Brunei has no personal income tax. There are no exports, sales, payroll or manufacturing taxes. Companies are subject to tax on the following types of income:
• Gains or profits from any trade, business or vocation;
• Dividends received from companies not previously assessed for tax in Brunei;
• Interest and discounts; and
• Rents, royalties, premiums and any other profits arising from properties.
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.
Moreover tax advantages at start-up and ongoing incentives throughout growth and expansion offer investors profitable conditions that are comparable if not better than those offered by other countries in the region.
• Scope of Income Tax A resident company in Brunei is liable to income tax on its income derived from or accrued in Brunei or received from overseas. A non resident company is only taxed on its income arising in Brunei.
• Concept of Residence A company, whether incorporated locally or overseas, is considered as resident in Brunei for tax purposes if control and management of its business is exercised in Brunei.
The control and management of a company is normally regarded as resident in Brunei if, among other things, its directors' meetings are held in Brunei.
The profits of a company are subjected to tax at the rate of 30%.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 accrued in, derived from, or received in Brunei by a corporation are included in taxable income, apart from 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 United Kingdom or Commonwealth countries are grossed up in the tax computation and credits claimed against the Brunei tax liability for tax suffered either under the double tax treaty with the United Kingdom or the provision of Commonwealth tax relief.
Any other dividends are included net in the tax computation and no foreign tax is available. Brunei does not impose any withholding tax on dividends.
All expenses wholly or exclusively incurred in the production of taxable income are allowable as deduction for tax purposes. These deductions include:
• Interest on borrowed money used in acquiring income;
• Rent on land and buildings used in the trade or business;
• Costs of repair premises, plant and machinery;
• Bad debts and specific doubtful debts, with any subsequent recovery being treated as income when received; and
• Employer's contribution to approved pensions or provident funds.
• Expenses not wholly or exclusively incurred in acquiring income;
• Domestic private expenses;
• Any capital withdrawal or any sum used as capital;
• Any capital used in improvement apart from replanting of plantation;
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