Everything you need to know to set up an operating company with a bank account.
• There are prison terms for disclosing customer bank details to third parties (and possibly fines).
• Banks are not at all subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).
• Banks are partially obliged to maintain sufficient records of customer and transaction data for law enforcement (old FATF recommendation 10 / new FATF recommendation 11).
• Banks and / or other covered entities are required to report large transactions in currency or other monetary instruments to designated authorities.
• The national administration does not have sufficient powers to obtain and provide banking information on request.
• There are undue notification and recourse rights against the exchange of banking information upon request without requirements.
The Brunei International Limited Partnership is made up of general partners, of which at least one must be a Brunei-authorized entity, and limited partners, which can all be foreign. General partner approval is required for all association business activities.
Best Uses: While we will help our clients register a Brunei ILP if required, We recommend using Brunei IBCs for most trading and holding activities
The Brunei Limited Liability Company (or Brunei Limited Liability Company)
All Brunei LLCs are also required to submit their annual financial statements to a statutory auditor and then submit them to the Ministry of Finance.
Best Uses: Brunei local businesses are the most widely used vehicle for doing business with Brunei residents.
Foreigners can register limited liability companies in the single free trade zone
from Brunei, the Pulau Muara Besar Free Trade Zone. These companies can benefit from up to 15
years of tax moratorium.
Best Uses: Companies in the Brunei Free Zone often carry out repackaging or light manufacturing of products that are then re-exported to Malaysia, Indonesia, the Philippines and Singapore.
Although Brunei PLC only requires US $ 1 of share capital, all of its shareholders and half of its directors must be Bruneians or Brunei PR. This entity is not different from a Branch.
All Brunei PLCs are required to submit their annual financial statements to a statutory auditor and then submit them to the Ministry of Finance.
Best Uses: Foreigners are not usually interested in setting up a Brunei PLC. If our Clients are willing to raise capital, a better alternative is to register a Singapore or Hong Kong PLC.
Brunei Company Law allows foreign companies to open fully foreign-owned branches, provided they have a resident company secretary and a registered office in Brunei.
The scope of operations of this Brunei legal entity will be defined by the parent company.
Branches in Brunei are subject to standard corporate taxes and withholding tax and must file their annual financial statements with the Registrar of Companies.
Branch registration is a good alternative for Clients who are not comfortable with the requirement to appoint resident directors when establishing a local limited liability company.
This entity is not different from a Branch.
Corporate Income Tax Considerations
• All Brunei companies are subject to a corporate income tax of 18,5%, which is applied to their profits.
• However, oil and gas companies are subject to a higher corporate tax rate of 55%.
• Interest paid to non-residents is subject to a 15% withholding tax.
• A 10% withholding tax is applied on royalties paid to non-residents, unless reduced under a double taxation agreement.
• A 20% withholding is applied on the technical service fees paid to resident and non-resident entities.
Tax incentives in Brunei
• Brunei does not impose i) capital gains tax, ii) VAT, or iii) withholding tax on dividends paid to both residents and non-residents.
• A plan and establishment of machinery between 2012 and December 2017 can claim a 15% credit on your new investment.
• Export-oriented companies have the option of paying a flat tax rate of 1% on all exports instead of corporate tax.
• Tax exemptions are also available for those companies approved under industry and pioneer products.
• Companies are allowed a carry-over of their losses for up to 6 years and a carry-over of one year.
• All companies must file corporate tax returns before June 30 with the Income Tax Collector (CIT) of the Ministry of Finance.
• Companies must file separate annual returns, as the filing of consolidated tax returns is not allowed.
• Failure to file tax returns on time can result in a US $ 7.000 fine or imprisonment of up to 1 year.
• Brunei does not impose exchange controls; however, currency movements and changes are monitored.
Other tax considerations
• Salary and other benefits paid to a nonresident director are subject to a 20% withholding.
• Employers must contribute i) 5% of their employees' compensation to the Employee Trust Fund and ii) 3,4% to the Supplementary Contributory Pension (SCP).
• Real estate is subject to i) a 12% property tax in Bandar Seri Begawan and ii) tax exempt in the rest of the country.
• Brunei has so far signed double tax treaties with 18 countries around the world to reduce withholding tax on payments abroad.
En Under the Brunei Companies Act, all companies are required to file annual returns with the Registrar of Companies.
All companies must also appoint auditors to annually audit the company's accounts and report to shareholders.
Companies should also keep minute books for meetings between shareholders, directors and managers and be prepared to provide them at the request of the Government.
To meet dealer license requirements, company facilities may be inspected by a government health official.
Public companies must also prepare an annual balance sheet and profit and loss account supported by a director's report.
PAs of December 24, 2017, all Brunei IBCs, as well as Brunei offshore companies, were completely closed, as stated by the Brunei Registry. The Brunei government took this step to promote and protect local businesses in Brunei. As a result, all foreign investors had to close or sell their businesses, thus reducing the foreign investor's confidence and dependence on this jurisdiction.
While the Sultanate is no longer on the OECD's blacklist of tax havens, Brunei-based companies continue to attract additional scrutiny from Western tax authorities and banks, but less than traditional tax haven countries.
While many countries, including i) France and ii) Canada, have recently removed Brunei from their list of tax havens, others, including i) Portugal and ii) Colombia, have yet to do so. As a result, fund transfers from these countries to a Brunei company are still subject to higher withholding tax rates.
• The national business registry does NOT include the identity information of the legal owner.
• Information on legal owners is not always available online (up to 10 EUR / GBP / USD).
• Companies available without registered legal property information.
• The registry of national companies does NOT include the identity information of the final beneficiary.
• Real property is not always available online (up to 10 EUR / GBP / USD).
• There is an obligation to maintain accounting data.
• It is not always necessary to present the annual accounts to a public authority
• No country-by-country public reporting at all.
• There is no requirement for local submission of a global country-by-country reporting file (in accordance with OECD BEPS Action 13) by large corporate groups (with a worldwide turnover of more than 750 million euros) and subsidiaries local foreign groups.
• Unilateral cross-border tax rulings (eg advance tax rulings, advance tax rulings) are available in laws or regulations, or administrative practice.
• The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.
• The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory for some financial market operators.
• The use of an annually updated LEI for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory.
<br>• Dividend payment: No unilateral relief for double taxation through a tax credit system.
<br>• Interest payments: No unilateral relief for double taxation through a tax credit system.
• None or restricted access to BOTH criminal and civil tax processes.
• None or restricted access to BOTH criminal and civil tax judgments / verdicts.
• The jurisdiction DOES accept the circulation of large bills / cash notes of your own currency (value over 200 EUR / GBP / USD).
• Bearer shares are not available / not circulated.
• Serial LLC / Shielded Cell Companies are available.
• Trusts with escape clauses are not prohibited.
Brunei It is no longer on the FATF List of countries that have been identified with strategic AML deficiencies.
The last Mutual Evaluation Report related to the implementation of the rules against money laundering and terrorist financing in Brunei was carried out by the Financial Action Task Force (FATF) in 2005. According to that Evaluation, Brunei was considered Compliant in 3 and Fully complied with in 16 of the 40 + 9 FATF Recommendations. Partially compliant or not compliant with 1 of the
6 main recommendations.
Overall Non-Compliance Score for FATF Standards in Percentage: 71,5%. (100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as completed or highly effective).
Automatic information exchange is extremely secretive in Brunei.
Brunei is not a signatory to the Multilateral Competent Authority Agreement (MCAA), which provides the
multilateral legal framework to participate in the automatic exchange of information (AEOI) of
compliance with the OECD Common Reporting Standard (CRS)
The international banks and digital are available.
Real bank operations: 90%.
Type of visa: BND, US $, €.
Joint accounts: SI.
Remote management account: To consult.
Wealth administration Depending on the qualification of the company.
Rates: It depends on the type of account.
Credit / debit cards in local currency.
Crypto-friendly banks: It depends on the correspondent bank.
Portfolio availability: It does not depend on the correspondent bank.
Ability to issue letters of credit: YES.
Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.
Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.