People who obtained vehicle import quotas under their entitlement schemes but had been uncertain about how to use them after the discontinuation of the entitlement system can finally move forward with clarity.
In a notification issued on May 31, 2026, the Ministry of Finance (MoF) introduced transitional measures governing vehicle import quotas issued before the entitlement system was discontinued. The ministry said the provisions are intended to provide “transitional treatment” and safeguard the value of the benefit that had already been conferred on eligible quota holders.
According to the notification, vehicle import quotas issued before the discontinuation of the entitlement system will remain valid provided they are still within their original validity period and have not been utilized.
“For vehicle quota that were originally entitled to full exemption from Customs Duty and Sales Tax shall likewise remain fully exempt. Only the Green Tax amount referred to in paragraph 1 shall remain payable,” the current notification reads.
It states that “the Green Tax (GT) applicable under the erstwhile tax regime shall continue to be payable, at the applicable GT rate based on the vehicle category and engine capacity, computed on the vehicle’s Free on Board (FOB) value.”
The notification also provides clarity for those holding vehicle import quotas with a ceiling value of Nu. 800,000.
“For vehicle import quotas of ceiling 0.800 million, GST, Excise Tax and Customs Duty shall be exempt only up to the quota ceiling of Nu. 0.800 million of the vehicle’s value provided that the Green Tax amount referred to in paragraph 1 shall remain payable,” the notification states. Where the imported vehicle’s value exceeds the approved ceiling, GST, Excise Tax and Customs Duty shall be payable at the prevailing rates on the value exceeding the quota ceiling.
For example, if a vehicle imported under the quota is valued at Nu. 1 million, the exemption will apply only to the first Nu. 800,000, while taxes will be payable on the remaining Nu. 200,000.
The ministry has also retained the existing seven-year validity period for vehicle import quotas. Quotas will remain valid for seven years from the date of issuance, and no extensions or renewals will be granted once the validity period expires. Holders are therefore encouraged to utilize their quotas within the stipulated timeframe.
The latest notification follows the sweeping tax reforms introduced with Bhutan’s adoption of the GST regime.
On August 1, 2025, the Ministry had issued a notification explaining the implications of the transition from the previous tax system to the GST framework. The notification stated that the existing Sales Tax and Green Tax regimes would be repealed and replaced by GST and Excise Tax once the new legislation came into force.
The ministry had further clarified that all existing Sales Tax exemptions, including those attached to vehicle import quotas with seven-year validity, would cease once the new tax laws became effective. Since the GST and Excise Tax laws do not recognize the previous vehicle quota exemption framework, many beneficiaries were left uncertain about whether they would lose benefits that had already been granted but not yet utilized.
The August 2025 notification had also stated that vehicle quota exemptions would no longer apply under the GST and Excise Tax framework and that the entitlement would continue only in relation to Customs Duty. “It is important to note that the vehicle quota exemption will no longer be applicable to the GST and Excise Tax Frameworks. However, vehicle quota exemptions will continue to be valid only for Customs Duty only,” the notification stated. This created confusion among quota holders, many of whom delayed importing their vehicles while awaiting further guidance from the government.
The latest notification resolves much of that uncertainty by laying out a transitional mechanism that preserves the original value of previously issued quotas while aligning them with Bhutan’s new tax system.
By recognizing existing entitlements and specifying how Customs Duty, GST, Excise Tax and Green Tax will be treated, the government has provided long-awaited certainty for individuals who were concerned that their unused quotas might become ineffective following the tax reforms.
The transitional arrangement is expected to benefit many eligible quota holders who have been waiting for official clarification before making decisions on importing their vehicles. At the same time, the government has made it clear that the concession is a one-time transitional measure, with no extension beyond the original seven-year validity period.
With the policy now clarified, eligible quota holders can proceed with greater confidence, knowing that the value of the benefits granted under the previous entitlement system has been largely preserved while ensuring consistency with Bhutan’s new GST-based taxation framework.
Tashi Namgyel, Thimphu
