Tax incentives are available to specific industries, products etc., under Investment Incentives Order, 2001.
Pioneer Industries are companies that have been approved as Pioneer Enterprise to produce pioneer products by the Minister (for Industrial Development) and are granted pioneer certificates subject to certain conditions. Minister may declare an industry, which is not being carried on in Brunei on a scale adequate to the economic needs of Brunei and for which there are favourable prospects for development, to be a pioneer industry and any specific product of that industry to be a pioneer product.
The tax relief period of the pioneer industry commences on its production day. The tax relief periods are as follows:
- 5 years, where minimum fixed capital expenditure is BND 500,000 but less than BND 2.5 million;
- 8 years, where fixed capital expenditure is more than BND 2.5 million. The tax relief period may be extended for a further period of 3 years at a time, up to maximum of 11 years; and
- 11 years, if such company is located in the high-tech area, declared by the Ministry. It may be extended for a further period of 5 years at a time up to maximum of 20 years.
- Exemption from taxes/duties on import of machinery, equipment, component parts, accessories or building structures;
- Exemption from taxes on imported raw materials;
- Exemption from import duties on raw materials that are not available or produced in Brunei, intended for the production of the pioneer product; and
- Allowance of carry forward of losses and capital allowances.
Companies may be classified as Pioneer Services Companies if they are engaged in qualifying activities. The companies are required to obtain a certificate specifying the qualified activity by the Minister. The qualifying activities include engineering or technical services (including laboratory, consultancy, and research and development activities), computer-based information and other computer-related services, development or production of any industrial design, services, and activities which relate to the provision of leisure and recreation publishing services, etc.
The tax relief period of a pioneer service company is 8 years which can be extended to maximum of 11 years, subject to certain conditions.
- Allowance of carry forward of losses and capital allowances.
Pioneer Companies formed on or after 1 May 1975, either as a pioneer industry or pioneer service company and a company which is into exports immediately before its tax relief period.
Tax relief period is 6 years and extendable up to maximum of 11 years.
- Allowance of carried forward of losses and capital allowance; and
- Adjustment of unabsorbed capital allowances and unabsorbed losses.
Any company intending to incur new capital expenditure for the purpose of the manufacture or increased manufacture of an approved product may apply to the Minister for an Expansion Certificate. For obtaining an Expansion Certificate, a company must satisfy either of the two conditions: a) incur new capital expenditure on purchase of productive equipment of BND 1 million or more; or b) if the cost is less than BND 1 million but exceeds BND 500,000 and results in an increase of not less than 30% in value of the original cost of all the productive equipment of the company.
- 3 years, extendable up to 15 years, where minimum new fixed capital expenditure is up to BND 1 million; and
- 5 years, where new fixed capital expenditure is more than BND 1 million.
The tax relief period of Expanding Service Company will commence on the expiry of the existing tax relief period specified in the certificate issued earlier for qualifying activities and may continue further, not exceeding 11 years, as the Minister may determine.
The Minister may extend the tax relief period not exceeding 5 years at any one time but not exceeding 20 years in total.
A company that manufactures products or is engaged in agriculture, forestry, and fishery activities either wholly or partly for the purposes of export may be granted a certificate of export enterprise subject to certain conditions.
- 6 years for Pioneer Companies, extendable up to 11 years;
- 8 years for companies other than Pioneer Companies; and
- 15 years for companies satisfying certain conditions.
- Exemption from import duties on machinery, equipment, component, parts, accessories, or building structures; and
- Exemption from import duties on raw material.
Companies engaged in qualifying services may be granted certificate of Export Service Company by the Minister. Qualifying activities include:
- Technical services (including construction), distribution, design, and engineering services;
- Consultancy, management supervisory or advisory services relating to any technical matter or to any trade or business;
- Fabrication of machinery and equipment and procurement of materials, components, and equipment;
- Data processing, programming, computer software development, telecommunications, and other computer services;
- Professional services including accounting, legal, medical and architectural services;
- Educational and training services; and
- Any other services as the Minister may prescribe.
Tax relief period of an export service company is 11 years, extendable up to 20 years, and the extension may be granted for 3 years at a time.
- Deduction of capital allowances and losses.
A company engaged in the following activities is considered as an International Trading Company:
- International trading of qualifying manufactured goods;
- Brunei Darussalam domestic production and export of those goods or products, either separately or in combination, exceeding BND 3 million per annum; or
- Entrepot trade in any qualifying commodities and export of those qualifying commodities exceeding BND 5 million per annum.
Qualifying manufactured goods are goods certified by the Minister with respect to manufacture for the purpose of exports. Qualifying commodities are commodities certified for export by the Minister.
Brunei Darussalam domestic produce means products approved by the Minister namely, prawns, fish (including aquarium fish), chicken, ornamental plants and orchids, etc.
- 8 years, from the date of commencement.
Tax incentives are available for a company raising a loan of an amount exceeding BND 200,000 from a non-resident person by way of a financial agreement, and such loan is utilized for purchasing productive equipment for its business.
- As per the financial agreement.
- Waiver of tax on interest payable on such loan as prescribed by the Minister
A company is eligible for investment allowance in respect of fixed capital expenditure for the approved project, subject to certain conditions.
The investment allowance granted for the approved project can be a maximum of 100% of the amount of the fixed capital expenditure incurred on each item specified in the certificate on the approved project.
- 5 years from the date of investment and in case of promotion of tourist industry, not exceeding 11 years from the date of investment.
Tax incentives are available to the companies incurring a fixed capital expenditure of a minimum of BND 2 million for the establishment or improvement of warehousing facilities wholly or mainly for storage and distribution of manufactured goods to be exported by the company, with the processing or the provision of related services; or for the purpose of providing technical or engineering services (or other services as the Minister may specify) wholly or mainly to a non-resident person.
- Maximum 11 years and may be extended for 3 years at a time, but not exceeding 20 years in total.
Companies using new technology in relation to a product, process or service in Brunei may make an application for incentive available in this respect, subject to certain conditions.
In response to the COVID-19 response, Brunei announced the following relief measures for impacted SME’s (with not more than 100 employees) for the period 1 August 2021 up to 31 December 2021:
- Salary payment subsidy of 25% for employees earning not more than BND 1500 per month;
- Discount of at least 30% on the rental rates of government buildings; and
- Discount of 20% on the water and electricity bills.