Investment Incentives Order, 2001

This Order may be cited as the Investment Incentives Order, 2001 and shall commence on 1st. June, 2001.

The long title of this Order is “An Order to make new provision for encouraging the establishment and development in Brunei Darussalam of industrial and other economic enterprises, for economic expansion and for incidental and related purposes”.

Order to be construed as one with the Income Tax Act (Chapter 35).

Subject to subsecti6n (2), the Minister may, if he considers it expedient in the public interest to do so, by order declare an industry, which is not being carried on in Brunei

Darussalam on a scale adequate to the economic needs of Brunei Darussalam and for which in his opinion there are favourable prospects for development, to be a pioneer industry and any specific product of that industry to be a pioneer product.

The Minister may revoke any order made under this section but any such revocation shall not affect the operation of any pioneer certificate issued to any pioneer enterprise before the revocation.

Application for and issue and amendment of pioneer certificate.

Any company which is desirous of producing a pioneer product may make an application in writing to the Minister to be approved as a pioneer enterprise in such form and with such particulars as may be prescribed.

Where the Minister is satisfied that it is expedient in the public interest to do so and, in particular, having regard to the production or anticipated production of the pioneer product from all sources of production in Brunei Darussalam, he may approve that company a pioneer enterprise and issue a pioneer certificate to the company, subject to such terms and conditions as he thinks fit.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

5

BLUV as at 16th February 2011

Every pioneer certificate issued under this section shall specify –

The Minister may, in his discretion, upon the application of any pioneer enterprise, amend its pioneer certificate by substituting for the production day specified therein such earlier or later date as he thinks fit and there upon the provisions of this Order shall have effect as if the date so substituted were the production day in relation to that pioneer enterprise.

Tax relief period of pioneer enterprise.

The tax relief period of a pioneer enterprise shall commence on its production day and shall continue for a period of –

Where the tax relief period of a pioneer enterprise is 5 years and the Minister is satisfied that it has incurred by the end of the year following the end of that period fixed capital of not less than $2.5 million, the Minister may extend its tax relief period to 8 years from the production day.

In this section, “fixed capital expenditure” in relation to a pioneer enterprise, means capital expenditure incurred by the pioneer enterprise on its factory building (excluding land) or on plant, machinery or other apparatus used in Brunei Darussalam in connection with and for the purposes of the pioneer enterprise.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

6

BLUV as at 16th February 2011

Further extension of tax relief period.

The Minister may, subject to such terms and conditions as he may impose, extend the tax relief period of a pioneer enterprise (other than a pioneer enterprise that is located in a high-tech park) for such further period or periods as he may determine except that the tax relief period of the pioneer enterprise shall not in aggregate exceed 11 years.

The Minister may, subject to such terms and conditions as he may impose, extend the tax relief period of a pioneer enterprise that is located in a high-tech park for such further period or periods not exceeding 5 years at any one time as he may determine except that the tax relief period of the pioneer enterprise shall not in aggregate exceed 20 years.

Provisions governing old and new trade or business.

the old trade or business of a pioneer enterprise shall be deemed to have permanently ceased at the end of its tax relief period;

the pioneer enterprise shall be deemed to have set up and commenced a new trade or business on the day immediately following the end of its tax relief period;

the pioneer enterprise shall make up accounts of its old trade or business for a period not exceeding one year, commencing on its production day, for successive periods of one year thereafter and for the period not exceeding one year ending at the date when its tax relief period ends; and

in making up the first accounts of its new trade or business the pioneer enterprise shall take as the opening figures for those accounts the closing figures in respect of its assets and liabilities as shown in its last accounts in respect of its tax relief period, and its next accounts of its new trade or business shall be made up by reference to the closing figures in such first accounts an any subsequent accounts shall be similarly made up by reference to the closing figures of the preceding accounts of its new trade or business.

Restrictions on trading before end of tax relief period.

During its tax relief period, a pioneer enterprise shall not carry on any trade or business other than the trade or business relating to the relevant pioneer product, unless the

Minister has given his permission in writing therefor.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

7

BLUV as at 16th February 2011

Where the carrying on of a separate trade or business has been permitted under subsection (1), separate accounts shall be maintained in respect of that trade or business and in respect of the same accounting period.

Where the carrying on of such separate trade results in a loss in any accounting period, the loss shall be brought into the computation of the income of the pioneer enterprise for that period unless the Collector, having regard to all the circumstances of the case, is satisfied that the loss was not incurred for the purpose of obtaining a tax advantage.

Where the carrying on of such separate trade results in a profit in any accounting period, and the profit, computed in accordance with the provisions of the Income Tax Act as modified by this section, amounts to less than 5% on the full sum receivable from the sale of goods or the provision of services, the statutory income from that source shall be deemed to be 5% (or such lower rate as the Minister may specify in any particular case) of the full sum so receivable and the income of the pioneer enterprise shall be abated accordingly.

Where in the opinion of the Collector the carrying on of such separate trade is subordinate and incidental to the carrying on of the trade or business relating to the relevant pioneer product, the income or loss arising from such activities shall be deemed to form part of the income or loss of the pioneer enterprise.

In this section, “relevant pioneer product” means the pioneer product specified in its pioneer certificate.

Power to give directions.

any sums payable to a pioneer enterprise in any accounting period which, but for the provisions of this Order, might reasonably and properly have been expected to be payable, in the normal course of business, after the end of that period shall be treated –

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

8

BLUV as at 16th February 2011

as not having been payable in that period but as having been payable on such date, after that period as the Collector thinks fit;

and

any expense incurred by a pioneer enterprise within one year after the end of its tax relief period which, but for the provisions of this Order, might reasonable and properly have been expected to be incurred, in the normal course of business, during its tax relief period shall be treated as not having been incurred within that year but as having been incurred –

for the purposes of its old trade or business; and

The income of a pioneer enterprise in respect of its old trade or business shall be ascertained in accordance with the provisions of the Income Tax Act after making such adjustments as may be necessary in consequence of any direction given under section 10.

In determining the income of a pioneer enterprise referred to in subsection (l), the allowances provided for in sections 13, 14, 15, 16, 17 and 18 of the Income Tax Act shall be taken into account.

Where the tax relief period of a pioneer enterprise referred to in subsection (1)

expires during the basis period for any year of assessment, for the purpose of determining the income in respect of its old trade or business and its new trade or business for that year of assessment, there shall be deducted allowances provided for in sections 13, 14, 15, 16, 17 and 18 of the Income Tax Act; and for the purpose of computing such allowances –

Where in any year of assessment full effect cannot, by reason of an insufficiency of profits for that year of assessment, be given to the allowances mentioned in subsection (2), then the balance of the allowances shall be added to, and be deemed to form part of, the corresponding allowances, if any, for the next succeeding year of assessment, and, if no such corresponding allowances fall to be made for that year, shall be deemed to constitute the corresponding allowances for that year, and so on for subsequent years of assessment.

Application of Part X of Income Tax Act (Chapter 35).

Subject to subsection (6) of section 15, where any statement issued under section 13 has become final and conclusive, the amount of the income shown by the statement shall not form part of the statutory income of the pioneer enterprise for any year of assessment and shall be exempt from tax.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

10

BLUV as at 16th February 2011

The Collector may, in his discretion and before such a statement has become final and conclusive, declare that a specified part of the amount of such income is not in dispute and such an undisputed amount of income is exempt from tax, pending such a statement becoming final and conclusive.

Certain dividends exempted from income tax.

As soon as any amount of income of a pioneer enterprise has been exempt under section 14, that amount shall be credited to an account to be kept by the pioneer enterprise for the purposes of this section.

Where that account is in credit at the date on which any dividends are paid by the pioneer enterprise out of income which has been exempted, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the account.

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

Notwithstanding subsection (3), where a dividend is paid on any share of a preferential nature, it shall not be so exempt in the hands of the shareholder.

Any dividends debited to that account shall be treated as having been distributed to the shareholders of the pioneer enterprise or any particular class of those shareholders in the same proportions as the shareholders were entitled to payment to payment of the dividends giving rise to the debit.

The pioneer enterprise shall deliver to the Collector a copy of that account, made up to a date specified by him, whenever called upon to do so by notice in writing sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

11

BLUV as at 16th February 2011

Notwithstanding section 14 and subsections (1) to (6), where it appears to the

Collector that –

Parts XI and XII of the Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, with the necessary modifications, to any direction given under subsection (7) as if it were a notice of assessment given under those provisions.

Section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is debited to the account required to be kept for the purposes of this section.

Where an amount has been received by way of dividend from a pioneer enterprise by a shareholder and the amount is exempt from tax under this section, if that shareholder is a company (referred to in this section as the holding company) which holds, throughout its tax relief period, the beneficial interest in all the issued shares of the pioneer enterprise (or in not less than such proportion of those shares as the Minister may require at the time when the pioneer certificate is issued to that pioneer enterprise) any dividends paid by the holding company to its shareholders, to the extent that the Collector is satisfied that those dividends are paid out of that amount, shall be exempt from tax in the hands of those

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

12

BLUV as at 16th February 2011

shareholders; and section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof so exempt.

Any holding company may, with the approval of the Minister and subject to such terms and conditions as he may impose, pay such exempt dividends to its shareholders even if it has not held the requisite shareholding in the pioneer enterprise for the whole of the tax relief period.

Carry forward of loss and allowance.

Where a pioneer enterprise has, during its tax relief period, incurred a loss for any year, that loss shall be deducted as provided for in subsection (2) of section 30 of the

Income Tax Act but only against the income of the pioneer enterprise as ascertained under section 11, except that the balance of any such loss which remains unabsorbed at the end of its tax relief period is available to the new trade or business in accordance with that Act.

Notwithstanding paragraph (a) of section 8, the balance of any allowance as provided for in section 11 which remains unabsorbed at the end of the tax relief period of the pioneer enterprise is available to the new trade or business in accordance with the Income Tax

Act.

any engineering or technical services including laboratory, consultancy and research and development activities;

computer-based information and other computer related services;

the development or production of any industrial design;

services and activities which relate to the provision of leisure and recreation;

publishing services;

services which relate to the provision of education;

medical services;

services and activities which relate to agricultural technology;

services and activities which relate to the provision of warehousing facilities;

services which relate to the organisation or management of exhibitions and conferences;

financial services;

business consultancy, management and professional services;

venture capital fund activity;

operation or management of any mass rapid transit system;

services provided by an auction house;

maintaining and operating a private museum; and

such other services or activities as the Minister may prescribe.

Application for and issue and amendment of certificate for pioneer service company.

Where a company is engaged in any qualifying activity, the company may apply in the prescribed form to the Minister for approval as a pioneer service company.

The Minister may, if he considers it expedient in the public interest to do so, approve the application and issue the company with a certificate subject to such terms and conditions as he thinks fit.

Every certificate issued under this section shall specify a date as the commencement day from which the company shall be entitled to tax relief under this Part.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

14

BLUV as at 16th February 2011

The Minister may in his discretion, upon the application of the company, amend its certificate by substituting for the commencement day specified therein such earlier or later date as he thinks fit and thereupon the provisions of this Part shall have effect as if the date so substituted were the commencement day in relation to that certificate.

8 years or such longer period, not exceeding 11 years, as the Minister may determine, in relation to any qualifying activity other than financial services;

5 years, which may be extended for a further 5 years, as the Minister may determine, in relation of financial service.

Application of sections 8 to 16 to pioneer service company.

any reference to a pioneer enterprise shall be read as a reference to a pioneer service company;

any reference to a pioneer product shall be read as a reference to a qualifying activity;

any reference to the production day of a pioneer enterprise shall be read as a reference to the commencement day of a pioneer service company;

any reference to a pioneer certificate shall be read as a reference to a certificate issued under section 18.

Any company which is –

The Minister may, if he considers it expedient in the public interest to do so, approve the application and issue the company with a certificate subject to such terms and conditions as he may impose.

Every certificate issued to a post-pioneer company under this section shall specify –

The Minister may, in his discretion, upon an application of a post-pioneer company, amend its certificate by substituting for the commencement day specified therein such other date as he thinks fit and thereupon the provisions of this Part shall have effect as if that date were the commencement day in relation to that certificate.

Notwithstanding section 35 of the Income Tax Act, tax at such concessionary rate, not being less than 10% as the Minister may specify, shall be levied and paid for each year of assessment upon the income derived by a post-pioneer company during its tax relief period from its qualifying activities.

Tax relief period of post-pioneer company.

The tax relief period of a post-pioneer company shall commence on its commencement day and shall continue for a period not exceeding 6 years as the Minister may determine.

The Minister may, subject to such terms and conditions as he may impose, extend the tax relief period of a post-pioneer company for such further period or periods as he may determine except that the tax relief period of the company shall not in the aggregate exceed 11 years.

Ascertainment of income in respect of other trade or business.

Where during its tax relief period a post-pioneer company carries on any trade or business other than its qualifying activities, separate accounts shall be maintained in respect of that other trade or business and in respect of the same accounting period and the income from that other trade or business shall be computed and assessed in accordance with the Income

Tax Act with such adjustments as the Collector thinks reasonable and proper.

Where in the opinion of the Collector the carrying on of such other trade or business is subordinate or incidental to the carrying on of the qualifying activities of the post-pioneer company, the income or losses arising from such other trade or business shall be deemed to form part of the income or loss of the post-pioneer company in respect of its qualifying activities.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

17

BLUV as at 16th February 2011

Deduction of losses.

the manner in which expenses, capital allowances and donations allowable under the Income Tax Act are to be deducted; and

the deduction of capital allowances and of losses otherwise than in accordance with sections 20 and subsection (2) of section 30 of the Income Tax Act.

Certain dividends exempted from income tax.

As soon as any amount of income of a post-pioneer company has been subject to tax at the concessionary rate under section 22, the net amount of the income after deduction of the tax shall be credited to a special account (referred to in this section as the account) to be kept by the post-pioneer company for the purposes of this section.

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

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

Notwithstanding subsection (3), where a dividend is paid on any share of a preferential nature, it shall not be so exempt in the hands of the shareholder.

Section 36 of the Income Tax Act shall not apply in respect of any dividends or part thereof which are debited to the account.

Where an amount of dividends debited to the account has been received by a shareholder, and that shareholder is a company (referred to in this section as the holding company) which holds, throughout its tax relief period, the beneficial interest in all the issued shares of the post-pioneer company (or in not less that such proportion of those shares as the

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

18

BLUV as at 16th February 2011

Minister may require at the time when the post-pioneer certificate is issued to the post-pioneer company) any dividends paid by the holding company to its shareholders, to the extent that the

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

Any holding company may, with the approval of the Minister and subject to such terms and conditions as he may impose, pay such exempt dividends to its shareholders even if it has not held the requisite shareholding in the post-pioneer company for the whole of the tax relief period.

The post-pioneer 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 sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.

Notwithstanding subsections (1) to (7), where it appears to the Collector that –

any sums payable to a post-pioneer company in the tax relief period which might reasonably and properly have been expected to be payable, in the normal course of business, after the end of that period shall be treated as not having been payable in that period but as having been payable on such date, after that period, as the

Collector thinks fit; and

any expense incurred by a post-pioneer company within one year after the end of its tax relief period which might reasonably and properly have been expected to be incurred, in the normal course of business, during its tax relief period shall be treated as not having been incurred within that year but as having been incurred for the purposes of its qualifying activities and on such date, during its tax relief period, as the

Collector thinks fit.

Ascertainment of income in respect of qualifying activities.

The qualifying income of a post-pioneer company shall, subject to subsection

and section 29, be ascertained in accordance with the provisions of the Income Tax Act after making such adjustments as may be necessary in consequence of any direction given under section 27.

In determining the qualifying income of the post-pioneer company for the basis period for any year of assessment –

Where, for any year of assessment, there are any unabsorbed allowances or losses in respect of the qualifying income of a post pioneer company, and there is any chargeable normal income of the company, those unabsorbed allowances and losses shall be deducted against the chargeable normal income in accordance with the following provisions –

Where, for any year of assessment, there are any unabsorbed allowances or losses in respect of the normal income of a post-pioneer company, and there is any chargeable qualifying income of the company, those unabsorbed allowances or losses shall be deducted against that qualifying income in accordance with the following provisions –

Where a post pioneer company ceases to derive any qualifying income in the basis period for any year of assessment but derives normal income in that basis period, subsection (1) shall apply, with the necessary modifications, to any unabsorbed allowances or losses in respect of the qualifying income of the company for any year of assessment subsequent to that year of assessment.

Where a post pioneer company ceases to derive any normal income in the basis period for any year of assessment but derives qualifying income in that basis period, subsection

shall apply, with the necessary modifications, to any unabsorbed allowances or losses in respect of the normal income of the company for any year of assessment subsequent to that year of assessment.

Nothing in subsections (1) to (4) shall be construed as affecting the application of section 20 or 30 of the Income Tax Act unless otherwise provided in this section.

In this section –

“adjustment factor”, in relation to any year of assessment, means the factor ascertained in accordance with the formula

A

,

B

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

22

BLUV as at 16th February 2011

where A is the rate of tax under section 35 of the Income Tax Act for that year of assessment; and

B is the concessionary rate of tax for that year of assessment at which the qualifying income is subject to tax;

“allowances” means the allowances under section 13, 14, 16, 16A, 17, 18 or 20

including unabsorbed allowances which arose in any year of assessment prior to the year of assessment 2002;

“chargeable normal income” means normal income after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the normal income;

“chargeable qualifying income” means the qualifying income after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the qualifying income;

“losses” means losses which are deductible under section 30 of the Income Tax

Act including unabsorbed losses incurred in respect of any year of assessment prior to the year of assessment 2002;

“normal income” means income subject to tax at the rate of tax under section 35 of the Income Tax Act;

“unabsorbed allowances or losses in respect of the qualifying income” means the balance of such allowances or losses after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the qualifying income;

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

23

BLUV as at 16th February 2011

“unabsorbed allowances or losses in respect of the normal income” means the balance of such allowances or losses after deducting expenses, donations, allowances or losses allowable under the Income Tax Act against the qualifying income;

“qualifying income” means the income of a post-pioneer company in respect of its qualifying activities.

Subject to subsection (2), where the Minister is satisfied that the increased manufacture of the product of any industry would be of economic benefit to Brunei

Darussalam, he may, if he considers it expedient in the public interest to do so, by order, declare that industry to be an approved industry and the product thereof to be an approved product for the purposes of this Part.

The Minister may revoke any order made under this section but any such revocation shall not affect the operation of any expansion certificate issued to any expanding enterprise before the revocation.

Issue of expansion certificate and amendment thereof.

Any company intending to incur new capital expenditure for the purpose of the manufacture or increased manufacture of an approved product may –

Where the Minister is satisfied that it is expedient in the public interest to do so, he may approve that company as an expanding enterprise and issue an expansion certificate to the company, subject to such terms and conditions as he thinks fit.

In this Part, “new capital expenditure” means expenditure incurred by a company in the purchase of productive equipment which is intended to increase its production or profitability.

Any expenditure incurred in the purchase of productive equipment which is not new shall be deemed not to be new capital expenditure unless it is proved to the satisfaction of the Minister that –

Every expansion certificate issued under this section shall specify the date on or before which the productive equipment shall be put into operation and that date shall be deemed to be the expansion day for the purpose of this Part.

The Minister may, in his discretion, upon the application of any expanding enterprise, amend its expansion certificate by substituting for the expansion day specified therein such earlier or later date as he thinks fit and thereupon the provisions of this Part shall have effect as if the date so substituted were the expansion day in relation to that expanding enterprise.

Tax relief period of expanding enterprise.

The tax relief period of an expanding enterprise shall commence on its expansion day or if the expansion day falls within the tax relief period specified in any certificate previously issued to the enterprise under Part II or VII for the same or similar product, commence on the day immediately following the expiry of that tax relief period and shall –

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

25

BLUV as at 16th February 2011

The Minister may, where he is satisfied that it is expedient in the public interest to do so and subject to such terms and conditions as he may impose, extend the tax relief period of an expanding enterprise for such further period or periods, not exceeding 3 years at any one time, as he may determine, except that the tax relief period of the expanding enterprise shall not in the aggregate exceed 15 years.

Application of section 10 to expanding enterprise.

Subject to the provisions of this Order, an expanding enterprise is entitled, during its tax relief period, to relief in the manner provided by this section.

The income of the expanding enterprise in respect of its trade or business to which its expansion certificate relates (referred to in this Part as the expansion income) shall be ascertained, for any accounting period during its tax relief period, in accordance with the provisions of the Income Tax Act and any regulations made under this Order.

In determining the income of the expanding enterprise, the allowances provided for in sections 13, 14, 15, 16, 17 and 18 of the Income Tax Act shall be taken into account.

Where an expanding enterprise carries on trading activities other than those to which its expansion certificate relates, the expansion income to be ascertained for the purposes of this section shall be determined in such manner as appears to the Collector to be reasonable in the circumstances.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

26

BLUV as at 16th February 2011

Where in the opinion of the Collector the carrying on of such trading activities is subordinate or incidental to the carrying on of the trade or business to which its expansion certificate relates, the income or loss arising from such activities shall be deemed to form part of the expansion income of the expanding enterprise.

The expansion income so ascertained shall be compared with the average corresponding income (referred to in this section as the pre-relief income) of the expanding enterprise as determined in subsection (8) and relief shall be given to the following extent –

The amount of exempt income shall not, unless the Minister in his discretion otherwise decides, exceed the sum which bears the same proportion to the expansion income as the new capital expenditure on productive equipment bears to the total of such new capital expenditure and the value at original cost of the productive equipment owned or used by the expanding enterprise prior to its expansion.

For the purposes of subsection (6), the average corresponding income of an expanding enterprise, in relation to a certificate issued under section 31, shall be determined by taking one-third of the total of the corresponding income of the expanding enterprise for the 3 years immediately preceding the expansion day specified in that certificate.

Where an expanding enterprise has carried on the trade or business to which its certificate relates for less than 3 years immediately prior to its expansion day or where the expanding enterprise has no corresponding income for any of those 3 years, the Minister may specify such amount to be its average corresponding income as he thinks fit.

Where an expanding enterprise has been approved as a pioneer enterprise or as an export enterprise or as both, the total amount of income exempted under this section and

Part II or VII shall not exceed 100% of the expansion income.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

27

BLUV as at 16th February 2011

Exemption from income tax of dividends from expanding enterprise.

As soon as any amount of expansion income has become exempt under section 34, that amount shall be credited to an account to be kept by the expanding enterprise for the purposes of this section.

Where that account is in credit at the date on which any dividends are paid by the expanding enterprise out of income which has been exempted, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the account.

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

Notwithstanding subsection (3), where a dividend is paid on any share of a preferential nature, it shall not be so exempt in the hands of the shareholder.

Any dividends debited to that account shall be treated as having been distributed to the shareholders of the expanding enterprise or any particular class of those shareholders in the same proportions as the shareholders were entitled to payment of the dividends giving rise to the debit.

The expanding enterprise shall deliver to the Collector a copy of that account, made up to a date specified by him, whenever called upon to do so by notice in writing sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.

Notwithstanding section 34 and subsections (1) to (6) where it appears to the

Collector that –

Parts XI and XII of the Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, with the necessary modifications, to any direction given under subsection (7) as if it were a notice of assessment given under those provisions.

Section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is debited to the account required to be kept for the purposes of this section.

Where an amount has been received by way of dividend from an expanding enterprise by a shareholder and the amount is exempt from tax under this section, if that shareholder is a company (referred to in this section as the holding company) which holds, at the time any dividend is declared, the beneficial interest in all the issued shares of the expanding enterprise (or in not less than such proportion of those shares as the Minister may approve), any dividends paid by the holding company to its shareholders, to the extent that the Collector is satisfied that those dividends are paid out of that amount, shall be exempt from tax in the hands of those shareholders; and section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof so exempt.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

29

BLUV as at 16th February 2011

Where a company engaged in any qualifying activity as defined in section 17

intends to substantially increase the volume of that activity, it may make an application in writing to the Minister to be approved as an expanding service company.

Where the Minister is satisfied that it is expedient in the public interest to do so, he may approve that company as an expanding service company and issue a certificate to the company, subject to such terms and conditions as he thinks fit.

Every certificate issued under this section shall specify a date (not earlier than 1st. January, 2001) on or before which the expansion of the qualifying activity shall commence and that date shall be deemed to be the expansion day for the purpose of this Part.

Tax relief period of expanding service company.

The tax relief period of an expanding service company shall –

The Minister may, where he is satisfied that it is expedient in the public interest to do so and subject to such· terms and conditions as he may impose, extend the tax relief period of an expanding enterprise for such further period or periods, not exceeding 5 years at any one time, as he may determine, except that the tax relief period of the expanding enterprise shall not in the aggregate exceed 20 years.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

30

BLUV as at 16th February 2011

Application of certain sections to expanding service company.

any reference to an expanding enterprise shall be read as a reference to an expanding service company;

any reference to an expansion certificate shall be read as a reference to a certificate issued under subsection (2) of section 36;

subsection (7) of section 34 shall not have effect.

The Minister may, on the application in the prescribed form of any company which is manufacturing or proposes to manufacture any export product or is engaged or proposes to engage in agriculture, forestry and fishery activities, either wholly or partly for export, approve the company as an export enterprise and issue to the company an export enterprise certificate subject to such terms and conditions as he thinks fit.

Every export enterprise certificate issued under this section shall specify the accounting period in which it is expected that the export sales of the export product or export produce –

For the purposes of this Part –

“export sales” means export sales (f.o.b.) whether made directly by the export enterprise or through an agent or independent contractor;

“f.o.b.” means free on board.

Amendment of export enterprise certificate.

The tax relief period of an export enterprise shall –

Notwithstanding subsection (1), where an export enterprise has incurred or is intending to incur a fixed capital expenditure of –

The Minister may, where he is satisfied that it is expedient in the public interest to do so and subject to such terms and conditions as he may impose, extend the tax relief period of any export enterprise for such further period as he thinks fit.

In subsection (2), “fixed capital expenditure” means capital expenditure which has been or is intended to be incurred by the export enterprise, in connection with its export product, on its factory building (excluding land) in Brunei Darussalam, and on any new plant or new machinery used in Brunei Darussalam and, subject to the approval of the Minister, on any secondhand plant or secondhand machinery used in Brunei Darussalam.

Power to give directions.

Part X of the Income Tax Act (relating to returns of income) shall apply in all respects as if the whole of the income of an export enterprise in respect of its export profits were chargeable to tax.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

33

BLUV as at 16th February 2011

The annual return of income shall be accompanied by a separate export statement showing the quantity and value at f.o.b. prices of its export product or export produce exported during the accounting period in respect of which the return is furnished, together with such further evidence as, in the opinion of the Collector, is necessary to verify the accuracy of the export statement.

Cognizance of export.

The income of an export enterprise in respect of its trade or business to which its export enterprise certificate relates shall be ascertained (after making any necessary adjustments in consequence of a direction under section 10, as applied to this Part by section

43) for any accounting period during its tax relief period in accordance with the provisions of the Income Tax Act, before taking into account the allowances provided for in sections 13, 14,

15, 16, 17 and 18 of that Act.

The total export profits of an export enterprise shall be deemed to be that part of the income so ascertained which bears the same proportion to that income as the total value of the export sales (f.o.b.) of its export product or export produce whether made, directly or

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

34

BLUV as at 16th February 2011

indirectly, by sale to an independent exporter (referred to in this Part as the export sales) bears to the total value of the sums receivable in respect of –

Where a company exports any products or produce to which its export enterprise certificate relates, the amount of its export profit arising from the export of those products or produce which will qualify for the relief provided by section 49 is the excess of that profit over a fixed sum to be determined in the following manner –

Where such a company is a pioneer enterprise, subsection (3) shall apply notwithstanding that the company was deemed to commence a new trade or business at the end of its tax relief period as a pioneer enterprise.

For the purposes of this section –

The tax relief provided under this Part applies to an export enterprise during its tax relief period subject to the following conditions –

Notwithstanding subsection (1), where, in its export year, the export sales of an export enterprise amount in value to $20,000 or more, but in proportion, to less than 20% of the total sales, and the Minister is satisfied, on the representations of the enterprise that the failure to realise that proportion of the total sales was due to causes beyond the control of the enterprise, or having regard to the quantum of its output and sales other than export sales, it is reasonable and expedient in the public interest to do so, the Minister may direct that the relief provided under this Part shall apply in respect of the year of assessment corresponding to its export year or in respect of any subsequent year of assessment during its tax relief period.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

36

BLUV as at 16th February 2011

Tax relief on export profits.

Where an amount of the export profit of an export enterprise qualifies under sections 47 and 48 for the relief provided by this section (referred to in this section as the qualifying export profit), there shall be deducted from that amount such part of the allowances provided for in sections 13, 14, 15, 16, 17 and 18 of the Income Tax Act as may be attributable to the qualifying export profit; and the part of the allowances so attributable to the qualifying export profit shall be deemed to be such amount which bears the same proportion to the total allowances deductible by the export enterprise under sections 13, 14, 15, 16, 17 and 18 of the

Income Tax Act as the amount of the qualifying export profit bears to the income of the export enterprise ascertained under subsection (1) of section 47.

For each year of assessment the Collector shall issue to the export enterprise a statement for that year of assessment showing the balance of the qualifying export profit after deduction of the allowances under subsection (1) and the provisions of Parts XI and XII of the

Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, with the necessary modifications, as if such a statement were a notice of assessment given under those provisions.

Subject to subsection (7) of section 50, where any statement issued under subsection (2) has become final and conclusive, an amount equal to 100% of the balance of such qualifying export profit shall not form part of the statutory income of the export enterprise for that year of assessment and shall be exempt from tax.

Certain dividends exempted from income tax.

As soon as any amount of export income has become exempt under section 49, that amount shall be credited to an account to be kept by the export enterprise for the purposes of this section.

Where that account is in credit at the date on which any dividends are paid by the export enterprise out of income which has been exempted, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the account.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

37

BLUV as at 16th February 2011

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

Notwithstanding subsection (3), where a dividend is paid on any share of a preferential nature, it shall not be so exempt in the hands of the shareholder.

Any dividends debited to that account shall be treated as having been distributed to the shareholders of the export enterprise or any particular class of the shareholders in the same proportions as the shareholders were entitled to payment of the dividends giving rise to the debit.

The export enterprise shall deliver to the Collector a copy of that account, made up to a date specified by him, whenever called upon to do so by notice in writing sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.

Notwithstanding section 49 and subsections (1) to (6) where it appears to the

Collector that –

Parts XI and XII of the Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, with the necessary modifications, to any direction given under subsection (7) as if it were a notice of assessment given under those provisions.

Section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is debited to the account required to be kept for the purposes of this section.

Where an amount has been received by way of dividend from an export enterprise by a shareholder and the amount is exempt from tax under subsections (1) to (9), if that shareholder is a company (referred to in this section as the holding company) which holds, at the time any dividend is declared, the beneficial interest in all the issued shares of the export enterprise (or in not less than such proportion of those shares as the Minister may approve), any dividends paid by the holding company to its shareholders, to the extent that the Collector is satisfied that those dividends are paid out of that amount, shall be exempt from tax in the hands of those shareholders; and section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof so exempt.

Power of entry into premises and taking of samples.

technical services including construction, distribution, design and engineering services;

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

40

BLUV as at 16th February 2011

consultancy, management, supervisory or advisory services relating to any technical matter or to any trade or business;

fabrication of machinery and equipment and procurement of materials, components an equipment;

data processing, programming, computer software development, telecommunications and other computer services;

professional services including accounting, legal, medical and architectural services;

educational and training services; and

any other services as the Minister may prescribe.

Application for and issue of certificate to export service company.

Where a company is engaged in any qualifying service, the company may apply in the prescribed form to the Minister for approval as an export service company.

The Minister may if he considers it expedient in the public interest to do so, approve the application and issue the company with a certificate, subject to such terms and conditions as he may impose.

Every certificate issued to an export service company under this section shall specify –

The Minister may, in his discretion, upon the application of an export service company, amend its certificate by substituting for the commencement day specified therein such earlier or later date as he thinks fit and thereupon the provisions of this Part shall have effect as if the date so substituted were the commencement day in relation to that certificate.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

41

BLUV as at 16th February 2011

Tax relief period of export service company.

The tax relief period of an export service company shall commence on its commencement day and shall continue for such period, not exceeding 11 years, as the Minister may, in his discretion, determine.

The Minister may, where he is satisfied that it is expedient in the public interest to do so and subject to such terms and conditions as he may impose, extend the tax relief period of any export service company or firm for such further periods, not exceeding 3 years at any one time, as he may determine, except that the tax relief period of the export service company shall not in the aggregate exceed 20 years.

Application of certain sections to export service company.

Section 10 shall apply, with the necessary modifications, to an export service company as it applies to a pioneer enterprise.

Section 50 shall apply, with the necessary modifications, to an export service company as it applies to an export enterprise.

Sections 68 and 69 shall apply, with the necessary modifications, to an export service company as they apply to an international trading company and for the purposes of such application, the reference in subsection (2) of section 68 to the export sales of qualifying manufactured goods, Brunei Darussalam domestic produce and qualifying commodities shall be read as a reference to the provision of qualifying services.

Ascertainment of income of export service company.

The income of an export service company in respect of its qualifying services shall be ascertained (after making such adjustments as may be necessary in consequence of a direction under section 10 as made applicable by section 58) for any accounting period during its tax relief period in accordance with the Income Tax Act, and, in particular, the following provisions shall apply –

The amount of income ascertained under subsection (1) which will qualify for the relief under section 60 shall be the excess of the amount of the income ascertained under subsection (1) over a base amount of income to be determined by the Minister.

Controller to issue statement of income.

For each year of assessment, the Collector shall issue to an export service company or firm a statement for that year of assessment showing the amount of income ascertained under subsection (2) of section 59 which will qualify for the relief provided by this section, and Parts XI and XII of the Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, with the necessary modifications, as if that statement were a notice of assessment given under those provisions.

Subject to subsection (7) of section 50, where any statement issued under subsection (1) has become final and conclusive, 100% of the amount of the qualifying income referred to in subsection (1) shall not form part of the statutory income of the export service company or firm for the year of assessment to which the income relates and shall be exempt from tax.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

43

BLUV as at 16th February 2011

Certification by auditor.

any unabsorbed allowances provided for under sections 13 to 18 of the

Income Tax Act attributable to income derived from qualifying services by it during its tax relief period otherwise than in accordance with section 20 of that Act; and

losses incurred by it during its tax relief period otherwise than in accordance with subsection (2) of section 30 of the Income Tax Act.

Where a company is engaged in –

The Minister may, if he considers it expedient in the public interest to do so, approve the application and issue the company with a certificate subject to such terms and conditions as he thinks fit.

The Minister may issue separate certificates to an international trading company for the purposes of paragraphs (a) and (b) of subsection (1).

Every certificate issued under this section shall specify a date as the commencement day from which the company shall be entitled to tax relief under this Part.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

45

BLUV as at 16th February 2011

The Minister may, in his discretion upon the application of an international trading company, amend its certificate by substituting for the commencement day specified therein such earlier or later date as he thinks fit and thereupon the provisions of this Part shall have effect as if the date so substituted were the commencement day in relation to that certificate.

A company shall furnish to the Minister at the time of application to be an international trading company a statement of all its associated companies and export agents and the activities they are engaged in and such other particulars as may be required; and where there is any change in the particulars, the company shall notify the Minister as soon as possible of the change.

Tax relief period of international trading company.

any sums payable to an international trading company in any accounting period which, but for the provisions of this Order might reasonably and properly have been expected to be payable, in the normal course of business, after the end of that period shall be treated as not having been payable in that period but as having been payable on such date, after that period, as the Collector thinks fit and, where that date is after the end of the tax relief period of the international trading company, as having been so payable on that date as a sum payable in respect of its post tax relief trade or business; and

any expenses incurred by an international trading company within one year after the end of its tax relief period which, but for the provisions of this Order might reasonably and properly have been expected to be incurred, in the normal course of business, during its tax relief period shall be treated as not having been incurred

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

46

BLUV as at 16th February 2011

within that year but as having been incurred on such date, during its tax relief period, as the Collector thinks fit.

Application of Part X of Income Tax Act.

Part X of the Income Tax Act (relating to returns of income) shall apply in all respects as if the whole of the income of an international trading company were chargeable to tax.

The annual return of income shall be accompanied by such evidence as, in the opinion of the Collector, is necessary to verify the income derived from the export sales of qualifying manufactured goods, Brunei Darussalam domestic produce and qualifying commodities.

Ascertainment of income in respect of other trade or business.

The total income of an international trading company, in respect of its trade or business which includes its relevant export sales, shall be ascertained (after making such adjustments as may be necessary in consequence of any direction given under section 66), for any accounting period during its tax relief period in accordance with the provisions of the

Income Tax Act, and, in particular, the following provisions shall apply –

The amount of the export income of an international trading company which will qualify for the relief for any year of assessment shall be deemed to be such amount which bears to the total income ascertained under subsection (1) the same proportion as the excess of the total value of the relevant export sales over the relevant base export value bears to the total amount of the sums received or receivable in respect of its total sales; and subject to section 70, one-half of the amount of the export income which qualifies for the relief as ascertained in this subsection shall not form part of the chargeable income of the international trading company for that year of assessment and shall be exempt from tax.

The relevant base export value referred to in subsection (2) shall be –

For the purposes of paragraph (b) of subsection (3), a “qualifying year” is a year in which the export sales –

Where an international trading company –

As soon as any amount of chargeable income of an international trading company has become exempt under section 69, that amount shall be credited to a tax exempt account to be kept by the company for the purposes of this Part.

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

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

49

BLUV as at 16th February 2011

So much of the amount of any dividends so debited to the tax exempt 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.

Notwithstanding subsection (3), where a dividend is paid on any share of a preferential nature, it shall not be exempt from tax in the hands of the shareholder.

Any dividends debited to the tax exempt account shall be treated as having been distributed to the shareholders of the company or any particular class of those shareholders in the same proportions as the shareholders were entitled to payment of the dividends giving rise to the debit.

The company shall deliver to the Collector a copy of the tax exempt account, made up to a date specified by him, whenever called upon to do so by notice in writing sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.

Where an amount has been received by way of dividend from a company by a shareholder and the amount is exempt from tax under this Part, if that shareholder is a company, any dividends paid by that company to its shareholders, to the extent that the Collector is satisfied that those dividends are paid out of that amount, shall be exempt from tax in the hands of those shareholders.

Recovery of tax exempted.

any amount of exempted income of an international trading company;

or

any dividend exempted in the hands of any shareholder, ought not to have been exempted by reason of a direction made under section 66 or the revocation under section 114 of the certificate issued under section 64 to the company, the

Collector may subject to section 62 of the Income Tax Act –

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

50

BLUV as at 16th February 2011

make such assessment or additional assessment upon the company or any such shareholder as may appear to be necessary in order to recover such tax as may have been exempted under this Part; or

Parts XI and XII of the Income Tax Act (relating to objection and appeals) and any regulations made thereunder shall apply, with the necessary modifications, to any direction given under section 72 as if it were a notice of assessment given under those provisions.

Section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is exempted from tax under this Part.

Application of certain sections to international trading company.

Where a company engaged in any industry is desirous of raising a loan of not less than $200,000 from a non-resident person (referred to in this Part as a foreign lender) by means of a financial agreement whereby credit facilities are granted for the purchase of productive equipment for the purposes of its trade or business, the company may apply to the

Minister for a certificate certifying that foreign loan to be an approved foreign loan.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

51

BLUV as at 16th February 2011

The Minister may, where he thinks it expedient to do so, consider an application for a foreign loan certificate in respect of a foreign loan of less than $200,000.

The application shall be in such form and with such particulars as may be prescribed, and shall be accompanied by a copy of the financial agreement.

Where the Minister is satisfied as to the bona fides of such an application and that it is expedient in the public interest to do so, he may issue a certificate certifying the loan specified in the application as an approved foreign loan.

Every certificate issued under subsection (4) shall be in such form and contain such particulars as may be prescribed, and shall be subject to such terms and conditions as the

Minister thinks fit.

Restriction on disposal of specified productive equipment.

Notwithstanding section 37 of the Income Tax Act, the Minister may, subject to subsection (2), if he is satisfied that it is expedient in the public interest to do so, by an endorsement to that effect on the approved foreign loan certificate, exempt from tax any interest on an approved foreign loan payable to a foreign lender.

Where a company has contravened section 76 or any conditions imposed by the

Minister under subsection (4) of section 75, the amount which, but for subsection (1), would have been deductible by the company from the interest paid by it to the foreign lender under section 37 of the Income Tax Act shall be deemed to have been deducted from that interest and shall be a debt due from the company to the Government and be recoverable in the manner provided by section 76 of the Income Tax Act.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

52

BLUV as at 16th February 2011

No action shall be taken by the Collector to recover any debt under subsection

without the prior sanction of the Minister.

Exemption of additional interest on approved foreign loan from tax.

Subject to subsection (3), section 77 shall apply to any additional interest payable on an approved foreign loan by reason of any arrangement whereby the period within which the loan must be repaid in full has been extended.

The rate of interest payable in respect of any such extended period shall not, without the prior sanction of the Minister, be higher than the rate of interest specified in the certificate relating to the approved foreign loan.

Any company making any such arrangement shall give notice thereof in writing to the Minister within 30 days from the date on which the arrangement is made.

For the purposes of this Part, unless the context otherwise requires –

“approved project” means a project approved by the Minister under subsection

of section 80;

“construction operations” means –

For the purposes of this Part, fixed capital expenditure shall not be deemed to be incurred by a company unless –

Where a company proposes to carry out a project –

Where the Minister considers it expedient, having regard to the economic, technical and other merits of the project, he may approve the project and issue the company with a certificate which shall qualify the company for an investment allowance (as stipulated in the certificate) in respect of the fixed capital expenditure for the approved project subject to such terms and conditions as he thinks fit.

Every certificate issued under this section shall specify a date as the investment day from which the company shall be entitled to investment allowance under this Part.

The Minister may, in his discretion upon the application of a company amend its certificate by substituting for the investment day specified therein such earlier or later date as he thinks fit and thereupon the provisions of this Part shall have effect as if the date so substituted were the investment day in relation to that certificate.

Investment allowance.

The investment allowance granted under section 80 shall be a specified percentage not exceeding 100% of the amount (which may be subject to a specified maximum)

of fixed capital expenditure incurred on each item specified by the Minister under subsection

on an approved project if the fixed capital expenditure is incurred –

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

55

BLUV as at 16th February 2011

The Minister –

Where any question arises as to whether a particular item qualifies as one of the items under paragraph (a) of subsection (2), it shall be determined by the Minister whose decision shall be final.

In subsection (1), “specified” means specified by the Minister.

Crediting of investment allowance.

Where in the basis period for a year of assessment a company has incurred fixed capital expenditure, the company shall be given for that year of assessment an investment allowance in respect of such amount of the fixed capital expenditure as qualifies for the investment allowance under the terms and conditions of its certificate and in accordance with section 81.

Where any investment allowance is given to a company for an approved project, the investment allowance shall be kept in an account to be called “investment allowance account” which shall be kept by the company for the purposes of this Part.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

56

BLUV as at 16th February 2011

Prohibition to sell, lease out or dispose of assets.

During its qualifying period or within 2 years after the end of its qualifying period, a company shall not, without the written approval of the Minister, sell, lease out or otherwise dispose of any assets in respect of which an investment allowance has been given.

Where during its qualifying period or within 2 years after the end of its qualifying period, a company has sold, leased out or otherwise disposed any asset in respect of which an investment allowance has been given, an amount equal to the aggregate of the investment allowance given in respect of that asset shall be recovered.

Where that account is insufficient to give full effect to the recovery, an assessment or additional assessment in respect of the amount unrecovered shall be made upon the company or any shareholder of the company and the tax exempt account, kept in accordance with section 71 (as made applicable by section 85), shall be debited accordingly.

Notwithstanding subsections (2) and (3), the Minister may waive wholly or partly the recovery of the investment allowance.

Exemption from income tax.

Where for any year of assessment the investment allowance account of a company is in credit and the company has for that year of assessment any chargeable income –

Any amount of chargeable income of a company debited from the investment allowance account shall be exempt from tax.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

57

BLUV as at 16th February 2011

Certain dividends exempted from income tax.

any amount exempted income of a company; or

any dividend exempted in the hands of any shareholder, ought not to have been exempted by reason of the revocation under section 114 of the certificate issued under section 80 to the company, the Collector may subject to section 62 of the Income

Tax Act –

make such assessment or additional assessment upon the company or any such shareholder as may appear to be necessary in order to recover such tax as may have been exempted under this Part; or

Parts XI and XII of the Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, with the necessary modifications, to any direction given under section 86 as if it were a notice of assessment given under those provisions.

Section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is exempted from tax under this Part.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

58

BLUV as at 16th February 2011

in relation to a warehousing company, the consideration received or receivable from the sales of goods (including the provisions of services connected with or related to such sales) or the commissions received or receivable therefrom; and

in relation to a service company, the consideration received or receivable from the provision of services;

“eligible goods or services”, in relation to a warehousing company or a servicing company, means the eligible goods or services specified in the certificate issued to that company under subsection (3) of section 89;

“export earnings” means –

in relation to a warehousing company, the consideration received or receivable from export sales free on board of eligible goods (including the provision of services connected with or related to such sales) or the commissions received or receivable therefrom; and

in relation to a servicing company, the consideration received or receivable from the provision of eligible services to persons outside Brunei Darussalam who are not resident in Brunei Darussalam.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

59

BLUV as at 16th February 2011

“fixed capital expenditure” means capital expenditure to be incurred on any building

(excluding land) and on any new productive equipment (and, subject to the approval of the Minister, on any secondhand productive equipment) to be used in Brunei

Darussalam;

“servicing company” means a company which has been approved as a servicing company under section 89;

“warehousing company” means a company which has been approved as a warehousing company under section 89.

Approved warehousing company or servicing company.

Any company intending to incur fixed capital expenditure of not less than $2

million for –

Where the Minister considers it expedient in the public interest to do so, he may approve the application and issue a certificate to the company subject to such terms and conditions as he thinks fit.

Every certificate issued under this section shall specify –

The Minister may, in his discretion, upon the application of a warehousing company or a servicing company, amend its certificate by substituting for the commencement day specified therein such earlier or later date as he thinks fit and thereupon the provisions of this Part shall have effect as if the date so substituted were the commencement day in relation to that certificate.

Tax relief period of warehousing company or servicing company.

The tax relief period of a warehousing company or a servicing company shall commence on its commencement day and shall continue for such period, not exceeding 11

years, as the Minister may, in his discretion, determine.

The Minister may, where he is satisfied that it is expedient in the public interest to do so and subject to such terms and conditions as he may impose, extend the tax relief period of any warehousing company or servicing company for such further period or periods, not exceeding 3 years at any one time, as he may determine, except that the tax relief period of the warehousing company or servicing company shall not in the aggregate exceed 20 years.

Prohibition of acquisition without approval.

During its tax relief period, a warehousing company shall not acquire any sales and a servicing company shall not acquire any services from any other person in connection with its trade or business without the written approval of the Minister.

Where the Minister permits a warehousing company or a servicing company to acquire such sales or services, he may vary the base export earnings as determined under subsection (3) of section 94 and impose such terms and conditions as he thinks fit.

Application of certain sections to warehousing company or servicing company.

Sections 66 and 68 shall apply, with the necessary modifications, to a warehousing company or a servicing company as they apply to an international trading company, and the reference in section 68 to relevant export sales shall be read as a reference to export of eligible goods or provision of eligible services.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

61

BLUV as at 16th February 2011

Sections 45, 46, 51, 52, 53 and 54 shall apply, with the necessary modifications, to a warehousing company as they apply to an export enterprise and the reference to export product or export produce in those sections shall be read as a reference to eligible goods.

Application of Part X of Income Tax Act.

Part X of the Income Tax Act (relating to returns of income) shall apply in all respects as if the whole of the income of a warehousing company or a servicing company were chargeable to tax.

The annual return of income shall be accompanied by such evidence as, in the opinion of the Collector, is necessary to verify the income derived by a warehousing company or a servicing company.

Computation of export earnings and exemption from tax.

The total income of a warehousing company or a servicing company in respect of its trade or business which includes its export of eligible goods or provision of eligible services shall be ascertained (after making such adjustments as may be necessary in consequence of any direction given under section 66 as made applicable by section 92), for any accounting period during its tax relief period in accordance with the provisions of the Income

Tax Act, and, in particular, the following provisions shall apply –

The amount of the export income of a warehousing company or a servicing company which will qualify for the relief for any year of assessment shall be deemed to be such amount which bears to the total income ascertained under subsection (1) the same proportion as the excess of the total amount of the export earnings of that company over its base export earnings bears to the total amount of its earnings; and one-half of the amount of the export income which qualifies for the relief as ascertained in this subsection shall not form part of the chargeable income of the company for the year of assessment and shall be exempt from tax.

The base export earnings referred to in subsection (2) shall be where a warehousing company or a servicing company has been carrying on its trade or business –

any amount of exempted income of a warehousing company or a servicing company; or

any dividend exempted in the hand of any shareholder, ought not to have been exempted by reason of a direction made under section 66 (as made applicable by section 92) or the revocation under section 114 of the certificate issued under section 89 to the warehousing company or the servicing company, the Collector may subject to section 62 of the Income Tax Act –

make such assessment or additional assessment upon the company or any such shareholder as may appear to be necessary in order to recover such tax as may have been exempted under this Part; or

Parts XI and XII of the Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, with the necessary modifications, to any direction given under section 96 as if it were a notice of assessment given under those provisions.

Section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is exempted from tax under this Part.

which is resident in Brunei Darussalam;

which holds shares in the technology company; and

in respect of which not less than 30% of the paid-up capital is beneficially owned by citizens or person to whom a Resident Permit has been granted under regulations made under the Immigration Act (Chapter 17) throughout the whole of the qualifying period of the technology company, unless the Minister otherwise decides;

“qualifying period”, in relation to a technology company, means a period of 3 years from the day it commences, for the purposes of the Income Tax Act (Chapter 35), to carry on its relevant trade or business;

“relevant trade or business”, in relation to a technology company, means the trade or business to which the certificate, issued to the company under subsection (2) of section 99, relates;

“technology company” means a company approved as a technology company under subsection (2) of section 99.

Application for and issue of certificate to technology company.

Any company incorporated in Brunei Darussalam which is desirous of using in

Brunei Darussalam a new technology in relation to a product, process or service may make an application in the prescribed form to the Minister to be approved as a technology company.

Where the Minister is satisfied that the technology, if introduced in Brunei

Darussalam, would promote or enhance the economic or technological development in Brunei

Darussalam, he may approve the company as a technology company and issue a certificate to that company subject to such conditions as he thinks fit.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

65

BLUV as at 16th February 2011

Every certificate issued under this section shall specify a percentage, not exceeding 30%, of such amount of the paid-up capital of the technology company as is held by any eligible holding company for the purpose of determining the deduction under section 100.

Deductions allowable to eligible holding company.

Where a technology company has incurred an overall loss in respect of its relevant trade or business at the end of its qualifying period, it may, within 6 years from that date, by notice in writing to the Collector elect for the overall loss (less any amount which has been deducted up to the date of the notice) and the amount of any unabsorbed capital allowances (less any amount which has been deducted up to the date of the notice) to be made available to an eligible holding company as a deduction against the statutory income of the eligible holding company.

The deduction to be made available to an eligible holding company under subsection (1) shall be an amount to be ascertained by multiplying the overall loss (less any amount which has been deducted up to the date of the notice) or the unabsorbed capital allowances (less any amount which has been deducted up to the date of the notice), as the case may be, by the percentage of the paid-up capital of the technology company held by that eligible holding company throughout the whole of the qualifying period of the technology company.

The deduction shall not in the aggregate exceed such percentage as may be specified in the certificate issued to the technology company under section 99 of the paid-up capital of the technology company held by the eligible holding company (excluding any shares acquired from other shareholders of the technology company) as at the end of such qualifying period.

Incorporating amendments until S 5/2011

(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020

66

BLUV as at 16th February 2011

Notwithstanding subsections (2) and (3), where the percentage of the paid-up capital of the technology company held by an eligible holding company is increased at any time during the qualifying period of the technology company, the Minister may, upon the application by the eligible holding company, if he considers it just and reasonable to do so, increase the amount of the deduction available under subsection (2) up to 50% of the paid-up capital of the technology company held by the eligible holding company as at the end of such qualifying period.

Where any deduction is made available to an eligible holding company in accordance with this section, any overall loss or unabsorbed capital allowances to the extent of the deductions so made available shall cease to be deductible by the technology company under section 20 or 30 of the Income Tax Act (Chapter 35), and those sections shall apply to the eligible holding company in respect of the deduction made available as if the eligible holding company was carrying on the trade or business in respect of which the overall loss or the unabsorbed capital allowances were made.

The overall loss or unabsorbed capital allowances made available to an eligible holding company under this section shall first be deducted against the statutory income of the eligible holding company for the year of assessment immediately following the year in which the notice given under subsection (1).