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Company Taxes in Brunei Darussalam
Brunei Darussalam has the least taxes compared to other countries in the region. In Brunei Darussalam, there are:
SUMMARY OF TAXES PERTINENT TO FOREIGN INVESTMENT
a. Corporate Tax
A company, whether incorporated locally or overseas, is considered as resident in Brunei Darussalam for tax purposes if the control and management of its business is exercised in Brunei Darussalam. The control and management of a company is normally regarded as resident in Brunei Darussalam if, among other things, its Directors' meetings are held in Brunei Darussalam.
A non-resident company is only taxed on its income arising in Brunei Darussalam.
Companies are subject to 30% tax on the following types of income:
There is no capital gains tax. 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.
Tax concession may be available. The profit or loss of a company as per its accounts is adjusted for income tax purposes to take into account certain allowable expenses, certain expenses prohibited from deduction, wear and tear allowances and any losses brought forward from previous years, in order to arrive at taxable profits.
Treatment of Dividends
Dividends accruing in, derived from, or received in Brunei Darussalam by a corporation are included in taxable income, apart from dividends received from a corporation taxable in Brunei Darussalam which are excluded. No tax is deducted at source on dividends paid by a Brunei Darussalam corporation.
Dividends received in Brunei Darussalam from United Kingdom or Commonwealth countries are grossed up in the tax computation and credit can be claimed against the Brunei Darussalam tax liability for tax suffered either under the double tax treaty with the United Kingdom and Indonesia or the provision for Commonwealth tax relief. Any other dividends are included net in the tax computation and no foreign tax is available. Brunei Darussalam does not impose any withholding tax on dividends.
All expenses wholly or exclusively incurred in the production of taxable income are allowable as deductions for tax purposes. These deductions include:-
Donations are not allowable but claimable if they are made to an approved institution.
Losses incurred by a company can be carried forward for six years to be offset against future income, and can be carried back one year. There is no requirement regarding continuity of ownership of the company, and also the loss set-off is not restricted to the same trade.
Foreign Tax Relief
Double taxation agreements exist with the United Kingdom and Indonesia. Tax credits are only available for resident companies.
Unilateral relief may be obtained on income arising from Commonwealth countries that provide reciprocal relief.
b. Stamp Duty
Stamp duties are levied on a variety of documents. The duties are either ad valorem or variable, depending on the nature of the documents.
c. Withholding Taxes
Interest paid to non-resident companies under a charge, debenture or in the respect of a loan, is subject to withholding tax of 20%. There are no other withholding taxes.
d. Import Duty
In general, duties are waived for all goods except non-development and luxury items. Basic foodstuff and goods for industrial use are exempted from import duties.
Source: Brunei Economic Development Board Website - www.bedb.com.bn
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