Income tax in the country is controlled by the Income Tax Act and Income Tax (Petroleum) Act. It is imposed on all income accrued, derived from, or made by all corporations, registered locally or overseas. The activities do not apply to incomes earned by individuals. The revenues of firms involved in exploring and producing oil and gas are levied at a 55 percent rate.
If you are interested in learning about the tax system in the country, here is a tax guide on the types of taxes charged in Brunei and applicable tax rates,
Types of Taxable Income
Income that is subjected to tax includes gains from trading or business, income earned from underemployment, the net value of lands, dividends, interest, or discounts, rents, royalties, premiums, or other profits made from sales of property.
Types of taxes
There are several types of taxes charged in the country. They include corporate income tax, withholding tax, excise duty, etc.
Corporate Income Tax
A corporation either incorporated locally or overseas is deemed to be a resident in the state if the management of most of its business activities is carried out in Brunei. A resident corporation has to pay tax on all global income made. However, a company that is not a resident is levied on income sourced within the nation or on profits obtained from business activities controlled by a branch or permanent establishment (PE). All companies registered here have to file their tax returns with the System for Tax Administration and Revenue Services (STARS). This tax has a rate of 18.5%.
Withholding Tax (WHT)
WHT is collected from foreigners and imposed on interests, royalties, and consultancy fees, but not dividends. WHT tax rates include 10%, 15%, and 20%. There is no fixed rate in Brunei.
Excise Duty
This affects the retail sale of liquor, cigarettes, and manufactured tobacco. Importers pay up to 200 percent duty for these imports. Since the selling of alcohol is banned within the territory, excise duty on alcohol does not exist.
Dividends
Dividends accrued, gotten from, or collected in Brunei Darussalam by a company are deemed as taxable income by the tax act.
Tax on exports
A flat tax rate of 1 percent was introduced to encourage export activities in terms of approved types of export. Under this tax, the gross turnover of the exporter is considered as exports, if the local sales do not exceed 20 percent of the total turnover. All companies incorporated with the Registrar of Companies have to register online for taxes via the STARS website.
Filing of tax returns
A corporation has to file Income tax returns to the government through the collection board within 3 months from the date of the form. When a company declares its revenue or income made from business activities for 12 months, it is known as an income tax return. The form has to be presented along with a certified copy of the audited financial statements, Income tax computation, and supporting schedules. When a registered taxpayer fails to file returns, this is an offense against the tax act and is punishable. Such an individual will be subjected to a fine of B$10,000 and if he or she fails to comply with the payment, it attracts imprisonment for 12 months.
Period of Assessment
The assessment period of a tax is on a previous year basis whereas a calendar year, which ends 31st December, is accepted to be a basis period. Tax deducted from income is payable to the office of the Collector of Income Tax within 30 days after the service of the Notice of Assessment.
