Taxes in Brunei

The Revenue Division of the Ministry of Finance and Economy and the Collector of Income Tax administer income tax. Individuals in Brunei pay no personal income tax and no capital gains tax. There is also no general value-added tax, Goods and Services Tax, Sales Tax or Payroll Tax. Imports may nevertheless be subject to Customs Import Duties and Excise Duties. Contracts, leases, transfers of company shares, security interests and certain insurance or payment instruments may be subject to Stamp Duty under the Stamp Act. The municipal building tax is a charge on land or buildings in Municipal Areas. The relevant municipal department (Jabatan) or municipal board (Lembaga Bandaran) typically calculates it based on the Annual Value or an estimated gross annual rent, rather than the Revenue Division. Limited Companies with income arising, derived or received in Brunei are generally subject to Corporate Income Tax. The standard rate is 18.5% of chargeable income. For the first 100,000 BND of each Year of Assessment, 25% of the applicable tax rate applies; for the next 150,000 BND, 50% applies; the remaining amount is subject to the applicable rate. Newly incorporated companies receive an exemption on the first 100,000 BND for their first three Years of Assessment and pay 50% of the applicable rate on the next 150,000 BND. A rate of 1% may apply to certain approved export activities where local sales account for no more than 20% of total turnover. Petroleum and natural gas exploration and production are governed by the Income Tax (Petroleum) Act and taxed at 55%. Taxable income includes, among other things, trade, business and professional activities, employment, income from land and improvements, dividends and interest, pensions, royalties, premiums, and gains from land or other assets. Dividends from a company taxed in Brunei are generally exempt. Companies may deduct expenses incurred wholly and exclusively in producing taxable income. Tax depreciation does not replace Capital Allowances; separate deductions apply to certain plant and machinery. Employer contributions to the Employees Trust Fund (Tabung Amanah Pekerja (TAP)) and the Supplementary Contributory Pension (SCP) may be deductible subject to the statutory conditions. Tax incentives exist for local employment, certain surpluses under the employees' fund, training and qualifying assets; overall, the use of such credits is generally limited to 50% of tax before foreign tax credit relief. Sole proprietorships and partnerships operated merely as a Business Name are currently not subject to Corporate Income Tax in the same way as a Limited Company. A company must generally file its income tax return through One Common Portal and STARS. Estimated tax for the accounting period must be reported within three months after its end. The annual tax return must be filed by 30 June and accompanied by audited financial statements, a tax computation and the prescribed attachments. Where turnover is below 1,000,000 BND, an exception from audited financial statements may apply under the BusinessBN rules; this does not remove the obligation to file a tax return or pay tax. A dormant company must also submit a return, a balance sheet, a profit and loss statement and evidence of its dormant activity. Tax records must be retained for at least seven years. A corrected tax return may generally be filed for Year of Assessment 2025 onward within six months after the original due date through OCP and STARS. This requires, among other things, that no assessment has yet been made, the original return was complete, and taxable income or tax increases. Income tax must be paid within 30 days after the Notice of Assessment, even if an objection is pending. Late payment incurs 5% initially and then 1% for each further full month, up to a maximum of 12%. An objection to the assessment may be filed in writing within 30 days with specific reasons and supporting documents. After a rejection by the tax administration, an appeal may be filed with the Board of Review within a further 30 days; a fee of 200 BND applies. The High Court may then be approached. Brunei levies withholding tax when a resident company or permanent establishment makes certain payments to a non-resident recipient. The rate is 2.5% for interest, commissions and certain fees relating to loan obligations. A rate of 10% generally applies to royalties, the use of movable property, technical know-how, technical or management services, the rental of movable property and remuneration of a non-resident director. Withholding tax must be deducted, reported and remitted within 14 days after payment or deemed payment. Late compliance incurs 5% initially and then 1% for each further full month, up to a maximum of 15%. For international matters, taxation generally follows the preceding-year basis. Double taxation agreements may change the allocation of taxing rights and withholding tax. The Revenue Division issues a certificate of residence. Payment evidence is required for a foreign tax credit. Automatic exchange of information exists, among other bases, under the Multilateral Competent Authority Agreement and the Common Reporting Standard. Reporting financial institutions must register annually by 31 May and submit the required CRS reports. Brunei does not issue a general Tax Identification Number to individuals or companies; the functional identifier used in the relevant procedure is used instead.