Accounting and tax
- All Brunei companies are subject to corporate tax, levied on their earnings at a rate of 20%, but companies selling goods or services abroad can opt for a 1% tax on related income in lieu of corporate tax. Corporate tax returns must be filed by June the 30th and paid by October the 1st;
- There is no sales tax or VAT in Brunei;
- Dividends paid by a Brunei company are exempted from withholding tax, provided they have been assessed against income tax;
- Withholding tax is levied at a rate of i) 15% on interest and ii) 10% on royalties payments, unless reduced by a tax treaty;
- Salary and other benefits paid to a non-resident director are subject to a 20% withholding tax;
- Employers must i) pay contributions of 8.5% on their employees’ gross salaries to the Employees Trust Fund and ii) withhold 8.5% of their employees’ basic salaries, to be remitted to the same Fund;
- Brunei companies can carry forward their business losses for up to three years. Losses can furthermore be carried back one year;
- Real estate is i) subject to a property tax of 12% in Bandar Seri Begawan (Brunei’s capital) and ii) tax-exempt in the rest of the country;
- Brunei has signed double taxation treaties with 13 countries including i) the UK ii) Indonesia iii) Malaysia iv) China v) Singapore vi) Hong Kong vii) Qatar and viii) the United Arab Emirates to reduce withholding tax on payments abroad;
- Healy Consultants Compliance Department will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budget and sensitivity analysis;
- It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.
Legal and compliance
Brunei administration is notoriously slow and inefficient and procedures involve plenty of red tape. As a result, the country is only ranked as the 101th best place to do business by the World Bank. Fortunately, formation procedures of offshore companies are completed with the Brunei International Financial Centre (IBC), a much more efficient institution.
- All employment contracts must be put in writing and translated into Bahasa Malaysia. Bruneians are allowed to work from 16 years old onwards;
- All new employees must go through a medical examination, which must be paid by the employer;
- All employees are entitled to i) 1 ½ rest days per week (ie. Fridays unless agreed otherwise) ii) 12 days of annual paid leave and iii) 14 days of paid public holidays;
- Employers are free to set wages in Brunei, as the Sultanate does not implement minimum wage regulation;
- Employment contracts can be terminated with a i) 1 month notice and ii) no severance pay in Brunei.
- All Brunei companies must submit i) audited annual financial statements and ii) annual statements on current shareholders and directors to the Ministry of Finance’s Economic Planning Unit;
- All companies must maintain minutes books for meeting between i) shareholders ii) directors and iii) managers. These documents must be immediately available, upon government request;
- The company’s premises and employees’ dormitory (if applicable) may be inspected by a government health officer in order to verify compliance with the rampaian license requirements.
Sharia and miscellaneous Muslim requirements
- Brunei is the only country in Southeast Asia that implements Shariah law, progressively introduced since 2014;
- All alcoholic beverages are strictly prohibited in Brunei Darussalam, even for non-Muslims and foreigners;
- Foreigners can be sued if they prevent a Muslim from observing his/her religious practices, which include i) refraining for consuming alcohol and non-halal products ii) performing prayers (notably on Fridays) and iii) fasting during the month of Ramadan;
- All Muslim individuals and businesses are required to pay zakat, a 2.5% wealth tax used to assist the poor and needy;
- Because Brunei is an Islamic Malay Monarchy, it is strictly forbidden to make negative comments regarding the current Sultan and his family. Most Bruneian businesses also display a portrait of the Sultan as a sign of respect.