Brunei DarussalamTax Obligations Detailed

In Brunei Darussalam, employers have several tax obligations, primarily contributing to employee pension funds.

Employer Contributions

• Tabung Amanah Pekerja (TAP): Employers contribute 5% of the employee's basic salary to this mandatory retirement savings plan.
• Supplementary Contributory Pension (SCP): Employers contribute 3.5% of the employee's basic salary to this supplementary pension scheme. The minimum contribution is BND 17.50, capped at BND 98.

Corporate Income Tax

• The corporate income tax rate is 18.5%. This applies to all limited companies, whether registered in Brunei or overseas, or operating as a foreign branch in Brunei, and is levied on income derived within Brunei.
• The first BND 100,000 of assessable income is taxed at 18.5% on 25% of that amount. For the next BND 150,000, 50% of that amount is taxed at the 18.5% rate.
• Tax returns must be filed within three months of the end of the financial year, which is typically December 31st.

Other Taxes

• There are no personal income taxes, capital gains taxes, VAT (Value Added Tax), payroll taxes, sales taxes, manufacturing taxes, or export taxes in Brunei.
• There is no withholding tax on dividends, interest, royalties, or technical service fees for resident companies. Non-resident companies may be subject to withholding tax rates ranging from 2.5% to 10%.

Additional Information

• Tax deadlines: Corporate income tax returns are due within three months of the end of the accounting period. Although there are monthly deadlines for other taxes and contributions (such as payroll tax and business activity statements), these do not directly apply to employers in Brunei due to the absence of those specific taxes.
• No Social Security Taxes: Brunei does not have social security taxes. The TAP and SCP schemes serve as the primary social safety net programs.

Information is current as of February 5, 2025, and may be subject to change.

In Brunei Darussalam, employee tax deductions primarily revolve around contributions to social security and retirement funds, rather than direct income tax.

Employee Contributions

• Tabung Amanah Pekerja (TAP): Employees contribute a minimum of 5% of their basic salary to this mandatory retirement savings fund. Employers match this contribution.
• Supplemental Contributory Pension (SCP): Employees contribute 3.5% of their basic salary to this additional pension scheme. Employers also match this contribution.

Employer Contributions

• TAP: Employers contribute 5% of the employee's basic salary, matching the employee's contribution.
• SCP: Employers contribute 3.5% of the employee's basic salary, matching the employee's contribution.

No Personal Income Tax

Brunei Darussalam does not levy personal income tax on residents or non-residents. Therefore, there are no income tax deductions in the traditional sense. The focus is on social security contributions (TAP and SCP).

Other Deductions from Salary

Employers can also make other deductions from an employee's salary for items such as:

• Absence from work
• Damage to or loss of company property
• Meals provided by employer at employee's request
• Housing accommodation
• Amenities and services
• Loan repayments
• Overpayment adjustments

Additional Considerations for Foreign Workers

Expatriate workers should confirm their specific TAP and SCP obligations with the relevant authorities, as regulations may vary.

Corporate Income Tax (CIT)

While not an employee deduction, it's important to be aware of the corporate income tax rate, which is 18.5% in Brunei. The first BND 100,000 of assessable income is taxed at 18.5%, and the next BND 150,000 is taxed at half this rate (9.25%).

It's recommended to consult official government resources or a qualified tax advisor for the latest information, as regulations can change. The information provided here is current as of February 5, 2025.

In Brunei Darussalam, there is currently no Value Added Tax (VAT) or Goods and Services Tax (GST).

Corporate Income Tax

• A company is resident in Brunei for tax purposes if its control and management are exercised within the country. Resident companies are taxed on worldwide income, while non-resident companies are taxed only on income sourced in Brunei or profits from businesses operated through a branch or permanent establishment in Brunei.
• The corporate income tax rate is 18.5%.
• Tax assessments must be filed through the System for Tax Administration and Revenue Services (STARS). All registered companies must register with STARS, now integrated within the One Common Portal (OCP).

Withholding Tax (WHT)

• Brunei imposes WHT on non-resident foreigners' income from interest, royalties, and consultancy fees, but not on dividends.
• WHT rates vary depending on the nature of the income and applicable tax treaties. Rates can range from 10% to 20%. Double taxation agreements may reduce the applicable rate.

Other Taxes

• Excise Duty: Applies to the retail sale of liquor, cigarettes, and manufactured tobacco. Rates vary depending on the specific product.
• Import Duties: Brunei levies import duties on various goods. Rates and exemptions are subject to change and specific product classifications. Some exemptions exist for machinery and raw materials used in designated industries.
• Stamp Duty: Applies to certain documents and transactions.
• Property Tax: Levied on property owners.

As of February 5, 2025, Brunei does not impose personal income tax or capital gains tax. Furthermore, there is no sales tax, payroll tax, export tax, or manufacturing tax. Tax incentives, such as pioneer status, are available for certain investments and industries, providing exemptions from corporate income tax and import duties. Businesses operating in Brunei should monitor potential tax law changes or updates on the Ministry of Finance and Economy's website.

Brunei Darussalam offers a range of tax incentives designed to attract investment and stimulate economic growth, particularly in high-tech industries and sectors beyond oil and gas.

Corporate Tax Incentives

• Tax Exemption for Pioneer Industries: Newly established companies in designated pioneer industries may qualify for tax exemptions. These industries are typically those the government wants to encourage as part of their economic diversification plans. The duration and specific terms of exemptions are determined on a case-by-case basis.
• Tax Relief for Capital Expenditure: Companies making significant capital investments (exceeding BND 1 million) may be eligible for tax relief. This incentive encourages businesses to invest in infrastructure and expansion, promoting economic development.
• Export Incentives: Businesses focused on exporting goods can choose to pay a reduced tax rate of 1% on approved exports instead of the standard corporate income tax rate. This incentive supports export-oriented businesses and international trade.
• Tax Credits: Certain expenditures like salaries and costs associated with employee training programs can qualify businesses for tax credits.

General Tax Environment

• No Personal Income Tax: Brunei does not levy personal income tax on individuals. This makes it an attractive location for both employees and employers.
• No Capital Gains Tax: There is no tax on profits made from the sale of assets, encouraging investment and capital market activity.
• Low Corporate Income Tax: The current corporate income tax rate is 18.5%, which is competitive within the region. Additionally, some companies with revenues below a certain threshold (BND 1 million) are exempt from corporate income tax.
• Import Duty Exemptions: Exemptions from import duties and taxes on raw materials, machinery, equipment, and building materials may be available, lowering the cost of doing business for certain industries.

Additional Incentives

• Double Taxation Agreements: Brunei has double taxation agreements with several countries to prevent double taxation of income for businesses operating internationally.
• Investment Incentives Order 2001: This order further encourages investment by offering tax exemptions for various activities, including pioneer service companies, expansion of existing enterprises, international trade, and investment in new technology.

Application Procedures

Incentive applications are typically handled by the Brunei Economic Development Board and the Ministry of Industry and Primary Resources. Details on specific requirements and procedures for each incentive are usually available through these agencies. The Ministry of Foreign Affairs and Trade also plays a role in promoting these investment opportunities.

It is important to consult with relevant government agencies and tax professionals for the most current and detailed information regarding specific eligibility requirements, application procedures, and any recent updates or changes to these programs. This information is up to date as of February 5, 2025, and may be subject to change.