US Company Formation from Bhutan (2026): The New Income Tax Act and GST, RMA Approval for Investing Abroad, Dollar Earnings, and the US LLC vs C-Corp Choice

Bhutan is a small economy with a growing group of people who earn from abroad. Software developers and designers in Thimphu work for foreign clients through online platforms. IT and back-office companies in Thimphu TechPark serve customers overseas. Tour operators sell trips to American travellers who pay in dollars. And a large Bhutanese community in Australia, the USA and elsewhere keeps close business ties with home.

A US company can make it easier to sign American clients, take card payments and hold dollar income. For a Bhutan resident, though, three things matter before the US side: the Royal Monetary Authority (RMA) rules on investing abroad and bringing foreign currency home; the new Income Tax Act and GST that start in 2026; and the fact that there is no US–Bhutan tax treaty. This guide covers each, then compares US LLC formation with US C-Corp formation.

In short: A Bhutanese resident can form a US LLC or C-Corporation without visiting, get an EIN without an SSN or ITIN, and apply for a US business bank account remotely. Owning a company abroad is an outward investment, so check the RMA's approval requirements first, and plan to bring export earnings home as the foreign exchange rules require. Bhutan's Income Tax Act 2025 applies from income year 2026, and GST at 5% replaces sales tax from 2026. With no treaty, US withholding on dividends from a US corporation is 30%.

No visit, no embassy needed

The USA and Bhutan do not have formal diplomatic relations, and US visa services for Bhutanese citizens are handled through the US Embassy in New Delhi. None of that affects a US company. Everything is done online:

• the state filing and registered agent;
• the EIN, applied for on Form SS-4 without an SSN or ITIN (see EIN for non-residents);
• the US bank or fintech application, with your passport and proof of address;
• a US business address if you want one.

See opening a US company without visiting.

Start with the Royal Monetary Authority

Bhutan controls foreign exchange closely, because convertible currency (other than the Indian rupee) is scarce. Two sets of RMA rules matter for a US company:

Investing abroad

Putting money into a company outside Bhutan, even a small US LLC, is an outward investment. Under the RMA's foreign exchange regulations, residents generally need approval to invest abroad, and the amount you can remit for that purpose is limited. Before forming the company:

• ask your bank, or the RMA's foreign exchange department, what approval is needed for your case;
• keep the formation cost small and pay it from an approved source;
• keep records of what you sent and why.

Many founders pay the formation fee once, with approval, and then let the US company fund itself from client income.

Bringing earnings home

Residents earning foreign currency from exports of goods or services are generally expected to bring the earnings back to Bhutan through the banking system within set periods. A US company does not change this: it is your company, and its profits are your foreign earnings. Plan to pay yourself regularly from the US account to your Bhutanese account, and keep invoices that match. An LLC that holds client money indefinitely abroad can cause trouble with both the RMA and the tax authorities.

The rupee peg

The ngultrum is pegged 1:1 to the Indian rupee, so a dollar's value in ngultrum moves with the rupee–dollar rate. Earning dollars through a US company is a natural hedge, especially for businesses that import from countries other than India.

Bhutan's new tax rules from 2026

Bhutan has overhauled its taxes:

• The Income Tax Act of Bhutan 2025 takes effect from 1 January 2026. Companies pay a single flat rate, reported at 22%, replacing the old 25% and 30% rates. Business income of individuals (sole proprietors and partners) is now taxed with personal income under progressive slabs, with income below Nu 300,000 untaxed.
• GST at 5% replaces the old sales tax from 2026.

Check the Department of Revenue and Customs notices for the exact slabs and rules.

What this means for a US company:

• A US LLC owned by an individual is usually treated in Bhutan as your own business income. Its profit is added to your other income and taxed under the progressive slabs, whether or not you pay it out.
• A Bhutanese company owning a US subsidiary pays Bhutanese tax at the flat rate on its own profits, and dividends from the subsidiary are taxed under Bhutanese rules.
• GST: services exported to US clients are generally treated differently from local sales under most GST systems. Check how the new GST law treats exported services and whether you must register.

Because this is a brand-new system, get local advice on your first year's return.

No US–Bhutan tax treaty

With no treaty, US domestic rules apply in full:

• 30% on dividends from a US corporation to a Bhutanese owner;
• 30% on US-source royalties;
• 30% on related-party interest.

A US LLC owned by a non-resident individual, with no US office or staff, usually avoids these questions altogether, because its profits are not US business income and it pays no dividends.

US LLC formation from Bhutan

US tax position

The IRS disregards a single-member LLC owned by a non-resident and treats its income as the owner's. If the owner runs the business from Bhutan, and the LLC has no US office, staff or dependent agents, the income is generally not effectively connected with a US business and is not taxed in the USA (see effectively connected income explained). The LLC must still file Form 5472 with a pro forma Form 1120 every year, and missing it carries a $25,000 penalty (see Form 5472 explained).

Example: a web developer in Thimphu

These figures are illustrative, at about Nu 85 to the dollar.

Karma builds websites and apps for small US businesses, found through referrals and online platforms. A Wyoming LLC with a US business account lets Karma invoice in dollars, take ACH payments and give clients a Form W-9. Annual revenue is US$40,000.

• USA: no US income tax; Form 5472 and a pro forma 1120 each year.
• Bhutan: the profit is Karma's business income, taxed under the progressive slabs from 2026.
• RMA: Karma had the small formation cost approved and transfers income to a Bhutanese bank every month.

US C-Corp formation from Bhutan

US tax position

A US corporation pays 21% federal tax plus any state tax on its profits, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained). Dividends to Bhutan are withheld at 30%.

Example: a Thimphu IT company's US arm

Take an illustrative case: an IT services company in Thimphu TechPark with 40 staff wants to win larger US contracts and hire a US sales manager. It forms a Delaware corporation as a subsidiary, with RMA approval for the investment.

• The US corporation signs US clients and employs the sales manager. Its profit after paying the Bhutanese company is taxed at 21%.
• The Bhutanese company does the development work and invoices the US corporation at arm's-length prices. That profit is taxed in Bhutan at the new flat corporate rate.
• Profits stay mostly in Bhutan through the service fees, and the US corporation keeps only a modest margin for its own US work.

See US subsidiary for a foreign company and LLC vs Inc for non-residents.

Tour operators selling to Americans

Bhutan's tourism model, with its Sustainable Development Fee for international visitors, attracts high-spending American travellers who book months ahead and pay large deposits. Some licensed Bhutanese tour operators use a US LLC to take US card payments and ACH at lower cost and to look familiar to US customers. The tours are performed in Bhutan, so the US LLC usually owes no US income tax, but you must still bring the earnings home and follow Bhutan's tourism rules. US states such as California and Florida have seller of travel rules for companies selling to their residents. See starting a travel agency or tour company for US travellers.

Which state

• Wyoming or New Mexico for a freelancer's or small agency's LLC.
• Delaware for a corporation, a subsidiary or a start-up.

See best state for non-residents.

What it costs

UCB's prices include state fees and the first year of registered agent service:

• Wyoming LLC with EIN: $249, or $348 with a US bank account application.
• Delaware corporation with EIN: $358.

A Wyoming LLC costs $121 a year to keep active, or $421 with the annual federal return. See what a US LLC costs every year.

Banking and documents

Use your Bhutanese passport. For proof of address: a Bhutan Power Corporation bill, a telecom bill or a bank statement in English.

US banks and fintechs see few Bhutanese applicants, so be specific:

• describe your clients and services clearly;
• have an English website or portfolio;
• show contracts or invoices with real clients.

Transfers to Bank of Bhutan, Bhutan National Bank, Druk PNB Bank, T Bank or BDBL arrive as US-dollar wires and are converted under RMA rules. See US business bank accounts for non-residents, Stripe for non-residents and receiving payments from US clients.

Mistakes to avoid

• Forming the company without checking RMA approval for the investment.
• Leaving earnings in the US account instead of bringing them home.
• Assuming the old tax rules still apply in 2026.
• Paying dividends from a US corporation at 30% when service fees would fit better.
• Forgetting Form 5472 because the LLC owes no US tax.

Frequently asked questions

Can a Bhutanese citizen open a US company without visiting the USA? Yes. The company, EIN and bank application are all done remotely.

Do I need an SSN or ITIN? No. The EIN is issued on Form SS-4 without either.

Do I need RMA approval? Owning a company abroad is an outward investment, which generally needs approval. Check with your bank or the RMA before you form it.

Does my US LLC pay US tax? Not if it has no US office, staff or agents. It files Form 5472 and a pro forma 1120 every year.

How is the LLC's income taxed in Bhutan? Usually as your own business income, under the progressive slabs from 2026.

How UCB can help

We form US companies for Bhutanese owners remotely: the state filing, EIN, registered agent, US business address and bank application, through our formation, EIN and bank account package. Each year we file the federal return through our US tax filing service. We do not advise on RMA approvals or Bhutanese tax. See the India guide and Nepal guide for neighbouring rules, and the IT services company guide.

Setting up a US company from Bhutan? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.