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Corporate Tax

What type of income is taxable in Brunei?

Corporate income Tax is levied on limited companies incorporated or registered under the Companies Act (Chapter 39) or any law in force elsewhere, usually as a “Sdn Bhd”, “Bhd” or “Pvt Ltd”, which accrues in, derives from or receives income in Brunei Darussalam.

 Currently, NO tax is levied on:

1) Unincorporated companies - Sole proprietorship or partnerships registered as Business Names.

2)  Personal income – Any earning by an individual from employment, self-employment, dividens, interest etc.

3) Capital gains – A profit from the sale of property or an investment.

What is the tax rate levied on company?

The corporate income tax rate shall be levied and paid for each year of assessment at the rate of 18.5% of the chargeable income of every company.

What is the due date for the submission of Income Tax Return?

Companies are required to submit their complete Income Tax Returns form by the 30th of June every year.

My company’s account is still being audited/yet to be signed by the Directors. What type of information/document is required?

Company which is unable to submit return within the stipulated period of time is required to inform in writing, the reasons for non-submission to the office of Collector of Income Tax. In addition to that, the company is required to furnish or notify to the Collector whether he is so chargeable and to submit draft financial accounts.

Is there any penalty imposed on company which fails to submit the Income Tax Return within the stipulated time frame?

Section 78 of the Income Tax Act states that every person who without reasonable excuse fails to comply with the requirement of a notice given to him under section 52 to submit Income Tax Returns shall be guilty of an offence against the Income Tax Act, and shall be liable on conviction, to a fine of $10,000 and in default of payment to imprisonment for 12 months.

What are the required documents when submitting the Income Tax Returns to the Collector of Income Tax through the STARS system?

Tax returns should be submitted to the Collector of Income Tax together with:

- Signed and completed Income Tax Form;

- Breakdown of fixed assets for computation of capital allowance;

- Signed and audited accounts including Profit & Loss.

If a company is dormant. Does it require to submit Income Tax form?

Even if the company is dormant, the company is still required to file Income Tax Returns along with all form of records that justify its dormancy, such as Balance Sheet, Profit & Loss account & dormancy letter.

What happens if company fails to respond to queries raised by Collector of Income Tax (CIT)?

If company fails to respond to queries raised by CIT, assessment will be made by disallowing expenses related to those queries which were not furnished as called for.

A company incurred losses for several years and subsequently is dormant, can the losses and capital allowances be carried forward to the subsequent years when the company begins to become active again?

Losses for the previous years cannot be carried forward when the company becomes dormant. Those losses can only be carried forward once the company starts its business activities again. However, the capital allowances can be carried forward during the dormant period.

How long does a company require to keep and retain records of accounts?

In accordance to the Section 56A (1a) of the Income Tax Act (Chapter 35), “every person carrying on or exercising any trade, business, profession or vocation shall: keep and retain in safe custody sufficient records for a period of 7 years from the year of assessment to which any income relates to enable his income and allowable deductions under this Act to be readily ascertained by the Collector or any officer authorized in that behalf by the Collector.”

What is the due date for the payment of tax?

Section 70 of the Income Tax Act (Chapter 35) states that a company is required to pay income tax within 30 days from the date of the Notice of Assessment even though the company has made an objection to the assessment.

What happens if a company fails to pay on time?

If a company fails to pay the tax liability within 30 days from the date of the Notice of Assessment, a demand letter will be sent out to instruct payment for outstanding tax plus 5% penalty.

Failure to pay after 60 days from the date of Notice of Assessment, an additional penalty of 1% per month is imposed on the tax that remains unpaid for each completed month up to a maximum of 12% (12 months).

Why does a company need to pay the tax levied even though an objection has been raised against the Notice of Assessment?

According to Section 70 of the Income Tax Act (Chapter 35), even though an objection has been raised against the Notice of Assessment, the company has to pay or arrange for payment within 30 days from the date of the Notice of Assessment.

What are the terms for applying tax refunds?

The terms are as follows:

1) If there is a difference between the tax paid and the tax payable in the Notice of Assessment. Often, this applies to to Estimated Notices of Assessment raised by the Collector of Income Tax, which has been paid. 

2) Payments have been made twice for the same assessment year due to delay in payment via telegraphic transfer provided that appeal for refund is made within 60 days from the date of Assessment. 

3) Application made against Notice of Assessment accepted by Collector of Income Tax.

Once application for refund is approved, what does the company need to do?

Company is requested to return the original receipt of payment to the Collector of Income Tax.

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