Section 11
Deductions allowed
(1)
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 —
(a)
any sum paid by way of interest upon any money borrowed by such person where the Collector is satisfied that the interest was payable on capital employed in acquiring the income;
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(b)
rent paid by any person in respect of any land or building or part thereof occupied by him for the purpose of acquiring the income;
(c)
any expenses incurred for repair of premises, plant, machinery or fixtures employed in acquiring the income, or for the renewal, repair or alteration of any implement, utensil or article so employed:
Provided that no deduction shall be made for the cost of renewal of any plant, machinery or fixture, which is the subject of an allowance under section 16, or for the cost of reconstruction or rebuilding of any premises, buildings, structures or works of a permanent nature which are the subjects of an allowance under section 13;
(d)
bad debts incurred in any trade, business, profession or vocation, which have become bad during the period for which the income is being ascertained, and doubtful debts to the extent that they are respectively estimated, to the satisfaction of the Collector, to have become bad during that period, notwithstanding that such bad or doubtful debts were due and payable prior to the commencement of that period:
Provided that —
(i)
all sums recovered during that period on account of amounts previously written off or allowed in respect of bad or doubtful debts, other than debts incurred before the commencement of the basis period for the first year of assessment under this Act, shall for the purposes of this Act be treated as receipts of the trade, business, profession or vocation for that period;
(ii)
the debts in respect of which a deduction is claimed were included as a trading receipt in the income of the year within which they were incurred;
(e)
any contribution or abatement deducted from the salary or pension of a public officer employed in the service of
Brunei Darussalam under any written law for the time being in force in Brunei Darussalam or elsewhere relating to widows’ and
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orphans’ pensions or under any approved scheme within the meaning of any such law;
(f)
any contribution to a pension, provident or other society or fund which may be approved by the Collector subject to such conditions as he may impose;
(fa)
zakat, fitrah or any religious dues, payment of which is made under any written law;
(g)
such other deductions as may be prescribed.
(1A)
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.
(2)
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.
(1)
Where the Collector is satisfied that expenses have been incurred —
(a)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam in establishing, maintaining or otherwise participating in an approved overseas trade fair, exhibition or trade mission which is for the primary purpose of promoting the export of goods manufactured in
Brunei Darussalam;
(b)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam in establishing, maintaining or otherwise participating in an approved local trade fair or exhibition which is for the primary purpose of promoting the export of goods manufactured in Brunei Darussalam;
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(c)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam which is engaged in the manufacture of goods in Brunei Darussalam or the export of goods manufactured in Brunei Darussalam, in maintaining an approved overseas trade office established exclusively for the purpose of promoting the export of such goods;
(d)
on or after 1st January 2001 by an approved company in
Brunei Darussalam and carrying on in Brunei Darussalam the business of providing services in establishing, maintaining or otherwise participating in an approved local or overseas trade fair or exhibition, trade mission or trade promotion activity for the primary purpose of promoting the provision of services overseas;
(e)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam and carrying on in
Brunei Darussalam the business of providing services in maintaining an approved overseas trade office established exclusively for the purpose of promoting the provision of services overseas;
(f)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam which is the holder of a master franchise or master intellectual property licence in establishing, maintaining or otherwise participating in an approved local or overseas promotion activity for the primary purpose of promoting the provision of services overseas in connection with the use overseas of any right under the franchise or licence; or
(g)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam which is the holder of a master franchise or master intellectual property licence in maintaining an approved overseas trade office established exclusively for the purpose of promoting the provision of services overseas in connection with the use overseas of any right under the franchise or licence, there shall be allowed a further deduction of the amount of such expenses in addition to the deduction allowed under section 11 subject to the following provisions of this section.
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(2)
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.
(3)
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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(4)
The Minister may specify the maximum amount of expenditure (or any item thereof) to be allowed under subsection (1).
(5)
No deduction shall be allowed under this section in respect of —
(a)
any expenses which are not allowed as deductions under section 11;
(b)
travelling, accommodation and subsistence expenses or allowances for more than two employees taking part in the approved overseas trade fair, exhibition or trade mission;
(c)
any expenses incurred during its tax relief period
(or qualifying period in the case of investment allowance) by a company which is given tax relief under the Investment Incentives
Order, 2001 (S 48/2001); and
(d)
any expenses relating to an approved overseas trade office —
(i)
which are incurred in the establishment of the approved overseas trade office;
(ii)
by way of remuneration, travelling, accommodation and subsistence expenses or allowances for more than three employees of the approved overseas trade office;
(iii)
which are specifically excluded as a condition for the approval of the overseas trade office under this section;
(iv)
which are incurred after the end of the first 2 years of the date of establishment of the approved overseas trade office; and
(v)
which are incurred by a company having a permanent establishment subject to tax in the country in which the approved trade office is established.
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(6)
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.
(7)
Where for any year of assessment a further deduction account of a company is in credit, the company shall —
(a)
debit from that account, such amount as which have been the chargeable income had the further deduction not been allowed or, the amount of the credit in that account, whichever is the less;
and
(b)
credit the amount debit under paragraph (a) to an account to be called a tax exempt account which shall be kept by the company for the purposes of this section or section 11B or 11D, and any remaining balance in the further deduction account shall be carried forward to be used by company in the first subsequent year of assessment when the company has chargeable income had the further deduction not been allowed, and so on for subsequent years of assessment until the credit in the further deduction account has been fully used.
(8)
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.
(9)
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.
(10)
Section 36 does not apply to any dividends or part thereof which is exempt from tax under this section.
(11)
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.
(12)
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.
(13)
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.
(14)
Notwithstanding anything in this section, where it appears to the Collector that in any year of assessment —
(a)
any further deduction which has been allowed under this section or section 11B or 11D; or
(b)
any dividend, including a dividend paid by a holding company, which has been exempted from tax in the hands of any shareholder, ought not to have been so allowed or exempted, as the case may be, the
Collector may, within the year of assessment or within 6 years after the expiration thereof —
(i)
make such assessment or additional assessment upon the company or any such shareholder as may be necessary in order to make good any loss of tax; or
(ii)
direct the company to debit its tax exempt account with such amount as the circumstances require.
(15)
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.
(1)
Subject to this section, where the Collector is satisfied that —
(a)
export market development expenditure for the carrying out of an approved marketing project overseas; or
(b)
advertising expenses in respect of advertisements placed in any approved Brunei Darussalam publication designed for publicity overseas, have been incurred —
(i)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam principally for promoting the export of goods manufactured in
Brunei Darussalam;
(ii)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam and carrrying on in Brunei Darussalam the business of providing services principally for promoting the provision of services overseas; or
(iii)
on or after 1st January 2001 by an approved company resident in Brunei Darussalam which is the holder of a master franchise or master intellectual property licence principally for promoting the provisions of services overseas in connection with the use overseas of any right under the franchise or licence, there shall be allowed a further deduction of the amount of such expenditure in addition to the deduction allowed under section 11.
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(2)
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).
(3)
No deduction shall be allowed under this section in respect of —
(a)
any expenses which are not allowed as deductions under section 11;
(b)
any expenses incurred during its tax relief period
(or qualifying period in the case of investment allowance) by a company which is given tax relief under the Investment Incentives
Order, 2001 (S 48/2001);
(c)
any expenses which are allowed as deductions under section 11A; or
(d)
travelling, accommodation and subsistence expenses or allowances for more than two employees taking part overseas in the approved marketing project.
(4)
In this section —
“approved” means approved by the Minister charged with the responsibility for industrial development;
“export market development expenditure” means —
(a)
expenses directly attributable to the carrying out of export market research or obtaining of export market information, including any feasibility study;
(b)
expenses in respect of advertisements placed in overseas news media, including television, newspapers and trade journals;
(c)
expenses incurred on overseas export promotion campaigns; or
(d)
expenses incurred in the design of the packaging, or in the certification, of goods manufactured in
Brunei Darussalam for export or in the certification of services to be provided overseas where such certification is carried out by an approved person;
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“master franchise” and “master intellectual property licence”
have the same meanings as in section 11A.