Brunei legal and accounting and tax considerations in 2024
Corporate income tax considerations
- All companies in Brunei are subject to corporate income tax rate of 18.5%, levied on their earnings;
- Oil and gas companies are however subject to a higher corporate income tax rate of 55%;
- Interests paid to non-residents is subject to a withholding tax of 15%;
- A 10% withholding tax is applicable on royalties paid to non-residents unless reduced under a double tax agreement;
- A 20% withholding tax is applicable on technical services fees paid to both resident and non-resident entities.
Tax incentives in Brunei
- Brunei does not impose i) capital gains tax, ii) VAT, nor iii) withholding tax on dividends paid to both resident and non-residents;
- A plan and machinery establishment between 2012 and Dec 2017 can claim a 15% credit on their new investment;
- Export oriented companies are permitted an option of paying a fixed 1% tax rate on all exports in lieu of corporate tax;
- Tax exemptions are also available for those companies approved under the pioneer industry and products;
- Companies are permitted a carryforward of their losses for up to 6 years and a carryback of one year.
- All companies must file corporate tax returns by 30th June with Collector of Income Tax (CIT) at the Ministry of Finance;
- Companies must file annual returns separately as filing consolidated tax returns is not permitted;
- Failure to file tax returns in time may lead to a fine of US$7,000 or imprisonment of up to 1year;
- Brunei does not impose foreign exchange controls; however, movement and exchanges of currency is monitored.
Other tax considerations
- Salary and other benefits paid to a non-resident director are subject to a 20% withholding tax;
- Employers must contribute i) 5% on their employees’ remuneration to the Employees Trust Fund and ii) 3.4% to the Supplemental Contributory Pension (SCP);
- Real estate is subject to i) a 12% property tax in Bandar Seri Begawan and ii) tax-exempt in the rest of the country;
- Brunei has so far signed double taxation treaties with 18 countries globally 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.
Legal and complianceHealy Consultants Compliance Department assists our Clients to efficiently and completely discharge their Brunei legal and compliance obligations when establishing and doing business in Brunei Darussalam.
Company compliance considerations
- Under the Brunei Companies Act all companies must file annual returns with the Registrar of Companies;
- All companies are also required to appoint auditors to annually audit company accounts and report to the shareholders;
- Companies must also maintain minutes books for meeting between shareholders, directors and managers and be ready to provide the same upon request by the Government;
- To comply with the Dealer License requirements, the company’s premises may be inspected by a Government health officer;
- Public companies must also prepare annual balance sheet and profit and loss account supported with a director’s report.
Staff and employment considerations
- All employment contracts must be put in writing and translated into Bahasa Malaysia, the country’s official language;
- Brunei nationals are permitted to commence formal employment from the age of 16 onwards;
- All new employees must undergo a medical examination, which must be paid by the employer;
- New employees are entitled to i) 1 rest day per week without pay ii) 7days annual paid leave and iii) 11days of paid public holidays;
- Employment contracts can be terminated with a i) 1month notice after 5years of service and ii) no severance pay in Brunei;
- There is no minimum wage regulation in Brunei and employers can negotiate a suitable salary with their employees.
Sharia and miscellaneous Muslim considerations
- 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:
- Refraining for consuming alcohol and non-halal products;
- Performing prayers (notably on Fridays);
- 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.