Vehicle Import Tax

Bhutan’s taxation policy on vehicles has seen some remarkable changes in the last few years. There is sufficient room to assume, vehicle taxes may further go up given the increasing number of vehicles especially in the city.

The ban on import of cars was lifted in July 2014 and since then, on average around 22 new cars hit the roads of Bhutan everyday.

In general, the government’s transport policy has been mostly focussed on popularising eco friendly electric vehicles and reducing the import of fuel run cars that not only leaves its mark on the environment but also puts pressure on the rupee reserve.

In fact, vehicle taxes were revised in a bid to discourage people from buying and thus reduce car imports. A new green tax was also introduced to counter environmental impact through emission.

The new taxes came into force on July 1, 2014. The levy progresses as the engine capacity of the vehicle increases.

However, electric cars are absolutely tax-free. 

For normal fuel run vehicle, there are three components of taxes levied – sales tax, customs duty and green tax. However, vehicles imported from India are exempt from customs duty.

For easy understanding of the government’s current tax structure, the following table should come in handy.

Engine Capacity Customs duty Sales Tax Green Tax TOTAL TAX
Up to 1500 cc 45% 45% 10% 100%
1500cc-1799cc 50% 50% 15% 115%
1799cc-2500cc 50% 50% 20% 120%
2500cc-3000cc 50% 50% 25% 125%
3000cc and above 100% 50% 30% 180%
       * Vehicles imported from India are exempt from Customs duty


Once you start driving your car, you are also bound to pay a separate 5 per cent green tax on fuel that is embedded on the price of every litre of petrol and diesel you buy from the gas station.

For hybrid cars of up to 1500 cc, you will be levied a sales tax of 20 per cent, another 20 per cent customs duty and 5 per cent green tax, totalling 45 per cent. It increases by five per cent for every higher engine specification (Cylinder Capacity).

The separate 5 per cent green tax on fuel was introduced to support the government’s policy of clean and sustainable transportation system. In so far, promoting electric cars has been one of government’s main priority areas.

Of late, varieties of electric and hybrid cars are making headway into the Bhutanese market, albeit stiff competition from the normal fuel run cars.


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