A company resident in Brunei Darussalam is liable to income tax on its income derived from or accrued in the country, or received from overseas. Meanwhile, a non-resident company is only taxed on its income arising in Brunei.
Companies are subject to tax on the following types of income: gains of profits from any trade, business or vocation; dividends received from companies not previously assessed for tax in Brunei; interest and discounts; and rents, royalties, premiums and any other profits arising from properties.
There is no Capital Gains Tax in Brunei. However, if the collector of income tax can establish that the gains form part of the normal trading activities, they become taxable as revenue gains.
Corporate income tax in Brunei is 18.5 per cent, one of the lowest in the region. To aid the development of micro, small and medium enterprises (MSMEs), companies with gross sales or turnover not exceeding BND1 million are exempted from corporate tax. Meanwhile, companies involved in the exploration and production of oil and gas receive a tax rate of 55 per cent.
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 SMEs.
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 also exempt from income tax, as well as import duties on machinery and raw materials. Unincorporated companies – sole proprietorships or partnerships registered as business names – are not subject to income tax.
To encourage export activities in respect of approved types of export, a flat tax rate of one per cent has been introduced. Under this treatment, total turnover of the exporter is treated as exports, if the local sales do not exceed 20 per cent of the total turnover.
The country does not levy any indirect taxes such as value-added tax (VAT) or other consumption-based taxes. 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 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.