Favourable Tax System

Brunei Darussalam has the least number of taxes in the region. There is no tax on sales, payroll, capital gains, manufacturing and personal income.

In terms of corporate income tax, the rate in Brunei is 18.5 per cent, one of the lowest in the region. Companies involved in the exploration and production of oil and gas receive a tax rate of 55 per cent.

Corporate income tax is levied on limited companies incorporated or registered under the Companies Act (Chapter 39) or any law in force elsewhere, usually as a “Sdn Bhd”, “Bhd” or “Pvt Ltd”, which accrues in, derives from or receives income in Brunei.

Exemption is granted to newly incorporated companies for the first BND100,000 chargeable income during the first three consecutive years of assessment falling within or after year of assessment 2008.

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). Unincorporated companies – sole proprietorships or partnerships registered as business names – are not subject to income tax.

Companies that have been granted a pioneer certificate in certain industries and products will receive a tax relief period between five to 20 years, depending on the conditions. Pioneer companies are exempt from income tax, as well as import duties on machinery and raw materials.

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 consumptionbased taxes. It also has no export duty. Properties for commercial use are subject to property tax with rates determined by the local municipal board.

The Revenue Division of the Ministry of Finance and Economy (MoFE) is in charge of Brunei Darussalam’s tax administration. In April 2012, the System for Tax Administration and Revenue Services (STARS) was officially rolled out, a self-service online tax system for taxpayers and tax professionals.

The online systems allow companies to file income tax returns and pay corporate income tax online, among others.

Registration can be made online at www.stars. gov.bn.

With a favourable tax system, Brunei is increasingly becoming the preferred investment destination for foreign companies.