With no personal income tax nor a VAT or GST, and a corporate tax rate which is the second lowest across Asean, Brunei’s tax regime is simple and, arguably, attractive to investors.
Here are the key taxes:
Corporate Tax: 18.5% standard rate
The corporate tax rate of 18.5 per cent is levied on both resident and non-resident companies. All limited companies, whether incorporated overseas, in Brunei, or registered as a branch of a foreign company, are subject to a tax on income accrued in, derived from, or received in Brunei.
Those engaged in the oil and gas sector, a sector that’s salient to Brunei’s economy, are taxed a higher income tax rate of 55 per cent.
Reduced rates for small companies and startups
The first B$100,000 of chargeable income is taxed at a reduced rate of a quarter of the full rate. (4.625 per cent). The next B$150,000 of chargeable income is taxed at half the full rate (9.25 per cent).
Small companies with gross sales or turnover of B$1 million or less, are exempted from corporate tax, or charged a 0 per cent rate.
For a new company, the first B$100,000 of its chargeable income is fully exempt from tax for its first three consecutive years of assessment.
Specific companies, or enterprises in specific sectors that are considered essential to Brunei’s economic development, have been offered tax exemptions too.
Companies which export can also opt to pay tax at a fixed rate of 1 per cent on approved exports, in lieu of corporate tax.
Dividends: Not taxed
Interest: Interest paid to a non-resident is subject to a 2.5 per cent withholding tax
Royalties: Royalties are subject to a 10 per cent withholding tax.
Brunei does not impose any value-added or sales tax at all.
Personal income is not taxed in Brunei, for both residents and non-residents.
Need more information?
Deloitte: Brunei Tax Highlights 2018
EY: Brunei Tax Guide
KPMG: Brunei Tax Profile (Updated August 2015)