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4.1. Domestic PE of a Foreign Entity

The Income Tax Act of Brunei defines a permanent establishment as a fixed place where the company, wholly or partly, carries on its operations in the country through a registered place of business in the country. Registered place of business includes a place of management, a branch, office, factory, a workshop, a warehouse, a farm or plantation, a mine or oil well or any other place of extraction of natural resources, a building or work or construction or installation or assembling site, etc.

Brunei domestic law does not specifically include in its PE definition, the constitution of service PE on completion of a specified number of days. However, a number of tax treaties (e.g. those with Cambodia, China, Hong Kong, Singapore) provide specifically for service PEs, all of which require the physical presence of employee or personnel of the non-resident company for a prescribed period (ranging between 3 and 6 months) in Brunei. Brunei’s tax treaty with certain countries like Japan do not include a service PE clause.

When a foreign entity is deemed to have PE in Brunei, income from its activities conducted through the PE in Brunei is subject to tax in the country.