Bhutan’s push toward clean energy development took a major step forward this week as the country’s National Assembly introduced the Renewable Energy Tax Exemption Bill 2026, a measure designed to encourage greater investment in the sector.
The proposed legislation offers targeted and time-bound tax incentives for renewable energy initiatives, including hydropower and solar projects, as the Himalayan kingdom seeks to expand its energy capacity and strengthen long-term economic resilience.
Presenting the Bill in Parliament, Finance Minister Lekey Dorji said the initiative is intended to enhance Bhutan’s energy security while supporting sustainable economic growth. According to the minister, the country must create a more attractive investment climate to accelerate the development of renewable energy infrastructure.
Under the proposed framework, approved renewable energy projects would receive exemptions on several indirect taxes as well as property transfer tax. The incentives, however, would not apply indefinitely. The Bill specifies that the exemptions would remain in effect only until Bhutan reaches its national renewable energy generation target of 25 gigawatts or until December 31, 2040 — whichever comes earlier.
The legislation also lays out a formal definition of renewable energy activities and establishes a two-stage approval mechanism for projects seeking tax benefits. Applications would first be reviewed by the ministry responsible for the energy sector before being forwarded to the Ministry of Finance for final approval.
Lawmakers have now referred the Bill to the Economic and Finance Committee for detailed examination. The committee is expected to submit its findings and recommendations to the National Assembly by June 3.
The move reflects Bhutan’s broader efforts to diversify and modernize its energy sector while maintaining its commitment to environmentally sustainable development.
