Dezan Shira in Brunei

Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. With more than two decades of on-the-ground experience and a large team of lawyers, tax experts and auditors, in addition to researchers and business analysts, we are your partner for growth in Asia.

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Regional Intelligence: Brunei

The Sultanate of Brunei’s reign peaked between the 15th and 17th centuries when its control extended over the coastal areas of northwest Borneo and the southern Philippines. This was followed by a period of decline and internal strife. In 1888, Brunei became a British protectorate, and independence was achieved in 1984. The same family has ruled Brunei for over six centuries.

Located on the northern coast of the island of Borneo, Brunei benefits extensively from its petroleum and natural gas fields. The economy depends heavily on revenue from the extraction of these natural resources (crude oil and natural gas production account for 60 percent of the country’s GDP and more than 90 percent of all exports), but also encompasses a mixture of foreign and domestic entrepreneurship, government regulation, welfare measures, and village tradition.

Recently, the country’s government has been looking to diversify the economy’s heavy reliance on oil and gas, with policies ranging from upgrading the labor force and reducing unemployment, (currently at 2.7 percent), to strengthening the banking and tourism sectors. In aid of this strategy, the government provides free health services and education through university to all citizens.

The country’s per capita GDP is among the highest in Asia, and substantial overseas investment supplements income from domestic production. Forbes ranks Brunei as the fifth-richest nation out of 182. However, there are regulatory challenges to starting a business in the country. On average, depending on the type of business, it takes 101 days to set up a business in Brunei.

Foreign labor in Brunei is controlled by the Labor Department’s Labor Quota system. The Department of Immigration and National Registration is in charge of issuing Employment Passes. The Brunei Passport Act requires all foreign nationals to obtain a valid visa to enter the country. However, nationals of the following countries are exempted from visa requirements for social, business, or professional visits for certain periods:

  • 14 days for: Canada, Indonesia, Japan, The Philippines, Thailand, France, Switzerland, Liechtenstein, Netherlands, Belgium, Luxembourg, Republic of Maldives, Denmark, Norway, Sweden, Spain, Italy and Peru.
  • 30 days for: Malaysia, Singapore, United Kingdom, Germany, Sultanate of Oman, Republic of Korea and New Zealand.
  • 90 days for: United States

Visas are required for nationals of these countries if they intend to stay longer than the above-specified period.

If a foreign national wishes to be employed in Brunei, they are required to obtain an Employment Permit issued from the Department of Immigration and National Registration – this will enable them to work and live in the country. It takes approximately five days for the work permit to be processed and it remains valid for up to two to three years, depending on the type of work involved.

Health screening, which includes a blood test and chest x-ray, is mandatory as part of the application process for a work permit

The following investment vehicles are available to investors in Brunei:

  • Partnership
    • May consist of up to 20 individuals, local or branches of foreign companies. In general, requires one local partner (Bruneian or Brunei Permanent Residence)
    • Subject to approval, open for foreigners to register.
    • Not subject to corporate tax.
  • Private company (Sendirian Berhad or Sdn. Bhd / Pty. Ltd)
    • Companies incorporated in Brunei Darussalam governed by the Companies Act (Cap 39).
    • Subject to a 22 percent gross profit corporate tax.
    • Public company (BERHAD or Bhd./Plc).
    • Companies that can transfer shares freely to public.
    • Subject to a 22 percent gross profit corporate tax.
  • Branch of foreign company
    • Any foreign company wishing to establish a presence in Brunei but not incorporated as local company.
    • Subject to a 22 percent gross profit corporate tax.
  • Joint venture
    • A joint venture in the form of an incorporation or partnership between foreign & local company.
    • Subject to approval, open for foreigners to register.
    • Subject to a 22 percent gross profit corporate tax.

Corporate Income Tax

  • Rate: 18.5 percent.
  • Residency: Considered resident if control and management of the business is exercised in Brunei.
  • Compliance: Self-assessment. All filing is done under the System for Tax Administration and Revenue Services (STARS), introduced in 2012.
  • Incentives: A number of tax incentives are provided including pioneer industry tax exemptions, tax holidays, tax relief for capital expenditures in excess of BND1 million, and withholding tax exemptions for interest on certain loans.

Indirect Tax

  • Rate: There is currently no VAT or equivalent consumption tax

Individual Income Tax

  • Rate: There is currently no individual income tax.

TAX TREATIES

You can find extensive collection of Brunei’s tax treaties from our Knowledge Sharing Platform.

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