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Brunei: Corporate Investment

Incentive Schemes

This page was last updated on 4 June 2019.

Competitive investment incentives are ready and available for investors throughout the business cycle of start-up, growth, maturity and expansion. The Investment Incentive Act, enacted in 1975, provides tax advantages at start-up and ongoing incentives throughout growth and expansion that are comparable if not better than those offered by other countries in the region.

The Investment Incentives Act makes provision for encouraging the establishment and development of industrial and other economic enterprises, for economic expansion and incidental purposes.

Investment incentive benefits vary from one programme to other. Among the benefits are:

  • Exemption from income tax;
  • Exemption from taxes on imported duties on machinery, equipment, component parts, accessories or building structures;
  • Exemption from taxes on imported raw material not available or produced in Brunei intended for the production of the pioneer products;
  • Carry forward of losses and allowances.

This Act provides tax relief for a company which is granted pioneer status.

  • Companies awarded pioneer status are exempted from corporate tax, tax import of raw materials and capital goods for a period ranging from 2 to 5 years, depending on fixed capital expenditure with possible extension at the discretion of the relevant authorities.
  • Enterprises which are given expansion certificates are given tax relief for a period between 3 to 5 years.
  • Approved foreign loans can be exempted from paying the 20% withholding tax for interest paid to non-resident lenders.

The Investment Incentives Order 2001 expanded the tax holidays available to investors. Examples include:

  • Corporate tax relief of up to 5 years for companies that invest B$500,000 to B$2.5 million in approved ventures
  • 8-years tax relief for investing more than B$2.5 million
  • An 11-year tax break if the venture is located in a high-tech industrial park.

In 2000, Brunei instituted a tax-privileged International Financial Centre.

Before the IFC was formally established in July 2000, Brunei was already a busy commercial centre, as witnessed by the existing active presences in the banking sector of HSBC, Standard Chartered, Citibank, Overseas Union Bank, RHB, Maybank, Baiduri Bank, Islamic Bank of Brunei Berhad, Islamic Development Bank of Brunei and the Brunei Islamic Trust Fund.

Brunei announced its intention to deploy its sovereignty, wealth and human resources in a conservative but assertive manner. Brunei IFC offers a range of international legislation carefully crafted to permit flexible, cost effective capabilities which are right up-to-date.

Accordingly, it was announced, Brunei would be a ‘dual jurisdiction’, whereby the international legislation offered ’offshore’ facilities, alongside the usual range of ‘domestic’ legislation drawn from that of England and Wales. The jurisdictional distinction is thus jurisprudential rather than physical and the judicial system will be common to both domestic and international law.

From January 2012, foreign tax credits have been available for tax when it is paid on foreign-sourced income. The tax credit is limited to the tax assessed at 50% of the Bruneian rate and only applies to local employees.

 

 

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