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Brunei

Why Brunei?

Brunei, officially known as the Nation of Brunei, the Abode of Peace, is a small sovereign state located on the north coast of the island of Borneo, in Southeast Asia. It is surrounded by the Malaysian state of Sarawak and the South China Sea. Brunei has a population of approximately 460,000 people, and its capital city is Bandar Seri Begawan.

Brunei is a monarchy, with the Sultan as the head of state and the Prime Minister as the head of government. The Sultanate of Brunei has a long history and was once a powerful empire, known for its trade and cultural influence in the region. Today, Brunei is one of the richest countries in the world, with a high standard of living and a well-developed economy.

The economy of Brunei is primarily based on its vast oil and gas reserves. It is the fourth-largest producer of liquefied natural gas in the world and has a well-developed petrochemical industry. The government of Brunei is working to diversify the economy and develop other industries, such as tourism, agriculture, and fisheries.

Brunei is also known for its rich cultural heritage and traditions, which are a blend of Malay, Chinese, and Islamic influences. The country has a well-developed education system and healthcare system, and its citizens enjoy a high standard of living. The official language of Brunei is Malay, and Islam is the official religion of the country.

Advantages

Strategic location

Brunei is strategically located in Southeast Asia, making it a gateway to markets in the region, including the ASEAN (Association of Southeast Asian Nations) countries.

Stable political environment

Brunei is a peaceful and stable country with a low crime rate. It has a well-established legal system that is based on English common law, which provides a reliable and predictable business environment.

Favourable tax system

Brunei has a low tax regime, with no personal income tax and a flat corporate tax rate of 18.5%. There are also several tax incentives and exemptions available to businesses, including those in the oil and gas industry.

Skilled workforce

Brunei has a highly educated and skilled workforce, with a high literacy rate and a strong focus on education. The government has invested heavily in education and vocational training, creating a pool of talented and capable workers.

Infrastructure

Brunei has a well-developed infrastructure, including modern transportation networks, ports, and airports. The government is also investing in new infrastructure projects to support economic growth.

Supportive government

The government of Brunei is supportive of foreign investment and has implemented policies and incentives to attract foreign businesses. The Brunei Economic Development Board (BEDB) provides a one-stop centre for foreign investors, offering assistance with business registration, licensing, and permits.

High quality of life

Brunei has a high standard of living, with a good healthcare system, quality education, and modern amenities. This makes it an attractive location for expatriates and their families.

Overall, Brunei offers a stable and business-friendly environment for investors, with a favorable tax system, a skilled workforce, and supportive government policies.

Simple Tax Regime

Personal income tax:

There is no personal income tax in Brunei. This means that individuals who earn income in Brunei are not required to pay any taxes on their earnings.

Corporate income tax:

Companies operating in Brunei are subject to corporate income tax at a flat rate of 18.5% on their net profits. However, there are several tax incentives and exemptions available to businesses, particularly those in the oil and gas sector. For example, companies in the oil and gas sector may be eligible for a tax exemption of up to 100% on their profits.

Withholding tax:

There is no withholding tax on dividends, interest, or royalties in Brunei.

Goods and Services Tax (GST):

Brunei has a Goods and Services Tax (GST) of 5%. This tax is applied to the supply of goods and services in Brunei, as well as the import of goods into the country.

Property tax:

There is no property tax in Brunei. However, property transactions are subject to a stamp duty of 2% on the value of the property.

Other taxes:

There are no capital gains taxes, inheritance taxes, or gift taxes in Brunei.

Overall, the tax system in Brunei is relatively simple and straightforward, with a low corporate income tax rate and no personal income tax. The government of Brunei has also implemented several tax incentives and exemptions to attract foreign investment, particularly in the oil and gas sector.

TAX SLABS –

Brunei does not have an Individual tax system. They have flat 18.5% corporate tax rate.

Brunei Companies

Companies in Brunei are governed by the Companies Act (Chapter 39) of Brunei Darussalam. The Companies Act provides the legal framework for the formation, operation, and management of companies in Brunei, including provisions for the incorporation, registration, and winding up of companies.

Sole proprietorship:

This is the simplest form of business entity and is owned and operated by a single individual. The owner is personally liable for all the debts and obligations of the business.

Partnership:

A partnership is a business entity that is owned by two or more individuals. The partners share the profits and losses of the business, and each partner is personally liable for the debts and obligations of the partnership.

Limited Liability Partnership (LLP):

An LLP is a type of partnership where the partners have limited liability for the debts and obligations of the business. This means that their personal assets are protected in the event of a lawsuit or bankruptcy.

Private Limited Company (PLC):

A PLC is a separate legal entity from its owners and shareholders. The liability of the shareholders is limited to the amount of their investment in the company. A PLC must have at least two shareholders and can have up to 50 shareholders.

Public Limited Company (PLC):

A PLC is similar to a private limited company but can offer its shares to the public. This means that anyone can invest in the company by buying its shares on the stock exchange.

Branch office:

A branch office is a separate office or location of a foreign company that operates in Brunei. The branch office is not a separate legal entity from the parent company and is subject to the same laws and regulations as the parent company.

Representative office:

A representative office is a temporary establishment of a foreign company that is set up to promote the company’s business interests in Brunei. A representative office is not allowed to engage in commercial activities, but it can undertake market research and promotional activities.

It is important to note that each type of company has its own advantages and disadvantages, and the choice of entity will depend on the specific needs and objectives of the business.

Brunei, officially known as the Nation of Brunei, the Abode of Peace, is a small sovereign state located on the north coast of the island of Borneo, in Southeast Asia. It is surrounded by the Malaysian state of Sarawak and the South China Sea. Brunei has a population of approximately 460,000 people, and its capital city is Bandar Seri Begawan.

Author: Chandrawat & Partners

Topic: Doing Business in Brunei

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