Brunei Companies and Brunei Trusts

General Introductory and Offshore Tax Information

An emerging tax haven and offshore business centre, Brunei offers numerous tax incentives to local and offshore Brunei companies. No corporate taxes are levied on Brunei offshore companies including international banks whose services, products and employees are exempt from tax. These tax benefits in Brunei are further extended to international insurance companies including insurance management, brokerage and underwriting service providers. As with other offshore jurisdictions, Brunei offshore companies and business entities are required to have a locally based agent or representative and a registered office. Copies of the relevant formation documents of every Brunei offshore company must be at the registered office in Brunei and agents function as intermediaries between Brunei companies’ authority and the owners of offshore companies in resolving certain matters.

Brunei offshore companies must appoint a private or public local registered auditing company which belongs to the group of Brunei Darussalam Registered Auditors. The purpose of appointing auditors is to ensure that a report is made to the shareholders of the Brunei offshore company whether the details of the company’s balance sheet give a true picture of the company’s performance.

In general, Brunei levies no tax on sales, manufacturing, personal income, exports and payroll. There are zero import duties on goods and food items with the exception of luxury items. Resident or local Brunei companies are mainly pay corporate tax while partnerships and sole proprietorships are exempt from tax on income.

Brunei Offshore Business Entities:

• Brunei International Limited Partnership
• Brunei International Insurance and Takaful Order, 2002
• Brunei International Banking
• Brunei International Trust
• Brunei International Business Company

Brunei International Limited Partnership

Main Features:

• The partners must not be residents of Brunei
• Must have at least one or more general partners
• Can be used to carry out any legal business
• Must have a registered office at the office of a trust company
• Business may be carried in or from within Brunei
• Governed by the International Limited Partnership Ordinance (ILPO)
• Must not provide its services to residents of Brunei
• General partners are responsible for all debts
• The liability of limited partners is limited to their contribution made toward the company’s capital
• At least one partner must be either another partnership which is an ILP, a trust company, an international business company, or a fully-owned subsidiary of anyone of these entities
• The name must include the words “International Limited Partnership” or “ILP”
• Accounts and records must be kept at the registered office and accurately present transactions

Brunei International Insurance and Takaful Order, 2002

Main Features:

• Governs the licensing and regulation of international insurance and international insurance-related business
• Service provided to non-residents
• International insurance company must be either an IBC or a company registered under Chapter 39 of the Companies Act or Part IX of the same act
• International insurance manager, broker or underwriting manager must be must hold the relevant license
• Minimum capital of Brunei $ five hundred thousand or its equivalent in a foreign currency for long-term insurance business
• Minimum capital of Brunei $1 million or its equivalent in a foreign currency for re-insurance business
• Minimum capital of Brunei $ two hundred and fifty thousand or its equivalent in a foreign currency for where only general insurance business is conducted
• Minimum capital of Brunei $ seven hundred and fifty thousand or its equivalent where both long-term and general insurance are carried on
• Minimum capital requirement of Brunei $ seventy-five thousand or its equivalent in any foreign currency where only international captive insurance business is conducted
• Minimum capital requirement of Brunei $ seventy-five thousand if applicant is a Dedicated Cell Company incorporated under the IBC Act with two or more cells
• Minimum capital of Brunei $ one hundred thousand or its equivalent in any foreign currency
• Minimum capital of Brunei $ one hundred thousand or its equivalent in any foreign currency where only linked long-term business is carried out. In addition the applicant may choose to add such amount as deemed prudent having regard to that portion of any linked long-term business under which the benefits payable exceed benefits determined by reference to the linked reference

Brunei International Banking

Main Features:

• The International Banking Order, 2000 (“IBO”) provides for the regulation and licensing of bodies carrying out international banking services to non-residents. Banks may be established as separate entities by registration as an International Business Company under the International Business Companies Order, 2000 (“IBCO”) or alternatively, register a branch of an established institution as a Foreign International Company, again under IBCO.

Types of Licenses:

Full International Licence

• Granted for general banking business

International Investment Banking Licence

• Granted for international investment banking business

International Islamic Banking Licence

• Granted for conducting international Islamic banking for either restricted, investment or general business

Restricted International Banking Licence

• Granted for conducting business only with the persons named in an undertaking as part of the licence application. Restricted licenses may differ.

Brunei International Trust

Main Features:

• Types of Offshore Trusts

Purpose Trust

• May be formed for either charitable or non charitable purposes
• Maybe established to hold securities or other assets
• The instrument with which the trust is formed must state that the trust is an authorized trust
• A new trust can be formed upon completion of a trust or on deciding that the trust’s purpose is impossible to achieve

Special Trust

• Settlor is non-resident
• The trust instrument must indicate that the trust created is a special trust
• The beneficiary of a special trust does not exercise the power to enforce the trust or right over the trust property
• Only the people stated in the trust instrument, the instrument’s provisions or the court as enforcers are able to execute the trust
• The object can be either one or more purposes and or persons
• Objects which are purposes can be charitable or non-charitable and of an unlimited number

Charitable Trust

• These are trusts created for charitable reasons
• Charitable purposes may include protection of the environment, historic sites and flora and fauna

Brunei International Business Company

Main Features:

• An IBC can be incorporated as a:
  • Dedicated Cell Company or Protected Cell Company
  • Converted or Re-domiciled company in Brunei
  • Company limited by shares
  • Company limited by guarantee
  • Company of limited duration limited both by shares and guarantee
  • Branch of a foreign or overseas company which registers as a Brunei Foreign International Company
• The incorporation of IBCs in Brunei is done by trust companies
• IBCs are formed through subscription to the Memorandum and Articles and filing of a certificate of Due Diligence along with accompanying documents of constitution
• Company names must be written using the roman alphabet, but can also appear in Japanese, Arabic, Chinese or Cyrillic script upon approval of the Registrar of IBCs
• Exemption from corporate tax is granted to offshore companies including International Business Companies (IBCs), International Trusts, International Banks and International Limited Partnerships
• Non-resident companies are liable to tax on income earned from within Brunei
• Any company controlled and managed from within Brunei is regarded as resident for tax purposes