Income Tax Act

This Act may be cited as the Income Tax Act.

This Act shall come into force on the 31st day of

December 1949 to the extent specified in Schedule 1.

a place of management;

a branch;

an office;

a factory;

a warehouse;

a workshop;

a farm or plantation;

a mine, oil well, quarry or other place of extraction of natural resources;

a building or work site or a construction, installation or assembly project, and without prejudice to the generality of the foregoing, a person is deemed to have a permanent establishment in Brunei Darussalam if that person —

carries on supervisory activities in connection with a building or work site or a construction, installation or assembly project; or

has and habitually exercises an authority to conclude contracts;

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maintains a stock of goods or merchandise for the purpose of delivery on behalf of that person; or

habitually secures orders wholly or almost wholly for that person or for such other enterprises as are controlled by that person;

“person” includes a company and a body of persons;

“plantation” means any land used for the growing and harvesting of crops;

“prescribed” means prescribed by rules made under section 5;

“replanting” means the replacement of the crop of any product on any area of land by the planting on the same area of a crop of the same product;

“research and development” means any systematic or intensive study carried out in the field of science or technology with the object of using the results of the study for the production or improvement of materials, devices, products, produce, or processes, but does not include —

quality control or routine testing of materials, devices or products;

research in the social sciences or the humanities;

routine data collection;

efficiency surveys or management studies; or

market research or sales promotions;

“research and development company” means a company which provides research and development services for any trade or business;

“resident in Brunei Darussalam” —

in relation to an individual, means a person who, in the year preceding the year of assessment, resides in

Brunei Darussalam except for such temporary absences therefrom as to the Collector may consider reasonable and not inconsistent with a claim by such person to be resident in

Brunei Darussalam, and includes a person who is physically

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present or who exercises an employment (other than as a director of a company) in Brunei Darussalam for 183 days or more during the year preceding the year of assessment;

in relation to a company or a body of persons, means a company or a body of persons the control and management of whose business is exercised in Brunei Darussalam;

“tax” means the income tax imposed by this Act;

“year of assessment” means the period of 12 months commencing on the 1st day of January 1950 and each subsequent period of 12 months.

For the due administration of this Act, His Majesty the Sultan and Yang Di-Pertuan may, by notification published in the Gazette, appoint a

Collector of Income Tax and such deputy collectors and other officers and persons as may be necessary.

The Collector may by notification published in the Gazette or in writing authorise any person, within or outside Brunei Darussalam, to perform or to assist in the performance of any specific duty imposed upon the Collector by this Act.

Subject to such conditions as the Collector may specify, the

Collector may by public notification direct that any information, return or document required to be supplied, forwarded or given to the Collector may be supplied to such other persons as the Collector may direct.

The Collector shall be responsible for the assessment and collection of tax and shall pay all amounts collected in respect thereof into the Treasury to the credit of the general revenue.

The Collector may specify the form of any return, claim, statement or notice to be made or given under this Act.

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No action shall be brought against the Collector, any authorised officer or any other person acting under the direction of the

Collector in respect of any act or thing done or omitted to be done by him in good faith in the exercise, performance or purported exercise or performance, of any powers or duties under this Act.

Every person having any official duty or being employed in the administration of this Act shall regard and deal with all documents, information, returns, assessment lists and copies of such lists relating to the income or items of the income of any person, as secret and confidential, and shall make and subscribe a declaration in the form prescribed to that effect before the Collector.

Every person having possession of or control over any documents, information, returns or assessment lists or copies of such lists relating to the income or items of income of any person, who at any time otherwise than for the purpose of this Act or with the express authority of the

Minister —

No proceedings for an offence against this section shall be taken save by or with the sanction of the Collector or the Public Prosecutor.

No person appointed under, or employed in carrying out, the provisions of this Act shall be required to produce in any court any return, document or assessment, or to divulge or communicate to any court any matter or thing coming under this notice in the performance of his duties under this Act except as may be necessary for the purpose of carrying into effect the provisions of this Act, or in order to institute a prosecution, or in the course of a prosecution, for any offence committed in relation to income tax.

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Where, under any law in any part of the Commonwealth, provision is made for the allowance of relief from income tax in respect of the payment of income tax in Brunei Darussalam, the obligation as to secrecy imposed by this section shall not prevent the disclosure to the authorised officers of the government in that part of the Commonwealth of such facts as may be necessary to enable the proper relief to be given in cases where relief is claimed from income tax in Brunei Darussalam, or from income tax in that part or place.

Notwithstanding anything contained in this section, the

Collector shall permit the Auditor or any officer duly authorised in that behalf by him to have such access to any records or documents as may be necessary for the performance of his official duties. The Auditor or any such officer is deemed to be a person employed in carrying out the provisions of this Act for the purposes of this section.

The Minister may, with the approval of His Majesty the Sultan and Yang Di-Pertuan, make rules to provide for —

Such rules may prescribe the penalty, not exceeding a fine of $10,000 and in default of payment imprisonment for a term not exceeding 2 years, with which the contravention of or failure to comply with any rule made under this section shall be punishable.

Rules made under this section may be expressed to take effect retrospectively from any date after the commencement of this Act specified therein.

Any person exercising any functions under this Act shall carry an authority card in a form approved by the Collector which shall identify the holder and his office and which shall be produced by the holder on demand to any person having reasonable grounds to make that demand.

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Where any person exercising any functions under this Act produces an authority card in a form approved under subsection (1) or any other written identification or authority, then, until the contrary is proved, that authority card or other identification or authority shall be presumed to be genuine and he shall be presumed to be the person referred to therein.

It shall not be an offence for any person to refuse to comply with any demand or order made by any person exercising any functions under this Act, if such latter person refuses on demand being made by such first-mentioned person to declare his office and to produce his authority card or other written identification or authority.

The Collector may at any time make a ruling on the application of any provisions of this Act in relation to any person or any type of arrangement.

The rulings made under subsection (1) shall be binding.

The Collector may withdraw, either whole or partly any ruling made under this section.

Notwithstanding any other provision of this Act, where the ruling in subsection (1) applies to any person in relation to an arrangement and the person applies the provision in the manner stated in the ruling, the

Collector shall apply the provision in relation to the person and the arrangement in accordance with the ruling.

Except where it is provided by this Act that service shall be effected either personally or by registered post, a notice may be served on a person either personally or by being sent through the post.

Where a notice is served by ordinary or registered post, it is deemed to have been served on the day succeeding the day on which the notice would have been received in the ordinary course of post if the notice is addressed —

Where the person to whom there has been addressed a registered letter containing any notice which may be given under this Act is informed of the fact that there is a registered letter awaiting him at a post office and such person refuses or neglects to take delivery of such registered letter, such notice is deemed to have been served upon him on the date on which he was informed that there was a registered letter awaiting him at a post office.

Every notice to be given by the Collector under this Act shall be signed by the Collector or by some person or persons from time to time authorised by him in that behalf under section 3, and every such notice shall be valid if the signature of the Collector is duly printed or written thereon.

Any notice under this Act requiring the attendance of any person or witness before the Collector shall be signed by the Collector or by a person duly authorised by him under subsection (4).

The Collector may provide an electronic service for —

For the purposes of the electronic service, the Collector may assign to any person —

Any person who is required to file or submit any return, estimate, statement or document, or to provide any information under section 86L(1), may do so through the electronic service.

Any agent who is authorised by his principal in the prescribed manner may file or submit any return, estimate, statement or document, or provide any information to the Collector, on behalf of his principal through the electronic service.

Where any return, estimate, statement or document is filed or submitted, or any information is provided, on behalf of any person under subsection (4) —

Where any return, estimate, statement or document is filed or submitted, or any information is provided, through the electronic service using the authentication code assigned to any person before that person has requested, in the prescribed manner, for the cancellation of the authentication code —

Where any person has given his consent for any notice to be served on him through the electronic service, the Collector may serve the notice on that person by transmitting an electronic record of the notice to that person’s account with the electronic service.

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Notwithstanding any other written law, in any proceedings under this Act —

For the avoidance of doubt —

For the purposes of this section, a certificate —

Where the electronic record of any return, estimate, statement, document, information or notice, or a copy or print-out of that electronic record, is admissible under subsection (8), it shall be presumed, until the contrary is proved, that the electronic record, copy or print-out accurately reproduces the contents of that document.

The Collector may, for the purposes of the electronic service, approve the use of any symbol, code, abbreviation or notation to represent any particulars or information required under this Act.

The Minister may, with the approval of His Majesty the Sultan and Yang Di-Pertuan, make regulations which are necessary or expedient for carrying out the purposes of this section, including regulations prescribing —

Income tax shall, subject to the provisions of this Act, be payable at the rate or rates specified hereinafter for each year of assessment upon the income of any person accruing in, derived from, or received in,

Brunei Darussalam in respect of —

Any sum realised under any insurance against loss of profits shall be taken into account in the ascertainment of any profits or income.

Where, under the provisions of section 14, 17 or 18, a balancing charge falls to be made, the amount thereof is deemed to be income chargeable with tax.

Subject to this Act, a tax shall be imposed, at the rate of one per cent, on every person deriving income from approved exports.

The tax imposed under subsection (1) shall be computed by applying the prescribed rate of tax to the gross proceeds of export, liable to be assessed to tax under this Act.

The total turnover of the exporter shall be treated as exports for the purposes of this section if the local sales do not exceed 20 per cent of the total turnover.

In case the local sales are —

The tax imposed under this section shall be a final tax on the amount in respect of which the tax is imposed and such amount shall not be further chargeable to tax under any other provision of the Act in computing the chargeable income of the person who derives it for any year of assessment.

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The tax payable by a person under this section shall not be reduced by any tax credit allowed under this Act.

Capital allowances are deemed to have been availed at the rates prescribed under the Act for the relevant period.

In this section, “approved” means approved by the Minister.

Subject to the provisions of section 10(1)(l), where a non-resident person carries on either —

Where a non-resident person carries on in Brunei Darussalam the business of transmitting messages by cable or by any form of wireless apparatus, his full profits arising from the transmission in Brunei Darussalam of any such messages, whether originating in Brunei Darussalam or elsewhere, to places outside Brunei Darussalam are deemed to accrue in

Brunei Darussalam.

The gains or profits from any employment exercised in

Brunei Darussalam are deemed to be derived from Brunei Darussalam whether the gains or profits from such employment are received in

Brunei Darussalam or not.

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There shall be deemed to be derived from

Brunei Darussalam —

There shall be deemed to be derived from

Brunei Darussalam —

There shall be exempt from tax —

The Minister, with the approval of His Majesty the Sultan and

Yang Di-Pertuan may, by public notification, provide that the interest payable on any loan charged on the public revenue of Brunei Darussalam shall be exempt from tax, either generally or in respect of interest payable to persons not resident in Brunei Darussalam, and such interest shall as from the date and to the extent specified by such notification be exempt accordingly.

There shall be exempt from tax any income arising from sources outside Brunei Darussalam and received therein by any person who is in Brunei Darussalam for some temporary purpose only and not with any intent to establish his residence therein and who has not actually resided in

Brunei Darussalam at one or more times for a period equal in the whole to 6 months in the year of assessment.

There shall be exempt from tax any income of a person relevant to year of assessment 2015 and the subsequent years of assessment if its gross sales or turnover during the basis period does not exceed $1,000,000.

For the purpose of subsection (4), gross sales or turnover include revenues from the sale of goods, rendering of services, interests, royalties and dividends.

For the purpose of ascertaining the income of any person for any period from any source chargeable with tax under this Act (in this Part referred to as the income), there shall be deducted all outgoings and expenses wholly and exclusively incurred during that period by such person in the production of the income, including —

Notwithstanding subsection (1), where outgoings and expenses falling within that subsection are incurred, whether directly or in the form of reimbursements, in respect of a motor car (whether or not owned by the person incurring the outgoings and expenses), the sum to be allowed as a deduction shall be limited to the amount which bears to such outgoings and expenses the same proportion as $50,000 bears to the capital expenditure incurred by the owner in respect of that motor car, where such capital expenditure exceeds $50,000.

The Collector may prescribe the method of calculating or estimating deductions under this section.

Further deduction for expenses relating to approved trade fairs, exhibitions or trade missions or to maintenance of overseas trade office 11A.

Where the Collector is satisfied that expenses have been incurred —

In respect of the deduction allowable to a company under subsection (1)(b), if the export sales of the manufacturer do not exceed 50 per cent of his total sales in the basis period for the year of assessment, the amount of deduction to be allowed shall be determined in accordance with the following formula —

B

A x C where A is the amount of expenses incurred;

B is the export sales in the basis period for the year of assessment;

and

C is the total sales in the basis period for the year of assessment.

In respect of the deduction allowable to a company for expenses incurred in establishing, maintaining or otherwise participating in an approved local trade fair or exhibition under subsection (1)(d), if the gross revenue of the company in the basis period for any year of assessment from the provision of services on persons not resident in Brunei Darussalam and having no permanent establishment in Brunei Darussalam or to permanent establishments outside Brunei Darussalam of persons resident in

Brunei Darussalam or elsewhere does not exceed 50 per cent of its total gross revenue in that basis period from the provision of services, the amount deduction to be allowed to the company or firm shall be determined in accordance with the following formula —

A x B

C where A is the amount of expenses incurred;

B is the gross revenue in the basis period for the year of assessment from the provision of services to persons not resident in

Brunei Darussalam and having no permanent establishment in

Brunei Darussalam or to permanent establishments outside

Brunei Darussalam of persons resident in Brunei Darussalam or elsewhere; and

C is the total gross revenue in the basis period for the year of assessment from the provision of services.

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The Minister may specify the maximum amount of expenditure (or any item thereof) to be allowed under subsection (1).

No deduction shall be allowed under this section in respect of —

As soon as any amount of further deduction is allowed to any company under this section or section 11B or 11D, a sum equal to that amount shall be credited to an account (in this section referred to as the further deduction account) to be kept by the company for the purposes of any of those sections.

Where for any year of assessment a further deduction account of a company is in credit, the company shall —

Where a tax exempt account of a company is in credit at the date on which any dividends are paid by the company out of the net amount credited to that account, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the tax exempt account.

So much of the amount of any dividends debited to the account as is received by a shareholder of the company shall, if the Collector is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder.

Section 36 does not apply to any dividends or part thereof which is exempt from tax under this section.

Where an amount of dividends exempt from tax under this section has been received by a shareholder, which is a holding company owning, at the time such dividends are received, not less than 50 per cent beneficial interest in the issued capital of the company, any dividends paid by the holding company to its shareholders, to the extent that the Collector is

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satisfied that those dividends are paid out of such amount, shall be exempt from tax in the hands of those shareholders; and section 36 does not apply to any such dividends or part thereof.

Notwithstanding subsections (9) and (11), no dividend paid on any share of a preferential nature shall be exempt from tax in the hands of the shareholder.

A company shall deliver to the Collector a copy of the account made up to any date specified by him whenever called upon to do so by notice in writing.

Notwithstanding anything in this section, where it appears to the Collector that in any year of assessment —

In this section —

“approved” means approved by the Minister charged with the responsibility for industrial development;

“master franchise” means any agreement under which the franchisor authorises or permits the franchisee to use in

Brunei Darussalam or overseas a business system owned or controlled by the franchisor, including the sub-franchising of the business system;

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“master intellectual property licence” means any licence under which the licensor authorises or permits the licensee to use in

Brunei Darussalam or overseas the rights under a patent, copyright, trade marks, design or know-how, including the sub-licensing of the same.

Further deduction for export market development expenditure and certain advertising expenses 11B.

Subject to this section, where the Collector is satisfied that —

The Minister may specify the maximum amount of export market development expenditure or any item thereof, or of advertising expenses, to be allowed under subsection (1).

No deduction shall be allowed under this section in respect of —

In this section —

“approved” means approved by the Minister charged with the responsibility for industrial development;

“export market development expenditure” means —

For the purpose of ascertaining the income of any person carrying on a manufacturing trade or business, or trade or business for the provision of specified services, the following expenditure incurred on or after the respective dates referred to in subsection (2) (other than any amount which is allowable as a deduction under section 11) by that person shall be allowed as a deduction —

For the purposes of subsection (1) —

In this section —

“approved” means approved by the Minister charged with the responsibility for industrial development;

“specified services” means —

For the purposes of this section, any expenditure incurred by a person prior to the commencement of his trade or business is deemed to have been incurred by that person on the first day on which he carries on that trade or business.

Subject to this section, where the Collector is satisfied that —

The Minister may —

No deduction shall be allowed under this section in respect of any expenditure which is not allowed under section 11 or 11C.

In this section —

“approved” means approved by the Minister charged with the responsibility for industrial development;

“specified services” has the same meaning as in section 11C.

Subject to the provisions of this Act, for the purpose of ascertaining the income of any person, no deduction shall be allowed in respect of —

Notwithstanding anything in this Act, where a person is required under section 55, 55A or 65(3) to furnish to the Collector any document, statement or particulars within the time specified in the notice given under those sections or such further time as the Collector may allow under those sections and that document, statement or particulars concerns wholly or in part a deduction claimed by that person in ascertaining the income of that person from any source in the basis period for the year of assessment, no deduction from the income from that source in that period shall be allowed in respect of such claim if the person fails to provide the document, statement or particulars within the time specified in the notice or such further time as the Collector may allow.

Where, in or after the basis period for the first year of assessment under this Act, a person incurs capital expenditure on the construction of a building or structure which is to be an industrial building or structure occupied for the purposes of a trade, there shall be made to the person who incurred the expenditure for the year of assessment in the basis period for which the expenditure was incurred an allowance (in this section referred to as an initial allowance) equal to 40 per cent thereof.

The provisions of this subsection apply in relation to expenditure incurred by a person on or after the 1st day of January 2008 but before the commencement of the first basis period as if it had been incurred by him on the first day of that period.

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Where any capital expenditure has been incurred on the construction of a building or structure and, in or after the basis period for the first year of assessment under this Act, any of the following events occurs while the building or structure is an industrial building or structure —

Where there are no sale, insurance, salvage or compensation moneys, or where the residue of the expenditure immediately before the event exceeds those moneys, a balancing allowance shall be made and the amount thereof shall be the amount of that residue or, as the case may be, of the excess thereof over those moneys.

If the sale, insurance, salvage or compensation moneys exceed the residue, if any, of the expenditure immediately before the event, a balancing charge shall be made and the amount on which it is made shall be an amount equal to the excess or, where the residue is nil, to that moneys.

Notwithstanding anything in the last preceding subsection, in no case shall the amount on which a balancing charge is made on a person exceed the aggregate of the following amounts —

Subject to the provisions of this section, in sections 13 and 14, an “industrial building or structure” means a building or structure in use —

Notwithstanding anything in subsection (1), the expression

“industrial building or structure” does not include any building or structure in use as, or as part of, a dwelling house, retail shop, showroom or office or for any purpose ancillary to the purposes of a dwelling house, retail shop, showroom or office:

Provided that this subsection does not apply to, or to part of, a building or structure which was constructed for —

In sections 13 and 14 —

Where, in or after the basis period for the first year of assessment under this Act, a person carrying on a trade, profession or business incurs capital expenditure on the provision of machinery or plant for the purposes of that trade, profession or business, there shall be made to him, for the year of assessment in the basis period for which the expenditure is incurred, an allowance (in this section referred to as an initial allowance)

equal to 40 per cent of that expenditure.

The provisions of this subsection apply in relation to expenditure incurred by a person on or after the 1st day of January 2009 but before the commencement of the first basis period as if it had been incurred by him on the first day of that period if such machinery or plant was in use for the purposes of that trade, profession or business at the commencement of that period.

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Where at the end of the basis period for any year of assessment a person has in use machinery or plant for the purpose of his trade, profession or business, there shall be made to him in respect of that year of assessment an allowance (in this section referred to as an annual allowance)

for depreciation by wear and tear of those assets. The allowance shall be calculated at the rate of 25 per cent and shall be computed on the reducing value of the asset, which shall be the original cost of the asset reduced by —

Notwithstanding the foregoing, where chargeable income of a company resident in Brunei Darussalam derives from the business of transportation by sea of liquefied natural gas and that company incurs capital expenditure on the purchase of a vessel or vessels for the purposes of that business, the initial allowance in respect of the expenditure so incurred shall be one-sixth of that expenditure. Thereafter there shall be a maximum of five annual allowances in respect of such expenditure, which annual allowances shall be made consecutively in each of the next succeeding five basis periods in respect of any such vessel in use by such company, each such annual allowance being equal to the initial allowance.

Notwithstanding subsections (1) and (2), in respect of a motor car to which this subsection applies —

Subsection (4) applies to a motor car which is constructed or adapted for the carriage of not more than seven passengers (exclusive of the driver) and the weight of which unladen does not exceed 3,000 kilograms.

Subject to this section, where on or after 1st January 2001, a person carrying on a manufacturing trade or business has incurred capital expenditure in acquiring any approved know-how or any approved patent rights for use in that trade or business (in this section referred to as the relevant trade or business), writing-down allowances in respect of that expenditure shall be made to him during a writing-down period of 4 years beginning with the year of assessment relating to the basis period in which that expenditure is incurred.

The writing-down allowance to be made to a person under this section for any year of assessment shall be an amount equal to 25 per cent of the expenditure incurred by him on the acquisition of the approved know-how or patent rights, as the case may be.

Any expenditure incurred on the acquisition of any approved know-how or patent rights by a person before the commencement of his trade or business shall be treated for the purpose of this section as if it has been incurred by him on the first day he commences that trade or business.

Where writing-down allowances have been made to any person under this section in respect of any approved patent rights and, before the end of the writing-down period, any of the following events occurs —

Where writing-down allowances have been made to any person under this section in respect of any approved patent rights and, before the end of the writing-down period, either of the following events occurs —

Where a person to whom writing-down allowances have been made under this section in respect of any approved patent rights —

References in subsections (5) and (6) to the amount of any expenditure remaining unallowed shall, in relation to any event, be construed as references to the amount of that expenditure —

Notwithstanding anything in subsection (6), the total amount on which a balancing charge is made in respect of any expenditure shall not exceed the total writing-down allowances actually made in respect of that expenditure, less, if a balancing charge has previously been made in respect of that expenditure, the amount on which that charge was made.

Where a person to whom writing-down allowances have been made under this section in respect of any approved know-how disposes of the approved know-how, the amount of value of any consideration received by him for the disposal shall, so far as it is not chargeable to tax as a revenue or income receipt, be treated for all purposes as a trading receipt of the relevant trade or business.

Where a person to whom writing-down allowances have been made under this section ceases to carry on the relevant trade or business, an allowance equal to the amount of the expenditure remaining unallowed in respect of the approved know-how or patent rights, as the case may be, shall be made to him in computing his income for the year of assessment relating to the basis period in which the cessation occurs.

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In this section —

“approved” means approved by the Minister charged with the responsibility for industrial development;

“know-how” means any industrial information and techniques likely to assist in the manufacture or processing of goods or materials;

“patent rights” means the right to do or authorise the doing of anything which would, but for that right, be an infringement of a patent.

For the purposes of this section —

Notwithstanding section 16, where a person carrying on a trade, profession or business incurs capital expenditure on the provision of machinery or plant for the purposes of that trade, profession or business, he shall, in lieu of the allowances provided by section 16, be entitled for a period of 3 years to an annual allowance of 33⅓ per cent in respect of the capital expenditure incurred.

Notwithstanding section 16, where a person proves to the satisfaction of the Collector that he has installed a computer or other prescribed automation equipment for the purposes of a trade, business or profession carried on by him, he shall, in lieu of the allowances provided by subsection (1) or section 16, be entitled, if he so elects, to an allowance of 100 per cent in respect of the capital expenditure incurred on the provision of that computer or automation equipment.

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Notwithstanding section 16 and subject to subsection (4), where a person proves to the satisfaction of the Collector that he has incurred capital expenditure not exceeding $2,000 on the provision of any item of machinery or plant for the purposes of a trade, profession or business carried on by him, he shall, in lieu of the allowances provided by subsection (1)

or section 16, be entitled, if he so elects, to an allowance of —

The aggregate amount of allowances claimed by any person under subsection (3) for any year of assessment shall not exceed $30,000;

and allowances may be made under subsection (1) or section 16 in respect of any capital expenditure still unallowed.

No allowance shall be made under subsection (3) in respect of any item of machinery or plant which is acquired under a hire-purchase agreement and the original cost of that item of machinery or plant exceeds $2,000.

Any claim by a person for allowances in respect of any machinery or plant under this section for any year of assessment shall not be disallowed by reason only that the person has not in use the machinery or plant at the end of the basis period for that year of assessment.

Any claim for allowances under this section shall be made at the time of lodgment of the return of income for the relevant years of assessment or within such further time as the Collector may allow.

Where any allowance has been claimed and allowed under this section for any year of assessment, no allowances shall be made in any subsequent year of assessment under section 16 in respect of such expenditure.

Subject to subsection (3), where any allowance has been claimed and allowed under section 16 in respect of any expenditure, no allowances shall, except with the approval of the Minister and subject to such conditions as he may impose, be made in any subsequent year of assessment

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under this section in respect of the amount of that expenditure remaining unallowed under section 16.

This section applies to any machinery or plant acquired on or after 1st January 2009.

Notwithstanding sections 16 and 16B, where a person carrying on a trade, profession or business incurs capital expenditure on the installation of machinery or plant for the production of products by any of the industries specified in Schedule 5, he shall, in lieu of the allowances provided by sections 16 and 16B, be entitled for an annual allowance of 100 per cent in respect of the capital expenditure incurred.

Where a person proves to the satisfaction of the Collector that he has incurred capital expenditure during the basis period relevant to the year of assessment on the installation of machinery or plant for the production of products by any of the industries specified in Schedule 5, there shall be allowed on due claim, in addition to the allowance provided by subsection (1), an additional allowance at the rate of 50 per cent of the capital expenditure incurred on the provision of that machinery or plant.

Any claim for allowances under this section shall be made at the time of lodgment of the return of income for the relevant years of assessment or within such further time as the Collector may allow.

Where any allowance has been claimed and allowed under this section for any year of assessment, no allowances shall be made in any subsequent year of assessment under any other provision of this Act, in respect of such expenditure.

Where any allowance has been made to any person under subsection (2), in respect of any machinery or plant and the person disposes off the machinery or plant within the period of one year from the provision of such machinery or plant, any allowance made under subsection (2), shall be brought to charge as if the allowance was not made, and be deemed as income for the year of assessment relating to the basis period in which the disposal occurs. The provisions of section 62 shall, so far as may be, apply, accordingly. The period of 6 years specified in that section shall be reckoned from the end of the year of assessment relevant to the basis period in which the disposal was discovered.

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Such person shall give notice to the Collector of such disposal within 30 days of the disposal.

This section applies to machinery and plant installed between the 1st day of January 2014 and the 31st day of December 2019.

Tax credit under section 42B shall not be available in respect of plant or machinery entitled to allowance under this section.

Where, in or after the basis period for the first year of assessment under this Act, any of the following events occur in the case of any machinery or plant in respect of which an initial allowance or an annual allowance has been made for any year of assessment to a person carrying on a trade, profession or business, either —

Where there are no sale, insurance, salvage or compensation moneys or where the amount of the capital expenditure of the person in question on the provision of the plant or machinery still unallowed as at the time of the event exceeds those moneys, a balancing allowance shall be made, and the amount thereof shall be the amount of the expenditure still allowed as aforesaid, or, as the case may be, the excess thereof over those moneys.

If the sale, insurance, salvage or compensation moneys exceed the amount, if any, of the expenditure still unallowed as at the time of the event, a balancing charge shall be made, and the amount on which it is made

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shall be an amount equal to the excess or, where the amount still unallowed is nil, to those moneys.

Notwithstanding anything in subsection (3), in no case shall the amount on which a balancing charge is made on a person exceed the aggregate of the following amounts —

Where machinery or plant in the case of which any of the events mentioned in section 17(1) has occurred is replaced by the owner thereof and a balancing charge falls to be made by him by reason of that event or, but for the provisions of this section, would have fallen to be made on him by reason thereof, then, if by notice in writing to the Collector he so elects, the following provisions shall have effect —

Expenditure on the provision of machinery or plant shall include capital expenditure on alterations to an existing building incidental to the installation of that machinery or plant for the purposes of the trade, profession or business.

in the case of an insurance company whether mutual or proprietary (other than a life insurance company) where the gains or profits accrue in part outside Brunei Darussalam, the gains or profits on which tax is payable shall be ascertained by taking the gross premiums and interest and other income received or receivable in Brunei Darussalam (less any premium returned to the insured and premiums paid on re-insurances), and deducting from the balance so arrived at a reserve for unexpired risks at the percentage adopted by the company in relation to its operations as a whole for such risks at the end of the period for which the gains or profits are being ascertained, and adding thereto a reserve similarly calculated for unexpired risks outstanding at the commencement of such period, and from the net amount so arrived at deducting the actual losses (less the amount recovered in respect thereof under re-insurance) the agency expenses in Brunei Darussalam and a fair proportion of the expenses of the head office of the company;

in the case of a life insurance company, whether mutual or proprietary, the gains or profits on which tax is payable shall be the investment income less the management expenses, including commission:

Provided that where such company received premiums outside

Brunei Darussalam, the gains or profits shall be the same proportion of the total investment income of the company as the premiums received in Brunei Darussalam bore to the total premiums received after deducting from the amount so arrived at the agency expenses in Brunei Darussalam and a fair proportion of the expenses of the head office of the company;

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in the case of an insurance company carrying on life insurance business in conjunction with any other insurance business, the assessment of the gains or profits on which tax is payable shall be made in one sum, but the gains or profits arising from the life insurance business shall be computed in accordance with the provisions of paragraph (b) as if such life insurance business were a separate business from the other insurance business carried on by the company.

Where for any period a non-resident person who carries on the business of shipowner or charterer produces the certificate mentioned in subsection (2), the profits accruing in Brunei Darussalam from the business for such period, before deducting any allowance for depreciation, shall be a sum bearing the same ratio to the sums receivable in respect of the carriage of passengers, mails, livestock and goods shipped in Brunei Darussalam as the total profits for that period bear to the total sum receivable by him in respect of the carriage of passengers, mails, livestock and goods, as shown by the certificate.

The certificate shall be one issued by or on behalf of any income tax authority with regard to which the Collector is satisfied that it computes and assesses the full profits of the non-resident person from his shipping business on a basis not materially different from that provided by this Act, and shall certify for any accounting period as regards such business —

Where, at the time of assessment, the provisions of subsection (1) cannot, for any reason, be satisfactorily applied, the profits accruing in Brunei Darussalam may be computed on a fair percentage of the full sum receivable on account of the carriage of passengers, mails, livestock and goods shipped in Brunei Darussalam:

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Provided that where any person has been assessed for any year of assessment by reference to such percentage, he shall be entitled to claim at any time within 6 years after the end of such year of assessment that his liability to tax for the year be recomputed on the basis provided by subsection (1).

Where the Collector decides that the call of a ship belonging to a particular non-resident shipowner or charterer at a port in

Brunei Darussalam is casual and that further calls by that ship or others in the same ownership are improbable, the provisions of this section do not apply to the profits of such ship and no tax shall be chargeable thereon.

Where the Collector is satisfied that the purpose or effect of any arrangement is directly or indirectly —

In subsection (1), “arrangement” includes any scheme, trust, grant, convenant, agreement, disposition transaction and all steps by which it is carried into effect.

Nothing contained in this section shall prevent the decision of the Collector in the exercise of any discretion given to him by this section from being questioned in an appeal against an assessment in accordance with Part 12.

Save as provided in this section, the income of any person for each year of assessment from each source of his income (referred to as statutory income) shall be the full amount of the income from each such source during the year preceding the year of assessment, notwithstanding that he may have ceased to possess any such source or that any such source may have ceased to produce income.

Where the Collector is satisfied that any person usually makes up the accounts of a trade, business, profession, vocation or employment carried on or exercised by him to some day other than that immediately preceding any year of assessment, he may direct that the statutory income from that source be computed on the amount of the gains or profits of the year ending on that day in the year preceding the year of assessment. Where, however, the statutory income of any person from a trade, business, profession, vocation or employment has been computed by reference to an account made up to a certain day, and such person fails to make up an account to the corresponding day in the year following, the statutory income from that source both of the year of assessment in which such failure occurs and of the 2 years of assessment following, shall be computed on such basis as the Collector in his discretion thinks fit.

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The statutory income of an executor shall be the income of the estate administered by such executor for the year preceding the year of assessment:

Provided that any income of the estate received by, distributed to, or applied to the benefit of, any beneficiary of the estate during the year preceding the year of assessment shall be deducted.

The statutory income for any year of assessment of any beneficiary of the estate of a deceased person administered by an executor shall include the amount of the income received by or distributed to him or applied to his benefit out of the estate during the year preceding that year of assessment (otherwise than as the capital amount or any part of the capital amount of his interest in the estate).

The assessable income of any person from all sources chargeable with tax under this Act for any year of assessment shall be the remainder of his statutory income for that year after the deductions allowed in this Part have been made.

For the purposes of this section, unless otherwise provided in this Act or the Investment Incentives Order, 2001 (S 48/2001), where a company whose income, if any, is subject to tax at different rates of tax for any year of assessment, the Collector shall apportion any sum allowable among those different rates of tax on such basis as he considers reasonable.

There shall be deducted —

For the purposes of subsection (2), the loss incurred during any year of assessment shall be computed, where the Collector so decides, by reference to the year ending on a day in such year of assessment which would have been adopted under section 26(2) for the computation of the statutory income of the following year of assessment if a profit had arisen.

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In the case of an individual resident in Brunei Darussalam in the year preceding the year of assessment, there shall be allowed a deduction of $3,000.

In the case of an individual resident in Brunei Darussalam in the year preceding the year of assessment who, in that year —

There shall be levied and paid for —

Notwithstanding anything in this Act, tax at the rate of 2.5 per cent shall be levied and paid on the gross amount of any income referred to in section 9(4), accruing in or derived from

Brunei Darussalam by a person not resident in Brunei Darussalam which is not derived by that person from any trade, business, profession or vocation carried on or exercised by him in Brunei Darussalam and which is not effectively connected with any permanent establishment of the person in

Brunei Darussalam.

Notwithstanding anything in this Act, there shall be levied and paid on the gross amount of —

Notwithstanding anything in this Act, tax at the rate of 10 per cent shall be levied and paid on the payment of any remuneration by a company to any director of the company who is not resident in

Brunei Darussalam.

(Repealed).

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Notwithstanding subsection (1) but subject to subsection (5), for the year of assessment 2011 and subsequent years of assessment, there shall be levied and paid for each year of assessment upon the chargeable income of every company, tax at the rate prescribed in subsection (1) on every dollar of that chargeable income thereof, except that —

Notwithstanding subsections (1) and (4), for each of the first 3 years of assessment falling within or after the year of assessment 2008, of a qualifying company, there shall be levied and paid upon the chargeable income of the company, tax at the rate prescribed in subsection (1) on every dollar of the chargeable income thereof except that every dollar of the first $100,000 of the chargeable income shall be exempt from tax.

Thereafter, for every dollar of the next $150,000 of the chargeable income, only 50 per cent shall be charged with tax.

(Repealed).

applies to such part of the chargeable income of the company.

For the purposes of subsection (6A), without prejudice to section 28, the Collector may make such adjustments as he considers appropriate, including the computation or re-computation of gains or profits of any company, so as to give effect to that subsection.

In this section —

(Deleted);

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“first 3 years of assessment”, in relation to a qualifying company, means the year of assessment relating to the basis period during which the company is incorporated or registered in Brunei Darussalam and the 2 consecutive years of assessment immediately following the year of assessment;

“gross amount”, in relation to any income referred to in subsections (2) and (2A), means the full amount of the income without any deduction and relief being allowed against the income under the provisions of the Act;

“qualifying company” means a company incorporated and registered in Brunei Darussalam (other than a company limited by guarantee) which for each of the first 3 years of assessment is resident in Brunei Darussalam for that year of assessment.

the liquefaction of gas in its natural state;

the production of any other liquid petroleum or petroleum product from such gas; or

the sale or other disposition for reward of natural gas so liquefied or of such liquid petroleum or petroleum product from such gas, there shall be levied and paid in respect of each consecutive basis period after 31st December 1985 tax (in lieu of that which would otherwise be applicable under section 35) at such rate per cent on every dollar of the chargeable income of the company as the Minister shall determine.

B. Rights of deduction of tax

Every company which is resident in Brunei Darussalam shall be entitled to deduct from the amount of any dividend paid to any shareholder, tax at the rate paid or payable by the company, double taxation

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relief being left out of account, on the chargeable income of the year of assessment in which the dividend is declared payable:

Provided that, where tax is not paid or payable by the company on the whole income out of which the dividend is paid, the deduction shall be restricted to that portion of the dividend which is paid out of income on which tax is paid or payable by the company.

Every such company shall, upon payment of a dividend, whether tax is deducted therefrom or not, furnish each shareholder with a certificate setting forth the amount of the dividend paid to that shareholder and the amount of tax which the company has deducted or is entitled to deduct in respect of that dividend, and also, where the tax paid or payable by the company is affected by double taxation relief, the rate of the tax paid or payable by the company after taking double taxation relief into account.

In this section, “double taxation relief” means any credit for foreign income tax which is allowable against income tax chargeable under this Act by virtue of arrangements made under section 41, and any relief allowable under section 39 (omitted) or 40, including any credit or relief which has been taken into account in determining the net Brunei Darussalam rate application to any dividends received by the company.

Where any person is liable to pay to another person, not known to him to be resident in Brunei Darussalam, any interest which is chargeable to tax under this Act, the person paying the interest shall deduct therefrom tax at the rate of 2.5 per cent on every dollar of the interest, and shall immediately give notice of the deduction of tax in writing and pay to the

Collector the amount so deducted and every such amount shall be a debt due from him to the Government and shall be recoverable as such.

The Collector may, if he thinks fit, allow any bank or financial institution to give notice of the deduction of tax and make payment of the amount so deducted within such other period and subject to such conditions as he may determine.

Where a person fails to make a deduction of tax which he is required to make under subsection (1), any amount which he fails to deduct shall be a debt due from him to the Government and shall be recoverable as such.

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If the amount of tax which is required to be deducted under subsection (1) is not paid to the Collector —

Without prejudice to any other provision of this Act, if any person after deducting the tax required to be deducted under subsection (1)

fails to give notice of such deduction to the Collector within 14 days after such deduction, he shall be guilty of an offence and shall on conviction be liable to a penalty equal to 3 times the amount of tax so deducted and shall also be liable to a fine not exceeding $10,000, imprisonment for a term not exceeding 3 years or both.

The Collector may —

For the purposes of this section —

Section 37 applies, in relation to the payment of any income referred to in section 9(4) or (5) by any person to another person not known to him to be resident in Brunei Darussalam, as those provisions apply to any interest paid by a person to another person not known to him to be resident in

Brunei Darussalam.

For the purposes of this section —

Section 37 applies, in relation to the payment of any remuneration referred to in section 35(2B) by a company to any director of the company who is not resident in Brunei Darussalam as those provisions apply to any interest paid by a person to another person not known to him to be resident in Brunei Darussalam.

For the purposes of this section —

If any person resident in Brunei Darussalam who has paid, by deduction or otherwise, or is liable to pay tax under this Act for any year of assessment on any part of his income, proves to the satisfaction of the

Collector that he has paid, by deduction or otherwise, or is liable to pay,

Commonwealth income tax for that year in respect of the same part of his income, he shall be entitled to relief from tax in Brunei Darussalam paid or payable by him on that part of his income at a rate thereon to be determined as follows —

If any person not resident in Brunei Darussalam who has paid, by deduction or otherwise, or is liable to pay, tax under this Act for any year of assessment on any part of his income proves to the satisfaction of the

Collector that he has paid by deduction or otherwise, or is liable to pay,

Commonwealth income tax for that year of assessment in respect of the same part of this income, he shall be entitled to relief from tax paid or payable by him under this Act on that part of his income at a rate thereon to be determined as follows —

For the purposes of this section, “Commonwealth income tax”

means any income tax charged under any law in force in any part of the

Commonwealth:

Provided that the legislature of that part or place has provided for relief in respect of tax charged on income both in that part or place and

Brunei Darussalam in a manner which appears to the Collector to correspond to the relief granted by this section.

For the purposes of this section, the rate of tax under this Act shall be computed in the manner provided by section 39(3) (omitted) and the

Commonwealth rate of tax shall be computed in a similar manner.

Where a person is for any year of assessment resident both in

Brunei Darussalam and in a place or territory in which Commonwealth income tax is charged, he shall for the purposes of this section, be deemed to be resident where during that year he resides for the longer period.

If the Minister, with the approval of His Majesty the Sultan and

Yang Di-Pertuan by order declares that —

Any arrangement under subsection (1)(a) includes a multilateral treaty to which Brunei Darussalam is a Party, the purposes of which include relief from double taxation and the exchange of information

(whether on request by an authority of a country or territory to the arrangement, or an authority of a Party to the treaty, or otherwise).

(Omitted).

On the making of an order under this section with respect to arrangements relating to any territory forming part of the Commonwealth, section 40 shall cease to have effect as respects that territory and is deemed to have ceased to have had effect from the beginning of the first year of assessment for which the arrangements are expressed to apply except in so far as the arrangements otherwise provide.

Any order made under this section may be revoked by a subsequent order.

Where any arrangements have effect by virtue of this section, the obligation as to secrecy imposed by section 4 shall not prevent the disclosure to any authorised officer of the Government with which the arrangements are made of such information as is required to be disclosed under the arrangements.

The Minister, with the approval of His Majesty the Sultan and

Yang Di-Pertuan, may make rules for carrying out the provisions of any arrangements having effect under this section.

In this section, “arrangements” means the arrangements specified in the order declared by the Minister, with the approval of

His Majesty the Sultan and Yang Di-Pertuan under subsection (1).

The provisions of this section shall have effect where, under arrangements having effect under section 41, tax payable in respect of any income in the territory, with the Government, of which the arrangements are made is to be allowed as a credit against tax payable in respect of that income in Brunei Darussalam; and in this section —

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“foreign tax” means any tax payable in that territory which under the arrangements is to be so allowed;

“income tax” means tax chargeable under this Act.

The amount of the income tax chargeable in respect of the income shall be reduced by the amount of the credit:

Provided that credit shall not be allowed against income tax for any year of assessment unless the person entitled to the income is resident in

Brunei Darussalam during that year.

The credit shall not exceed the amount which would be produced by computing the amount of the income in accordance with the provisions of this Act and then charging it to incoming tax at a rate ascertained by dividing the income tax chargeable (before allowance of credit under any arrangements having effect under section 41) on the assessable income of the person entitled to the income by the amount of his assessable income.

Without prejudice to the provisions of subsection (3), the total credit to be allowed to a person for any year of assessment for foreign tax under all arrangements having effect under section 41 shall not exceed the total income tax payable by him for that year of assessment, excluding any tax payable by him under the provisions of section 37.

In computing the amount of the income —