Plant and machinery. An initial allowance of 40% of the cost of plant or machinery is given on the qualifying expenditure, and an annual allowance is given on the declining value of the asset. Effective from 1 January 2016, the rates of the annual allowance for all types of assets were changed to 25%. Alternatively, a company may choose to write off such expenditure over three years on a straight-line basis. For plant and machinery not exceeding BND2,000 per item, a company may choose to write off such expenditure fully in the year of acquisition subject to an aggregate cap of BND30,000 per year. For computer and office automation equipment, a company may also choose to write off such assets fully in the year of acquisition.
Effective from 1 January 2014, the capital allowance rate was increased to 150% for assets categorized as plant and machinery for companies in the manufacturing sector. This capital allowance applies only to plant and machinery installed between 1 January 2014 and 31 December 2019.
Mining. All expenditure incurred in connection with the working of a mine or other source of mineral deposit of a wasting nature is considered qualifying mining expenditure. An initial allowance of 10% of the qualifying expenditure is given in the year of expenditure, with annual depletion allowances deductible over the life of the mine. These are determined by multiplying the residue of the capital expenditure by the greater of the fraction of 1/20 and the following fraction:
Output for the year
Output for the year plus estimated future output
Disposals. When an asset is sold, scrapped or destroyed, a balancing allowance or charge is made, based on the difference between the disposal price and the depreciated value on disposal. The balancing charge may be deferred if the plant and machinery disposed of are replaced by similar assets.
Relief for losses. Losses may be carried forward for up to six years to offset future profits. Continuity of trade or ownership is not required to carry forward losses. Losses in one trade or business may be set off against other sources of income for the same year of assessment.
Unabsorbed capital allowances may be carried forward indefinitely, provided the company continues to carry on the same trade or business.
Groups of companies. No special rules or reliefs apply to groups of companies; each company is taxed on its own income as appropriate.
D. Domestic and treaty withholding tax rates
Brunei Darussalam’s domestic tax law imposes withholding tax on various payments made to nonresident persons, which include companies and bodies of persons. A company is considered to be a nonresident company if the control and management of its business are not exercised in Brunei Darussalam. The following are the withholding tax rates.
The above withholding tax rates may be reduced under tax treaties. Brunei Darussalam has entered into double tax treaties with Bahrain, Cambodia, China Mainland, the Hong Kong Special Administrative Region (SAR), Indonesia, Japan, Korea (South), Kuwait, Laos, Luxembourg, Malaysia, Oman, Pakistan, Qatar, Singapore, the United Arab Emirates, the United Kingdom and Vietnam. In addition, Brunei Darussalam has signed tax treaties with the Philippines and Tajikistan, but these treaties have not yet been ratified. Both resident and nonresident companies may also apply for unilateral relief on income arising from British Commonwealth jurisdictions offering reciprocal relief. However, the maximum relief cannot exceed half the Brunei Darussalam rate.