Brunei Income Tax Rates

Brunei does not levy any income tax on individuals. There are also no capital gains tax, export, sales or payroll tax in Brunei.

Brunei does not currently levy any income tax on individuals or other bodies of persons, apart from companies. Partnership income is apportioned to the partners. Accordingly, individuals trading in partnerships are not at present subject to income tax. However, corporate partners are taxed in the same way as a corporation on the corporate partner's share of profits.

Social Security Taxes: There are no social security taxes in Brunei. However, all Citizen and Permanent Residents of Brunei must contribute 5% of their salary to a State managed provident fund. The employer will have to also contribute the same amount for its employees to the provident fund.

Stamp Duty: Stamp duties are levied on a variety of documents in Brunei. Certain types of documents attract an ad valorem duty, whereas with other documents the duty varies with the nature of the documents.

Property Taxes: Properties under commercial use are subjected to property tax based on the estimated value of the property. The quantum is decided by the local municipal board.

Customs Duty: In general, basic foodstuffs and goods for industrial use are exempted from import duties. Cigarettes and manufactured tobacco are dutiable items, importers and exporters in Brunei Darussalam will have to pay more than 200 percent duty for these items.

Excise Duty: The Excise Act covers the retail sales of liquors. Since Brunei prohibits the sale of any forms of alcohol there are no excise duties.

Gift Tax: There is no gift tax in Brunei.

Payroll Tax: There is no payroll tax in Brunei Darussalam.

Capital Gains Tax: There is no income tax on individuals in Brunei.

Dividends: There is no income tax on individuals in Brunei Darussalam.

Brunei Corporate Tax Rate

Brunei corporate tax rate for 2010 is 23.5%.

Petroleum Tax: A special legislation exists in Brunei in respect of income from petroleum operations, which is taxable under the Income Tax (Petroleum) Act 1963. This legislation follows the general pattern of most Middle East oil-producing countries. The petroleum tax rate in Brunei is a fixed rate of 55%.

Brunei Tax Exemptions

- No Personal Income Tax
- No Sales Tax
- No Payroll Tax
- No Export Tax
- No Manufacturing Tax
- No Capital Gains Tax

Brunei Tax Incentives

- Pioneer Status Companies
   . Exempt from Corporate Income Tax
   . Exempt from import duties on machinery
   . Exempt from import duties on raw materials
   . Tax exemption for up to 11 years
- Expansion of Established Enterprise
   . Exempt from Corporate Income Tax
   . Minimum capital expenditure of US$ 650,000
   . Tax exemption up to 20 years
- Foreign Loans for Productive Equipment
   . Exemption from withholding tax for interest paid
   . Minimum amount US$ 130,000

Brunei Corporate Taxation in General

Brunei Darussalam is a Sultanate. The Collector of Income Tax has responsibility for the general administration of the Sultanate tax legislation. The Sultanate also levies customs and excise duties. There is no payroll, manufacturing, export or sales taxes. The tax year (known as the year of assessment) runs from January 1 to December 31 of each year. There is no direct taxation of individuals in Brunei.

Income tax applies to resident companies on their worldwide income. For non-resident companies, income tax is payable on their income sourced in Brunei, or on the profits of their business(es) in Brunei operated through a branch or permanent establishment.

Income tax for a year of assessment is computed on the basis of income derived in the preceding calendar year from each source of income. In the case of a trade, business, profession or vocation, where the accounting year ends on a date other than December 31, the Collector of Income Tax normally accepts the accounting year as the basis year instead of the calendar year. Under such circumstances, tax is assessed on the income for the accounting year ending within the preceding year, the year of assessment.

There is no capital gains tax in Brunei. However, where the Collector of Income Tax can establish that the gains form part of the normal trading activities, they become taxable as revenue gains.

Brunei instituted a tax-privileged International Financial Centre (BIFC) providing regimes for banking, insurance, investment funds and trust management. Accordingly, Brunei is a dual jurisdiction, whereby the international legislation offers offshore facilities, alongside the usual range of domestic legislation drawn from that of England and Wales. Legislation passed in 2000 introduced a number of additional corporate forms which are available to business operations in the International Financial Centre, including International Business Companies, International Limited Partnerships, and International Trusts.

Types of Businesses in Brunei

- Sole Proprietorship: Not subject to corporate tax
- Partnership: Not subject to corporate tax
- Private Company (Sendirian Berhad or Sdn. Bhd / Pty. Ltd): Subject to 25.5% gross profit corporate tax. Companies incorporated after 1 January 2008 are exempted from corporation tax for up to $100,000 of its profits for the first 3 years of assessment.
- Public Company (BERHAD or Bhd. / Plc): Subject to 25.5% gross profit corporate tax. Companies incorporated after 1 January 2008 are exempted from corporation tax for up to $100,000 of its profits for the first 3 years of assessment.
- Branch of Foreign Company: Subject to 25.5% gross profit corporate tax.
- Joint Venture: Subject to 25.5% gross profit corporate tax.

Capital Gains Tax: There is no capital gains tax in Brunei Darussalam. However, where the Collector of Income Tax can establish that the gains form part of the normal trading activities, they become taxable as revenue gains.

Taxation of Dividends: Dividends accruing in, derived from or received in Brunei by a corporation are included in its taxable income, except for dividends received from a corporation taxable in Brunei (which are excluded). No tax is deducted at source on dividends paid by a Brunei corporation.

Dividends received in Brunei from the United Kingdom or Commonwealth countries are grossed-up in the tax computation and credit may be claimed against the Brunei tax liability for tax suffered, either under the DTA with the United Kingdom or the provisions for Commonwealth tax relief. Dividends received from other countries are included 'net of tax' in the tax computation and no foreign tax credit is available.

Brunei does not impose any withholding tax on dividends.

Exempt Income: There is no income specifically exempt from tax in Brunei.

Grouping / Consolidation: There are no provisions in the existing tax legislation for the filing of group tax returns or group relief.

Property Tax: Properties Under commercial use are subjected to property tax based on the estimated value of the property. The quantum is decided by the local municipal board.

Tax Administration: The Collector of Income Tax, Ministry of Finance is responsible for the general administration of the Sultanate tax legislation in accordance with the Income Tax Act, Cap 35 (Revised Edition 2003), Income Tax Act (Amendment) Order, 2008 and Income Tax Act (Amendment) (No.2) Order, 2008.

Income Tax Returns and Payment of Company Tax: Upon receipt of the Income Tax Returns Forms, a company is required to submit their tax returns within three months from the date of the return. However, an extension of time is permitted on a case by case basis and the extension period is at the discretion of the Collector of Income Tax if an application is made.

Each company must submit an income tax return. There is no provision for consolidated returns. The profits of a company are subject to tax at the rate as written above.

Company tax is paid in arrears and is payable within 30 days from the date that the actual or estimated tax assessment is raised by the Collector of Income Tax.

Double Tax Relief: Brunei provides unilateral relief against international double taxation on income arising from Commonwealth countries that provide reciprocal relief. However, the maximum relief cannot exceed half the Brunei rate. This relief applies to both resident and non-resident companies.

Withholding Taxes in Brunei: With effect from January 1, 2008, withholding tax shall be payable on the following payments which are sourced in Brunei Darussalam or deemed to be sourced in Brunei Darussalam at the following rates:
- Interest, commission, fee or other payment in connection with any loan or indebtedness: 15%
- Royalties or other lump sum payments for the use of movable properties: 10%
- Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information: 10%
- Technical assistance and Service Fees: 20%
- Management Fees: 20%
- Rent or other payments for the use of movable property: 15%
- Nonresident Directors' Remuneration: 20%

Penalties for Late Payment: Any taxpayer who fails to deduct or pay withholding tax to the Collector of Income Tax within the specified period, shall be chargeable with penalties at the following rates:
a) A penalty of 5 percent will be imposed on the tax withheld if it is not received by the Collector of Income Tax within 14 days after the date of payment of income to the nonresident person
b) An additional penalty of 1 percent will be imposed for each completed month that the tax withheld remains unpaid, up to a maximum of 15 percent if the tax withheld is not paid over the Collector of Income Tax after 30 days from the date of payment of the income to the non-resident person.