Brunei

1. General Information

1.1  Geography
Located on the northwest coast of Borneo, the Nation of Brunei is made up of two unconnected parts and covers 5,765 square kilometers. It has a 161-kilometer coastline along the South China Sea and is bounded by the Malaysian state of Sarawak on the other three sides. Brunei has a tropical equatorial climate with no dry season and an average annual temperature of 26 °C.

1.2  Government
Brunei is a constitutional sultanate, and the Sultan is the Prime Minister and is both chief of state and head of government. The Council of Cabinet Ministers oversees executive matters, and the Sultan presides over the Cabinet and appoints all members. The Sultan also appoints all members to the Religious Council, the Privy Council, the Legislative Council and the Council of Succession.

1.3  Population
Totaling 408,706 people, most of Brunei’s population lives in urban areas and is over 65% ethnic Malay. 65% of the population is Muslim and Islam is the country’s official religion. The official language is Malay, and the principal spoken language is the Malay Brunei dialect. Both English and Chinese also spoken, and the literacy rate is 92.7%.

1.4  Economy
Brunei’s small, high-income, open economy is dominated by the oil and gas sector which accounts for over half of Brunei’s GDP and over 90% of its exports. Brunei imports most of its manufactured products and 80% of its total food requirements. The public sector is largest employer of Brunei’s population and provides employment for over half the workforce. Industry is 67% of its GDP and 62% of its employment with the service sector at 32% of the GDP and 33% of its employment. Agriculture is minimal at 0.8% of the GDP and 4% employment. Brunei joined ASEAN in 1984.

1.5  Legalsystem
Brunei has a dual legal system. One part is based on based on English common law and the other on Islamic law.  In the common law courts, there is no jury system and a higher court’s decisions are binding on the lower courts, and decisions from higher courts in the British Commonwealth, especially those from Singapore and the UK, have persuasive authority and are often used by the Brunei courts in statutory interpretations. Also, all judges and magistrates are appointed by the Sultan. In the Syariah Courts, Islamic law supersedes civil law in a number of areas, but mostly deals with divorce and Islamic family laws. The Supreme Court of Brunei is made up of the Court of Appeal and the High Court. It has jurisdiction over the High Court’s original and appellate criminal and civil cases and appellate criminal and civil jurisdiction by the Court of Appeal. Under the Supreme Court is the Intermediate Court and its criminal jurisdiction runs concurrent with the High Court for original criminal jurisdiction except for any death penalty or life imprisonment cases, and its civil jurisdiction is mostly for cases with claims or valued amounts that don’t exceed USD 80,000. The Intermediate Court also has registrars and deputy registrars responsible for the administering oaths and notary public functions. Under the Intermediate Court are the Magistrate Courts, the first tier of Brunei’s common law courts, where Magistrates try, determine and dispose of summary prosecutions or inquire into offences that must be sent to the High Court.  Its civil jurisdiction is mostly for cases with claims or valued amounts below USD 25,000. Brunei’s Islamic law system is made up of the Syariah High Court, the Syariah Subordinate Courts, and the Syariah Appeal Court, and all judges are appointed by the Sultan and different religious bodies. The Syariah Courts’ civil jurisdiction revolves around Islamic family law and includes betrothal, marriage, divorce, and the disposition of property arising from these, and wills, and inheritances and division of property. The Syariah Court of Appeal is the final court of appeal for Islamic law matters.

1.6  Environment for foreigners
Brunei is a small, modern, wealthy Islamic country where the cost of living for foreigners is comparable to Singapore. It’s a dry country, so alcohol is not sold or drunk in public, and foreigners can only bring in small quantities for personal consumption.  Most foreigners enjoy living in Brunei as housing, health care, foreign schools, foods, sports and recreation facilities are of high quality, and there is no personal income tax. All foreigners wishing to live or work in Brunei must comply with the country’s immigration and work-permit regulations. In Brunei, different Malay dialects are spoken, but English is also widely spoken and understood, and most signage includes Roman letter equivalents.

1.6.1     Visas – All foreign nationals need a valid visa to enter Brunei; however, some are exempted from visa requirements for social, business or professional visits for certain time periods. To work in Brunei, foreigners must obtain an Employment Visa from the Department of Immigration and National Registration which is valid for 2-3 years. Malaysia and Singapore nationals are exempt.

 1.6.2     Work permits – After receiving an Employment Visa, a foreigner must then apply with the Department of Immigration and National Registration for an Employment Pass. A Pass is valid for 2 to 3 years and can be renewed.

2. Investment Environment

2.1  Economic growth
According to the Brunei Economic Development Board in the Prime Minister’s Office, Brunei has a small, wealthy economy that grows at a slow, steady rate and has remained stable with an average inflation rate of 1.5% over the past twenty years. Its people enjoy a high quality of life with an estimated US$31,000 per capita income – the second highest in the ASEAN region. Brunei has a low tariff regime and no capital gains or personal income tax. Brunei imports about 80% of its food requirements, and the government subsidizes rice, sugar and milk for its citizens along with housing, electricity, water and oil. Brunei also provides comprehensive medical services and free education through to university level for its people.

2.2  Openness to investment and incentives
In order to rely less on its oil and gas sector, Brunei encourages foreign investment into the country. The Brunei Economic Development Board and the Ministry of Industry and Primary Resources are the leading economic development agencies for Brunei. They work with foreign and domestic investors to develop new economic opportunities where Brunei has competitive advantage. Brunei grants incentives for foreign investment which include tax incentives, tax breaks, pioneer status, and 100% foreign ownership except for natural resources and national food security which can be up to 70% foreign owned.

2.3  Banking and foreign exchange
The evolution of financial institutions in Brunei has been marked by rapid growth over the last decade. It’s divided into two categories: Banking System and Non-Bank Financial Institutions. Brunei has no central bank, and most functions of a central bank are carried out by the Treasury, the Ministry of Finance, and the Brunei Currency Board – which is also responsible for the circulation and management of currencies in Brunei.

 2.4  Intellectual property protection
The Intellectual Property Division of the Attorney General’s Chambers (AGC) governs Brunei’s IP rights system and offers IP protection for trademarks, copyrights, industrial designs and layout designs. The Patent Registry Office at the Brunei Economic Development Board oversees all patents. Brunei is a member of WTO’s TRIPS agreement and a part of the Berne Convention since 2006, the Paris Convention since February 2012, and the Patent Cooperation Treaty since July 2012. Brunei opened its Patent Registry Office in January 2012 and began processing applications. In the past, there was not much enforcement and no specialized court. Currently, Brunei is improving its intellectual property rights protection through political commitment and legislative reform.

2.5  Labor
The regulations and procedures on foreign worker recruitment are straightforward, and the Government’s assistance is readily available in securing approval for foreign workers ranging from laborers to executive managers. As most citizens are employed in the public sector, the Government continues to promote local employment in the private sector. The push towards diversification and foreign direct investment promotion is seen as the answer to the problem of overdependence on public service employment. Foreign workers have eased the labor shortage and currently make up over a third of the workforce.

3. Types of Business Organizations

3.1  Sole proprietorship – A sole proprietorship is a privately-owned company that’s not subject to company income tax. However, the owner is personally liable for the obligations of their business. Foreigners are not allowed to register.

 

3.2  Partnership – A partnership can consist of individuals, local companies and branches of foreign companies with a maximum of 20 partners and are not subject to corporate tax. At least one partner must be a citizen of Brunei or a Brunei Permanent Resident. Under special circumstances, the Registrar will approve foreign individuals to register.

3.3  Company – Governed by the Companies Act, there are four types of companies that can be incorporated in Brunei: companies limited by shares, companies limited by guarantee, companies limited both by shares and guarantee, and unlimited companies. These companies can be either private or public companies.

3.3.1   Branch of a foreign company – If a foreign company wants to establish a business in Brunei, but does not incorporate as a local company, it must register as a branch of the foreign company. The branch must have a registered office in Brunei and must appoint a local agent.

3.3.2   Joint venture – A joint venture can be a corporation or a partnership. Several factors including the nature of the project determine the type of joint venture. In a corporate joint-venture, the owners have limited liability, and in a partnership joint venture, the partners have unlimited liability. If the parties to a partnership joint venture are corporations, then liability is limited to that of the participating corporations.

4. Taxation

In Brunei, there are no capital gains, export, manufacturing, VAT or payroll taxes, and individuals are not liable for income tax either. Brunei has signed Double Taxation Agreements with 11 countries.

4.1  Corporate Income Tax – The corporate income tax rate is 22% except for oil and gas companies which have a 55% rate. There is no capital gains tax. Resident companies pay tax on income derived in Brunei and from overseas, and non-resident companies only pay tax on their Brunei income

(Source: http://www.dejudomlaw.com/guide/december-2013/   retrieved 11/2/2014)