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Good news for companies doing business in Brunei Darussalam. Starting from this financial year, the corporate tax will be cut by two per cent from the current 22 per cent, while companies that employ locals will enjoy tax credit.

In addition, there will also be reduction in customs tax for machinery and industrial equipment that use electricity as well as heavy vehicles.

YB Pehin Orang Kaya Laila Setia Dato Seri Setia Awang Haji Abdul Rahman bin Haji Ibrahim, the Minister of Finance II at the Prime Minister's Office, revealed amendments to the Income Tax Act (Chapter 35) during the presentation of the bill seeking to supply a sum of consolidated fund for the service of the financial year 2012/2013 yesterday at the Eighth Legislative Council session.

"In an effort to attract more investments into Brunei Darussalam, His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam has consented to the amendment of several components in the Income Tax Act (Chapter 35). The amendment will come into force in 2012," he said.

He announced that the corporate tax rate has been reduced from 22 per cent to 20 per cent. The move is aimed at reducing the financial burden for companies, to encourage profits that have been obtained to be reinvested to expand business operations and for the private sector to further increase the facilities and comfort at the work place.

Meanwhile, to encourage locals to work in the private sector and to reduce the reliance on foreign workforce, the minister said, "The Government of His Majesty will be giving tax credit by as much as 50 per cent from the basic salary paid to local workers. The tax credit will be given to basic salary that do not exceed $3,000 per month and will only be given for the first 36 months of employment for those who are employed since January 1, 2012.

"The introduction of tax credit incentive is hoped to encourage companies to take in more local staff in managing the company without burdening the companies in terms of finance. This is because through the incentive, for the corporate taxpayers, the government is actually bearing 70 per cent of the basic salary that is paid to new staff.

"The incentive also hopes to encourage the private sector to offer more competitive and attractive pay to local workers to attract their interest to work in private sector," said YB Pehin Dato Seri Setia Awang Haji Abdul Rahman.

In addition to tax credit for employing locals, the Government of His Majesty has also extended the tax credit on basic salary for local workforce that has enrolled for training and courses.

The minister said, "In encouraging companies to take the initiative as well as plan in providing local staff the opportunity to join training and courses in recognised institutions, the government is also allowing the cost of payment in basic salary for local workers subject to the maximum of $2,000 per month to be given 100 per cent tax credit in the duration of the training or courses. It is hoped that this will lessen the financial burden of companies in their plan to increase human resource abilities as well as to increase local workforce capacity."

As an addition to lessening the burden for companies, the Government of His Majesty is also providing customs tax reduction for a number of items with effect from April 1, 2012 aimed at reducing the cost of business and export.

"Machinery and industrial equipment that utilise electricity will enjoy a reduction of customs tax from 20 per cent to five per cent, while heavy vehicles will also enjoy a reduction of customs tax from 20 per cent to five per cent.

"Other initiatives that are closely related to supporting ecosystem activities, economy and investment in the country including further increasing the use of technology that can facilitate public and private sector dealing with the government will be continued," said the minister.

Among the initiatives is the implementation of e-Darussalam project, which among others is a business licensing system, at a project cost of $7.76 million, providing access to online services for a number of government agencies and building the capacity of the national single window to ease trade.

Other initiatives are introducing online payment system with the cooperation of a number of banks in the country and preparing a 500-hectare land for Brunei Technology Agro-park as well as implementing e-payment gateway project at a cost of $25 million, which is expected to be fully operational by end of 2012.

- Courtesy of Borneo Bulletin