Brunei: Wealth Management

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On this Page:

- Brunei: The Tax System and Wealth
- Brunei: Inheritance Taxes
- Brunei: Banks, Stocks and Real Estate
- Brunei: Alternative Investment
- Brunei: The Wealth Management Industry

Brunei: The Tax System and Wealth

In Brunei there is no personal income tax, and there are no export, sales, payroll or manufacturing taxes. Sole-proprietorship and partnership businesses are not subject to income tax.

Stamp duties are levied on a variety of documents. The duties are either ad valorem or fixed, depending on the nature of the documents.

Ad Valorem Duties apply to:

• Instruments of transfer of property including marketable securities, shares of other companies and of non tangible property, benefits to legal rights and goodwill;
• Instruments creating interests in property, for example Tenancies and Leases;
• Instrument of security for monies including instruments creating contracts for payment or monies of binding (generally described as "bond");
• Certain capital market instrument, for example, Contract Notes, Share Certificates, etc.

Fixed Duties apply to:

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Brunei: Inheritance Taxes

Estate duty is levied under the Stamp Act, Cap 34, on all immovable property in Brunei Darussalam and movable property wherever situated for persons domiciled in Brunei Darussalam at the time of death. There is double taxation relief for estate duty paid overseas on assets that are also charged to estate duty in Brunei Darussalam.

Estate duty is not payable in the case of person dying on or after December 15, 1988, on the first B$2.0 million of the aggregate value of the deceased’s interest in a dwelling house or dwelling houses, whether occupied by the deceased or not, and the amount thereof does not form part of the value of the estate charged with estate duty of any deceased person. If the value of the dwelling houses exceeds B$2.0 million, the estate duty payable on this part of the estate is 3% of the excess.

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Brunei: Banks, Stocks and Real Estate

• a full international licence for the purpose of carrying on international banking business generally;
• an international investment banking licence for the purpose of carrying on international investment banking business;
• an international Islamic banking licence for the purpose of carrying on international Islamic banking business, granted in respect of full, investment or restricted activities.
• a restricted international banking licence for the purpose of carrying on international banking business subject to the restriction that the licensee may not offer, conduct or provide such business except to or for persons named or described in an undertaking embodied in the application for the licence.

• providing consultancy and advisory services relating to corporate and investment matters, industrial strategy and related questions, and advice and services relating to mergers and restructuring and acquisitions, or making and managing investments on behalf of any person;
• providing credit facilities including guarantees and commitments;
• participation in stock, or share issues and the provision of services relating thereto: or
• the arrangement and underwriting of debt and equity issues.

International banks will pay no tax, and neither will their staff, customers or products.

Securities Trading

Securities is very widely defined under the Securities Order, 2001 ('SO') which provides a framework for the establishment of a financial exchange or exchanges in Brunei, and for the licensing of "dealers". The latter may, or may not, be members of an exchange licensed under this Order. The terms 'investment adviser' is also very widely defined. No person or company, whether based in Brunei or visiting, may offer any form of financial product or investment in any form of security without holding a license granted under the SO.

The Securities Order is "An Order to make provision with respect to financial exchanges, dealers and other persons providing advice in respect of, managing or dealing in securities, for certain offences relating to securities, and for other purposes connected therewith”.

The responsible Minister is the Minister of Finance, and the Order is administered by the Authority appointed by His Majesty the Sultan and Yang Di-Pertuan Negara Brunei Darussalam. The Minister may establish or cause to be established within Brunei Darussalam a body or bodies corporate to be exchanges. An exchange shall, with the approval of the Authority, make rules which provide for the conditions of entry and admission into membership and for the regulation generally of the conduct of trading members in connection with the business of an exchange. The secretary of the exchange shall keep a register of the trading members. The register of trading members shall be made available for inspection at the registered office of an exchange during business hours. An exchange shall provide such assistance to the Authority, as the Authority reasonably requires for the performance of the Authority’s functions and duties.

The Minister may by order published in the Gazette require that an exchange shall establish and keep such fidelity fund as he may determine to be administered by the committee on behalf of that exchange. The assets of fidelity fund shall be the property of the exchange but shall be separated from all other property and shall be held in trust for the purposes set out in this Part. Provision is also made for appropriate insurance.

The Authority may, where it appears to be in the interests of Brunei Darussalam, issue directives to an exchange with respect to trading, the manner in which that exchange carries on its business, including the manner of reporting off-market purchases, and any other matter which the Authority considers necessary for the effective administration of this Order and such exchange shall forthwith comply with that directive.

Except as permitted pursuant to the Order, a person shall not carry on the business of a dealer or hold himself out as carrying on such a business unless he is the holder of a dealer’s license granted under Part III. A person shall not act as a dealer’s representative, who in Part III is referred to as the "representative", unless he is the holder of a dealer's representative's license granted under that Part.

Except as permitted pursuant to the Order, a person shall not act as an investment adviser or hold himself out to be an investment adviser unless he is the holder of an investment adviser's license granted under Part III. A person shall not act as an investment representative, who in this Part is referred to as the "representative", unless he is the holder of an investment representative's license under that Part.

Under the Securities Order, an investment adviser is very widely defined, and includes all persons (including companies) who in or from within Brunei Darussalam carry on the business of advising others concerning securities or of investments or of investments or portfolio management. Also included are those who as part of a regular business issue or promulgate analyses or reports concerning securities. Certain institutions are exempted, for example licensed banks, registered newspapers and licensed broadcasters. In the latter two cases it is giving of advice, which is relevant.

Real Estate

Like other Asian locations, Brunei has seen a boom in commercial property development over the last ten years, briefly interrupted by the global debt crisis in 2008 and 2009, which has led to over-supply, particularly in the retail sector.

The state has been quite active in supporting commercial and industrial development, mostly through BEDB (the Brunei Economic Development Board) which was set up by the Sultan in 2001. An Infrastructure Development Strategy was formulated to ensure continued investment by government and through public-private sector partnerships in developing and maintaining world-class infrastructure.

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Brunei: Alternative Investment

The Mutual Funds Order, 2001 ('MFO') applies to domestic and international funds and their promoters/managers/custodians. Provision is made for Public Funds, Private Funds and Professional Funds. Islamic Funds are provided for and are defined as funds which do not offend against the Religion of Islam. A Shari'ah Council must be appointed in respect of an Islamic fund. Mutual funds may be in the form of a body corporate, a unit trust, a limited partnership or other arrangement whereby participants (investors) may benefit from the pooling of funds, diversification and the spreading of risk. No bearer shares may be issued.

An increasing number of mutual fund providers are using the jurisdiction to register their (Brunei) collective investment schemes under the Mutual Funds Order.

The MFO provides 'for the regulation of mutual funds in Brunei Darussalam, the supervision and licensing of such funds and of persons promoting and providing services in connection therewith and for other matters relating to mutual funds'.

Provision is made for Public Funds, Private Funds and Professional Funds, Islamic Funds are specifically defined as funds which do not offend against the Religion of Islam.

Mutual Funds may be in the form of a body corporate, a unit trust, a limited partnership or other arrangement whereby participants (investors) may benefit from the pooling of funds, diversification and the spreading of risk. No bearer shares may be issued without the specific consent of the Minister.

No mutual fund may be established, domiciled, offered to the public, traded listed, managed or administered from within Brunei Darussalam unless it holds the appropriate licence or permission issued by the Authority.

Managers, administrators, custodians and trustees (together referred to as “operators”) are required to be appropriately licensed or permitted. Trust companies licensed under the Registered Agents and Licensed Trustees Order, 2000 and appropriately licensed banks (domestic or international) are permitted operators.

Some banks in Brunei have begun to offer fixed income products. Standard Chartered Bank's Roop Barua said that the bond products have been very well received by clients, and that introducing the product to the Brunei market is the “right thing to do”.

“We are bringing it to the market in a responsible way, and I personally feel passionate about it,” he said. The investment bond products currently have a minimum investment amount of $50,000 in the respective foreign currencies and $250,000 in local currency.

“The products we are bringing in are mostly very high grade liquid bonds from around the world, covering multiple major currencies including the Singapore Dollar,” said Barua. The bank will also be bringing in various other currencies and that the kind of bonds that Standard Chartered Brunei brings in will depend on the demand from its client base. “For instance, if a client says that they have a lot of Australian Dollars that needs to be looked after, and needs it to be given the opportunity to invest, then we’ll bring in Australian Dollar bonds,” said Barua.

Barua said that during his visit to Brunei, he had noticed that most of the market base in Brunei is made up of mostly conservative investors. Bonds, he said, are “a very natural fit” for conservative investors. “Bonds in general are very conservative, because they have less risk than another asset class, so it would certainly fit in, but I would argue that bonds have a very natural fit with every client, because conservative clients will have more holdings but aggressive clients will also have bonds, but less in their portfolio,” he said.

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Brunei: The Wealth Management Industry

For a long time, wealth management in Brunei meant the business of looking after the royal family's very substantial private wealth, but rising oil prices in the last ten years and growing openness in the economy have broadened the pool of wealthy individuals and given rise to a small, if active international wealth management business.

RBC and HSBC are among the banks which have opened Brunei wealth management offices in the last few years.

Standard Chartered Bank recently held a Wealth Management training course in Brunei to enhance the knowledge and skills of the bank's financial consultants in order to provide better services to its customers.

"This training course is a pre-requisite for all wealth management financial consultants at Standard Chartered Bank. This is to ensure that all our staff are properly equipped with the necessary skills and knowledge on investment products so that they can analyse and introduce suitable investment products into Brunei's financial market," said Eng Siok Tin, SCB General Manager of Wealth Management.

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