BUSINESS AND INVESTMENT INCENTIVES

Brunei, through its Vision 2035 has set out the direction of its economic goals with an emphasis on attracting foreign direct investments (FDIs) as a driver of growth.

It focusses mainly on economic activities that attract new industries, knowledge, technologies, markets and businesses as well as employment opportunities.

Through an open economy policy favourable to foreign trade and FDIs, the government continues its economic diversification efforts to limit its long reliance on oil and gas exports. This is part of the government’s reform agenda to ensure a pro-business and conducive investment climate.

Thanks to a slew of investment incentives, political stability and peaceful environment in the country, the last few years saw the country accelerating its pace on bringing in more FDIs.

The various investment incentives are offered by the Ministry of Energy, Manpower and Industry (MEMI) and through activities conducted by the Ministry of Foreign Affairs (MoFA) and the Brunei Economic Development Board (BEDB).

Brunei has also made some crucial amendments and streamlining of its laws to make it easier and quicker for entrepreneurs and investors to establish businesses.

One of the initiatives includes the amendment of the Business License Act (Amendment) of 2016 that exempts several business activities from needing to obtain a business license. Another is the Miscellaneous License Act (Amendment) of 2015 that reduces the wait times for new business registrants to start operations, with low-risk businesses like eateries and shops able to start operations immediately.

Other efforts to attract more foreign investment include the establishment of the BEDB, the FDI Action and Support Centre (FAST) and the Darussalam Enterprise (DARe). These organisations also work together to smoothen the process of obtaining permits, approvals and licenses. Facilitating services are now consolidated into one government website.

In an effort to encourage business activities, the Revenue Division of the Ministry of Finance (MoF) was appointed to handle the country’s tax administration. It continuously reviews and strengthens the income tax legislations to increase tax compliance and collection.

The division is also responsible for conducting and negotiating Avoidance of Double Taxation Agreement (DTA), Bilateral Investment Treaty (BIT) and Tax Information Exchange Agreement (TIEA).

Several units were also established in assisting taxation processes in the country. Under the Revenue Division, the System for Tax Administration and Revenue Services (STARS) is set up as an online tax system to facilitate companies in handling matters related to taxes such as filing of income tax returns and payment of corporate income tax online.

The Income Tax Board of Review (ITBOR) was established in February 2017 by the MoF to oversee processes of hearing, examining and settlement of objection cases as brought about by companies. ITBOR illustrates the ministry’s efforts in pushing for a transparent and fair corporate tax system.

There are no sales, payroll, capital gains, manufacturing and personal income tax. Corporate income tax in Brunei is at 18.5 per cent – which is one of the lowest in the region. However, companies involved in the exploration and production of oil and gas receive a tax rate of 55 per cent. Newly incorporated companies receive an exemption for the first BND100,000 chargeable income.

Additionally, a tax threshold is granted to both newly incorporated and existing companies to reduce the tax liabilities of Small and medium-sized enterprises (SMEs). Other notable incentives include tax relief for capital expenditure in excess of BND1 million and the withholding of tax exemptions for interest on certain loans from non-residents.

The country does not levy any indirect taxes such as value added tax (VAT) or other consumption based taxes. It also has no export duty. Property tax is only imposed on properties for commercial use with rates determined by the local municipal board.

More foreign companies are choosing the country as their preferred investment destination to take advantage of the congenial business atmosphere.

With smooth processes and efficiency in mind, Brunei throughout the years has successfully enhanced the business environment and the government’s pro-business policy has led to significant improvement in the country’s position in the 2019 World Bank’s Ease of Doing Business ranking from 72 in 2017 to 55 in 2019.

BEDB, FAST and other relevant government agencies work closely to provide assistance to investors from submission of proposals up to implementation and operation of projects with the FDI processes streamlined for quicker approval.

Companies incorporated in Brunei are permitted to have 100 per cent foreign ownership. Credible co-investment partnerships are available with partners including MoF’s Strategic Development Capital (SDC) Fund and Government Linked Companies (GLCs).

Brunei laws foster a pro-business and proinvestor environment featuring a robust and comprehensive Intellectual Property (IP) Protection and accessibility to international filing routes. The country also has one of the lowest tariffs for basic utilities in the region, keeping business operating costs to a minimum and readily available infrastructure of over 30 designated industrial sites with good connectivity to roads, water, electricity, broadband Internet and more.

The government of His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam, through the Ease of Doing Business Steering Committee, has been actively driving business reforms.

These reforms streamline inefficient government processes, ensure the costs of doing business are competitive and assure that regulations are aligned with international best practices.

The initiatives have resulted in signs of increased confidence in Brunei as a destination for investments – manifested in the recent healthy influx of FDIs from different sectors.

Improving the business environment and ultimately Brunei’s global competitiveness is a key priority of His Majesty’s government to ensure the country sustains the right trajectory to achieve Brunei Vision 2035.