes to the constitution, directors, representatives, registered offices, name, business or legal form must be notified within 30 days (s. 372(1)). Financial statements of the whole foreign company, not just the branch, must be lodged annually; where home law requires tabling at an annual general meeting, the deadline is 60 days after it (s. 373(1)–(3)). The name and place of incorporation must appear on letterheads and official publications, with notice of limited liability where the name does not end in "Limited" or "Ltd." (s. 375(1)). A register of registrable controllers must be kept from registration (s. 386AF(4A)).
Cessation of business in GMC must be notified within seven days (s. 377(1)); a home liquidation within 14 days (s. 377(2)). Default in any provision without its own penalty is an offence for the company, officers in default and any representative who knowingly permits it, with a fine of up to $1,000 and a default penalty (s. 386). A registered foreign company may hold immovable property in GMC (s. 367), and its registration ceases automatically if it later redomiciles (s. 361(1)(b)).
Business names: no separate registration for a registered branch
The Business Names Registration Act 2026 requires persons carrying on business in GMC to register before doing so (s. 5), but s. 4 exempts foreign companies registered under the Companies Act 2025, so a registered branch trading under its corporate name needs no business name registration. The converse is enforced: the Registrar must refuse a business name to an unregistered foreign company (s. 9).
The Representative Office route under GEN Chapter 9
For a bank, asset manager, insurer or other regulated firm that wants a marketing presence rather than a trading branch, the GEN Rulebook provides a distinct regime.
Who may apply
An application may be made only by a person that is incorporated and "regulated by a Non-GMC Financial Services Regulator in a jurisdiction other than GMC" (GEN 9.2.2(1)). The regulator "will not consider an application" from an applicant intending to operate as a Domestic Firm (GEN 9.2.2(2)). The applicant applies for a Financial Services Licence in the prescribed form (GEN 9.2.1).
What GFSO assesses
Licensing requires GFSO to be satisfied that the applicant is fit and proper, that its activity "will be limited to that of marketing" and will not include any other regulated activity, and that licensing furthers the regulator's objectives (GEN 9.3.1). GFSO may consider whether the home regulator has been made aware of the application and has no objection (GEN 9.3.2(b)), and will assess the fitness and propriety of the Principal Representative (GEN 9.3.3(2)).
The precise scope of the permission is confirmed by GFSO during the application process, and Basnet Law can advise on it.
Operating conditions
A Representative Office must have a place of business within GMC (GEN 9.7.1) and must not share an office with another Licensed Firm or represent anyone other than itself or its Group (GEN 9.7.2). It must at all times have a Principal Representative "resident in the Bhutan" who satisfies GFSO as to fitness and propriety, with a successor designated within 28 days if the incumbent leaves (GEN 9.8.2). It must not hold client money or property beyond ordinary operating expenses (GEN 9.9.1), must notify GFSO immediately of any solvency concern about the institution as a whole (GEN 9.10.1), must not hold itself out as able to carry on any other regulated activity (GEN 9.11.1), and must state on websites, letterhead and business cards that it is regulated as a Representative Office (GEN 9.11.2). Communications must be "clear, fair and not misleading" (GEN 9.12.1).
Four Principles replace the twelve for Licensed Firms: integrity, due skill, care and diligence, adequate resources, and open dealing with regulators (GEN 9.6.1–9.6.4); breach can lead to withdrawal of the licence (GEN 9.5 guidance). Undertaking any other regulated activity breaches Part 4 (Authorisation) of the Financial Services Act 2025 (GEN 9.1 guidance), and promotions remain subject to Schedule 2 (see our guide to financial promotions in GMC).
The tax consequences of each route
The Income Tax Act 2025 charges income "accruing in or derived from GMC or received in GMC from outside GMC" (s. 10(1)). A "permanent establishment" is defined as "a fixed place where a business is wholly or partly carried on", expressly including "a branch" and "an office", and a person is deemed to have one where an agent in GMC habitually concludes contracts or secures orders on its behalf (s. 2). A registered branch is therefore taxable in GMC on its GMC-source profits. Companies and non-resident persons other than individuals pay 15% on every dollar of chargeable income (s. 43(1)(a), (c)).
Payments out of GMC to the foreign head office or to other non-residents attract withholding: interest under s. 45 and royalties, management fees and similar income under s. 45A, at 15% unless a concessionary rate applies. Whether a branch's home-country profits are also taxed in GMC depends on the source rules and any applicable arrangement under s. 49 (see our guide to double taxation relief for GMC companies).
A Representative Office confined to marketing is still a fixed place of business, and the group should analyse before applying whether its activity generates GMC-source income.
Practical checklist / Next steps
- Map the intended GMC activities against s. 366(2). If every activity falls within a safe harbour, registration is not required.
- If registration is required, appoint an authorised representative who understands the personal liability in s. 370(2), and secure a registered office open five hours each business day (s. 370(1)).
- Assemble the s. 368(1) documents, including certified home incorporation documents and the latest audited head-office accounts.
- Diarise the continuing filings: changes within 30 days (s. 372), annual financial statements (s. 373), cessation within seven days (s. 377).
- For a regulated firm considering a Representative Office, confirm with GFSO the scope of the permission, obtain the home regulator's no-objection, and identify a Principal Representative resident in Bhutan.
- Model the permanent establishment and withholding position under the Income Tax Act 2025 before choosing between branch and subsidiary.
Frequently asked questions
Do we need to register if our GMC subsidiary does all the work and we only hold its shares?
The general answer is no. Holding shares, investing funds and maintaining a bank account are each listed in s. 366(2) as activities that alone do not amount to carrying on business in GMC.
Who is liable if a registered foreign company breaks the rules?
The company, every officer in default and any authorised representative who knowingly permits the default (s. 386). The authorised representative is also "personally liable to all penalties imposed on the company" unless the court excuses him or her (s. 370(2)).
Can a Representative Office sign clients in GMC?
No. Its licence is limited to marketing, it must not carry on any other regulated activity (GEN 9.3.1(b)), and it must not hold client money (GEN 9.9.1). Any wider activity breaches Part 4 of the Financial Services Act 2025.
What does branch registration cost and how long does it take?
The cost is US$2,000 to register, US$2,000 annual renewal, about one week from complete documents, and no paid-up capital.
Is a branch taxed in GMC?
Yes. A branch or office is a permanent establishment (Income Tax Act 2025, s. 2) and its GMC-source income is chargeable at 15% (ss. 10(1), 43(1)).
Key takeaways
- Registration under Part 11 is triggered by establishing a place of business or carrying on business, subject to the s. 366(2) safe harbours.
- A branch is not a separate entity; the parent files its full financial statements and the authorised representative is personally answerable.
- The Representative Office regime under GEN Chapter 9 is a marketing-only licence for firms already regulated abroad.
- Every route is a permanent establishment for tax purposes; the choice between branch and subsidiary should be made with the Income Tax Act in view.
- Basnet Law acts as GMC counsel for foreign companies registering, licensing and structuring their first presence in Gelephu.
This article is general information about the law of the Gelephu Mindfulness City Special Administrative Region as at the date above. It is not legal advice and does not create a lawyer–client relationship.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
References
- Companies Act 2025, ss. 4A, 143, 145, 361, 365, 366, 367, 368, 369, 370, 372, 373, 375, 377, 386, 386AF
- Business Names Registration Act 2026, ss. 4, 5, 9, 11
- Financial Services Act 2025, Part 4; Schedule 1; Schedule 2
- GEN Rulebook 2026, Chapter 9 (rules 9.1–9.12)
- Income Tax Act 2025, ss. 2 ("permanent establishment"), 10(1), 43(1), 45, 45A, 49
- GCRO FAQ for GMCA Entities (3 June 2026, v0.2), Gelephu Corporate Registration Office
