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Executive Summary
Brunei Darussalam, the official name of Brunei, is a country located in South-East Asia, and excluding the coastline with the South China Sea, Brunei is surrounded by Sarawak, Malaysia. Its area covers 5,765 sq. km. Brunei has gained its independence from the UK in 1984, and it has adopted an Islamic absolute monarchy political regime. It is governed by a Sultan, whose title has been passed from generation to generation within the same dynasty from the 15th century. The mass media in the country is fully pro-government.

Bandar Seri Begawan is the capital of Brunei, Malay is its official language. It is a member state of the UNO, ASEAN and APEC. Natural gas and crude oil are main economic activities of the country that bring approximately a half of annual income to the state. Economy is a combination of local and foreign business entrepreneurship. The state has a well developed medical care system, and government subsidizes housing. Brunei government is currently working on strengthening banking and tourism sectors, as well as reducing unemployment, thus improving an overall level of the economic development.

Brunei dollar (BND) is the national currency.

Geography
Brunei consists of two parts, separated by Malaysia, which are not connected together, with 97% of the population living in the Western part of the country, and the minority residing in the mountainous Eastern part. Apart from its capital, Bandar Seri Bagawan, other big cities of the country are Muara, Seria and Kuala Belait.

Brunei has an equatorial climate, with the average annual temperature being approximately 27 degrees C.


Map, Flag and Coat of Arm


Types of Company

Domestic legislation for regulating business coexists together with offshore legislation.

International Financial Centre
Registered agents and licensed trustees can provide services for international companies formation, and must file all the compliance document, including due diligence information. Such forms as international business companies, international limited partnerships and international trusts are available for incorporation:

International Business Company
This type of company is exempted from paying taxes, and the main purpose of the government  when creating an opportunity to establish such a company type, was to attract international investors to the jurisdiction. These companies can be limited by shares, guarantee, shares and guarantee, duration, they can be redomiciled, discontinued, can be created by conversion or can be dedicated cell companies. A foreign company can register as an international business company in Brunei.

Directors and secretaries may be individual and corporate entities, and there is an obligatory requirement to have a secretary provided by a registered agent.


International Limited Partnership
At least one general and at least one limited partner must form a limited partnership, which can be created for any lawful purpose, but must not conduct business with residents of Brunei. A general partner is liable for all debts and liabilities of the partnership, but a limited partnership responsibility is limited to the capital invested, unless a partnership contract states otherwise. Every partnership name includes letters “ILP” at the end, and the registered office should be located in Brunei.

International Trust
Different types of trusts are possible to incorporate in Brunei which are appropriate to individual and corporate entities goals. At least one trustee must be a licensed and authorized trustee of Brunei and a beneficiary should be a non-resident of Brunei.
Purpose and Special trusts for charitable and non-charitable purposes are also available in Brunei.

The following types of companies are available in the Domestic Sector of Brunei:


Sole proprietorship
Generally foreigners cannot obtain a permission for registering this form of business, which is not taxed, but business owners are fully liable for all the obligations of the structure.

Partnership
Private persons and corporate entities can become members of a partnership. The maximum number of members must not exceed twenty, of which at least one should be resident in Brunei (some exceptions can be approved). Income tax is not paid by this type of company.

Private Company
These companies are divided in four categories: a) companies limited by guarantee, b) companies limited by shares, c) companies limited by shares and guarantee, d) unlimited companies. The right to transfer shares must be restricted and stated in the Articles of Association, and the number of members must not exceed fifty. At least half of directors of such a company should be residents in Brunei. There should be at least two shareholders who must be residents or citizens of Brunei. Tax returns should be submitted to the Collector of Income Tax, and the accounts should be audited.

Public Company
This type of company can be both limited and unlimited, it may issue freely transferable shares to general public and there should be a minimum of seven shareholders (residents or citizens of Brunei). Registration fees depend on the amount of the initial share capital, and there are no requirements for the minimum capital required for registering a public company.

Such a company should prepare a balance sheet together with a profit and loss account on the annual basis, approved by auditors registered in Brunei. All the records (Minutes of Book of Meeting Members/ Directors/Managers; Register of Members/Charges, Register of Directors and Managers) should be kept by the company.


Branch of Foreign Company
Any foreign company can register its branch in Brunei, which should have a registered office in the jurisdiction, as well as an appointed local agent. The same authority and powers are assigned to such a company as to a local company. Branches must prepare accounts for their business activities, as well as file a copy of the annual accounts of their head office. Registration fees depend on the amount of initial share capital, but are a half less than those of a local company.

Taxation

Personal
Individuals are not liable to income tax. Stamp duty is levied on documents, either at a flat or changing rate, depending on the type of a document. There are no export, manufacturing or sales taxes in Brunei. Estate duty is levied.

Corporate
A local company registered in Brunei or a foreign company that conducts the company management (including directors’ meetings) from the jurisdiction, is considered a resident there. From 2009 income tax rate is reduced from 30% to 27.5%. There is no capital gains tax. However, if gains are regarded as income deriving from trading activities by the Tax authority, corporation tax will be applied. Non-resident companies are liable to pay taxes only on income gained from activities conducted on the territory of Brunei.

First need materials, imported to Brunei, such as food and goods for industrial input are exempted from import duties. Withholding tax is not levied on dividends, but is due to be paid only on interests paid to non-resident companies under a charge, debenture or for a loan, at a rate of 20%.
 
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