Tax laws Brunei

02 Mar 2025 --
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Brunei offers a tax-friendly environment with relatively low tax rates, making it an attractive location for both individuals and businesses. Here are the key aspects of tax laws in Brunei:

1. Corporate Tax

Brunei has a low corporate tax rate compared to many other countries, which makes it a favorable destination for businesses.

Corporate Income Tax: The corporate tax rate in Brunei is 18.5% for most companies.
Small Business Tax: Small businesses with annual income below BND 100,000 (approximately USD 74,000) may qualify for tax exemptions or lower rates.

2. Personal Income Tax

Brunei does not impose a personal income tax, making it one of the few countries with no individual tax liability for residents.

No Personal Income Tax: Both residents and non-residents are not taxed on their personal income, regardless of whether it is earned locally or abroad.

3. Value Added Tax (VAT) and Goods and Services Tax (GST)

Brunei does not have a Value Added Tax (VAT) or Goods and Services Tax (GST) system in place.

No VAT/GST: There is no consumption tax, which means that goods and services are not subject to VAT or GST.

4. Withholding Tax

Brunei imposes withholding tax on certain payments made to non-residents.

Withholding Tax Rates:
- Dividends: There is no withholding tax on dividends.
- Interest: A withholding tax of 10% is applicable on interest payments to non-residents.
- Royalties: Royalties paid to non-residents are subject to a withholding tax rate of 10%.
- Technical Fees and Service Fees: Withholding tax is typically 10% on payments for technical or service fees paid to non-residents.

5. Capital Gains Tax

Brunei does not have a capital gains tax.

No Capital Gains Tax: There are no taxes on the sale or transfer of assets, such as real estate or stocks.

6. Inheritance and Estate Tax

Brunei does not impose any inheritance or estate taxes.

No Inheritance Tax: There is no tax on inheritance or estates, which makes it an attractive destination for estate planning.

7. Social Security Contributions

Brunei has a social security system, but it is primarily for local employees.

Social Security for Locals: Employees and employers must contribute to the Employees Trust Fund (ETF), a social security scheme. However, foreign workers are generally not required to make contributions.
- The contribution is 5% of an employee's salary, with the employer matching this amount.

8. Stamp Duty

Brunei levies stamp duty on certain transactions, primarily related to real estate and contracts.

Stamp Duty Rates:
- Real Estate Transactions: Stamp duty is 3% on the transfer value of real estate properties.
- Contracts: Stamp duty may apply to certain contracts, such as leases or agreements, at varying rates depending on the nature of the contract.

9. Business Taxes and Fees

Brunei imposes several administrative fees and taxes on businesses.

Business License Fees: Businesses are required to obtain a business license from the government, with fees determined by the type of business.
Excise Tax: Brunei imposes excise taxes on certain goods such as alcohol, tobacco, and motor vehicles. The rates vary depending on the product.

10. Double Taxation Treaties

Brunei has a limited network of double taxation treaties (DTTs).

No Extensive DTT Network: Brunei has signed a few double taxation treaties with countries like Singapore, Malaysia, and others, which aim to avoid double taxation on income for residents of both countries.

11. Economic Diversification and Incentives

Brunei is focusing on diversifying its economy and has established various incentives to attract foreign investment.

Tax Incentives for Investment: There are certain tax exemptions available for companies involved in key sectors such as manufacturing, agriculture, and ICT. Companies operating in these sectors may qualify for tax exemptions on profits for up to 5 years or more.

12. No Sales Tax

There is no general sales tax in Brunei, which simplifies the tax system for businesses and consumers.

Conclusion

Brunei offers a highly favorable tax regime with no personal income tax, no VAT/GST, no capital gains tax, and no inheritance tax. The corporate tax rate is relatively low at 18.5%, and small businesses may benefit from tax exemptions or reduced rates. The country’s tax system is simple, and businesses engaged in certain sectors may qualify for tax incentives. While Brunei does impose a withholding tax on certain payments to non-residents and stamp duties on real estate transactions, it remains an attractive destination for both businesses and individuals due to its low tax burden and stable economic environment.