CIT and dividends from DHI at the top of the finance pipeline.
The Ministry of Finance (MoF) has announced that the total estimated resources for the fiscal year (FY) 2025–2026 will amount to approximately Nu 97.77 billion. Finance Minister Lekey Dorji attributed this projection to the government’s ongoing efforts to maintain economic stability, promote national development, and safeguard social welfare.
The projected resources are diversified across multiple revenue streams, including direct and indirect taxes, non-tax revenue, external grants, and other miscellaneous receipts—signaling a strategic and balanced approach to fiscal planning.
Direct Taxes
A significant share of the total revenue—estimated at Nu 32.25 billion—is expected from direct taxes. This includes, Corporate Income Tax (CIT), which is projected at Nu 15.43 billion. CIT represents the largest contributor among direct taxes. This reflects both a robust corporate sector and the government’s focus on enhancing corporate tax compliance.
Business Income Tax (BIT) is estimated to bring in about Nu 1.97 billion. This category captures revenue from non-corporate business entities.
Meanwhile, taxes from Personal Income Tax (PIT) is forecasted at Nu 3.35 billion. PIT projections are supported by improved assessment and compliance initiatives, aligning with the government’s commitment to equitable taxation.
A further Nu 11.41 billion is expected from property taxes and various other direct levies, reflecting efforts to broaden the tax base and ensure revenue capture from diverse sources.
Indirect Taxes
Indirect taxes are projected to generate Nu 14.68 billion. Key components include, sales tax, which is estimated at Nu 10.88 billion. It is the largest among indirect taxes, driven by continued consumption in sectors such as retail and hospitality.
Domestic Excise Duties are projected at Nu 854.09 million, primarily from alcohol, tobacco, and petroleum products, while it is expected that Green Tax would bring in Nu 1.40 billion, reflecting policy efforts to promote environmental sustainability through taxation.
Additionally, Customs Duty is estimated to contribute Nu 865.96 million, supporting both trade regulation and domestic industry protection. Other Indirect Taxes are projected to contribute an additional Nu 680.91 million. It includes luxury taxes, hotel taxes, and miscellaneous levies.
Non-Tax Revenue
Non-tax revenue is expected to contribute Nu 23.52 billion, comprising dividends from Druk Holding and Investments (DHI), which is estimated at Nu 6.48 billion.
The Royal Monetary Authority’s (RMA) Surplus Transfer is projected at Nu 2.26 billion, while profits from Bhutan Power Corporation’s PHEP-II is expected to contribute Nu 3.28 billion.
These revenues reflect the effective utilization of state-owned enterprises and government assets to support public expenditure.
Other Receipts
Miscellaneous income, including fees, fines, and service charges, is estimated at Nu 11.50 billion. Additionally, other receipts—amounting to Nu 1.89 billion—are forecasted from various government operations and sources.
External Grants
External grants remain a crucial source of revenue, with an estimated Nu 25.42 billion. These grants reflect Bhutan’s continued partnerships with development allies and international agencies committed to supporting the country’s development goals.
Medium-Term Budget Overview (FY 2023–2028)
The Ministry also outlined projections for broader fiscal trends. Total resources are expected to rise from Nu 70 billion in FY 2023–2024 to over Nu 105 billion by FY 2026–2027. However, government expenditure is also projected to increase significantly, peaking at Nu 114 billion in FY 2025–2026 before moderating.
The fiscal deficit, which was relatively modest at Nu 431 million in FY 2023–2024, is projected to widen considerably, reaching approximately Nu 21.4 billion in FY 2025–2026—representing the highest deficit over the period, at over 6% of GDP. It is expected to narrow again to about Nu 2.7 billion by FY 2027–2028.
This fiscal trajectory reflects growing expenditures in both recurrent spending—such as salaries and operational costs—and capital investments, particularly in infrastructure, which are expected to peak in FY 2025–2026.
The FY 2025–2026 resource estimates demonstrate the government’s commitment to strategic fiscal management amid evolving economic conditions. Through a diversified revenue approach and planned investments, Bhutan aims to balance growth with fiscal sustainability while continuing to strengthen its development partnerships and institutional capacities.
Sherab Dorji from Thimphu
