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Bandar Seri Begawan - Business chambers in the country voiced their support on the tax reduction including reduction in customs tax on certain items as well as the introduction of 'tax credit' to given to corporate taxpayers (firms) that employ locals, which was announced during the Legislative Council session Tuesday.

On tax credit, however, as it is something new, some members of the chambers are still unclear as to how it works and thus wanted to "wait and see" before reacting to it.

YB Pehin Orang Kaya Laila Setia Dato Seri Setia Awg Hj Abdul Rahman bin Hj Ibrahim, Minister of Finance II at the Prime Minister's Office on Tuesday stated that the Government of His Majesty the Sultan and Yang DiPertuan of Brunei Darussalam 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 does 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 is hoped to encourage companies to take in more local staff in managing the company without burdening the companies in terms of finance.

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 the private sector.

The Malay Chamber of Commerce Information Secretary Abdul Halim Saim told the Bulletin that the members of the chamber have welcomed the reduction in corporate tax from 22 to 20 per cent. He said the reduction will not only help attract foreign investment but also help existing business to grow.

He said the reduction in corporate tax, customs tax and the introduction of tax credit will always be welcomed by the business community. However, on tax credit, he said, the business community is still waiting for clarity as how it is computed.

The tax credit is something that is new to the private sector and many would like to know how it will eventually translate into business opportunities.

He said one of the biggest problems with regard to local employment in private firms is high employee turnover. He said there are locals who have quit in a matter of months or even weeks.

He hoped businesses that are given 'tax credit' will put them to good use, such as providing attractive salary to locals or providing training to strengthen their business fundamentals.

He suggested for the establishment of an agency to monitor the goals of the 'tax credit' are achieved.

Nazeer Ahmed, President of the Indian Chamber of Commerce, said the Indian business community has welcomed the tax reduction, giving particular attention to the reduction in customs tax such as on heavy industrial vehicles that will enjoy a reduction of tax from 20 per cent to five per cent.

He said it is a wise move as the reduction on industrial vehicles will help increase profits in the industrial sector.

He said Brunei already has a favourable tax regime and these latest initiatives will undoubtedly boost the nation's ability to attract foreign direct investments into the country.

He said heavy industrial vehicles are usually used by contractors, and he hoped the big reduction would help the construction business do well.

He also said that the tax reduction on heavy vehicles may also help businesses such as bus operators. Cheaper coaches will hopefully translate into cheaper bus fares, which then hopefully bring about a more robust transportation industry.

--Courtesy of Borneo Bulletin