Property Tax Act of Bhutan 2022

The Property Tax Act of Bhutan 2022 is the law that moved Bhutan from area-based to value-based property taxation. Passed by Parliament in December 2022 and in force from 1 January 2023, it replaced the property-taxation policy of 1992, under which land tax had been charged at nominal per-acre rates unchanged for three decades.^[1]

Because the old rates were so low and the revaluation so overdue, the transition produced some of the sharpest single-year tax increases in the country's history — and with them, the first of the public backlashes over taxation that would recur with the vehicle-tax revisions of 2024 and the GST rollout of 2026.

How the tax works

The Act levies an annual tax of 0.1 per cent on the taxable value of all registered land, and a further 0.1 per cent on the taxable value of buildings. Land values are set by the Property Assessment and Valuation Agency (PAVA), computed as the average of three inputs: the prevailing market rate, the bank rate, and the pre-existing PAVA compensation rate. Building values are derived from annual rental value, a capitalisation rate, and assessed worth. The Act also brought vacant urban land within the tax net.^[2][3]

The Act carries a schedule of concessions: 50 per cent for cultivated dry land, 90 per cent for wetland, 50 per cent for self-occupied traditional houses, 70 per cent for traditional houses in protected areas, and 90 per cent for highland communities.^[3]

Impact and public reaction

The first bills under the new law landed in 2023 and the jumps were dramatic. A ten-decimal plot in core Thimphu that had cost a little over Nu 2,100 (~USD 24) a year was now assessed at more than Nu 26,500 (~USD 300). An acre of rural dry land in Samtse went from Nu 12 to about Nu 780 (~USD 9) even after the 50 per cent cultivation concession. BBS reported rural households — many wholly dependent on agriculture — "feeling the heat," and a Ministry of Finance official acknowledged the pinch was real, noting the country had not revised property taxes in almost thirty years.^[4]

Revenue moved as sharply as the bills. Kuensel reported property-tax collections rising over 900 per cent in the first year, to Nu 616.94 million (~USD 7 million).^[5] The government responded to the discontent with relief rather than repeal: the Finance Minister told Parliament there would be no changes to the Act itself, with PAVA rates to be reviewed instead,^[6] and a 90 per cent concession was later applied to urban plots where construction and development are restricted. Together with rising uptake of the cultivation concession, relief measures brought collections down to Nu 570.82 million in FY 2024-25 — about 0.9 per cent of domestic revenue.^[7]

See also

• Tax System of Bhutan
• Income Tax Act of Bhutan 2025
• Goods and Services Tax (Bhutan)

References

1. Property Tax Act of Bhutan, 2022 — ECOLEX legislative record
2. Property taxes to go up as Bill says 0.1% land and building tax based on actual value — The Bhutanese
3. MoF explains tenets of the Property Tax Act of Bhutan 2022 — Business Bhutan
4. People feeling heat of new property tax — BBS, 2023
5. Property tax revenue sees over 900 percent increase to Nu 616.94 million — Kuensel
6. No changes to Property Tax Act, PAVA rates to be reviewed — Finance Minister — BBS
7. National Revenue Report FY 2024-25 — Department of Revenue and Customs (Rules on the Act: MoF PDF)