Brunei: Double Tax Treaties

Brunei Double Taxation Agreements

• Encourage investment & trade between the two countries;
• Lessen the burden of tax on companies when operating in two countries;
• Enable Government institutions to operate in other countries without incurring tax liabilities;
• Enable the exchange of information on tax matters.

Negotiations have been completed for Treaties with Malaysia, Thailand, Pakistan, Oman and Laos; although these are not yet in force. The treaty with Pakistan was signed in December 2008, but will not come into effect until both sides exchange formal notes.

Further treaties are under negotiation with Bahrain, Vietnam, the Philippines and Germany.

In April 2009, Brunei and Kuwait signed several cooperation agreements including an agreement for the avoidance of double taxation and fiscal evasion with respect to income taxes.

The signing ceremony, held on April 14, saw the signing of several documents of cooperation between the two countries including an Agreement for the Reciprocal Promotion and Protection of Investment, the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and a Memorandum of Understanding on Oil and Gas Cooperation.

The agreements were signed by Pehin Dato Seri Pahlawan Haji Mohammad, Brunei’s Minister of Energy and Kuwaiti Minister of Finance Sheikh Ahmed Abdullah Al-Ahmad Al-Sabah.

In August 2009, the leaders of Brunei and Malaysia expressed the belief that their signing of a double taxation agreement would promote even greater bilateral economic collaboration between the two countries.

Detailed terms of the double taxation agreement had, at that point, not been released. However, it was reported that the maximum rates of withholding tax on dividends, royalties and fees will be 10%.

In November 2009, Japan and Brunei exchanged diplomatic notes to bring into force the Convention on the Avoidance of Double Taxation and Fiscal Evasion with respect to Taxes on Income, which was signed on January 20, 2009.

The exchange of formal notes took place in Brunei's capital city of Bandar Seri Begawan on November 19. According to a statement from the Japanese government, the agreement will enter into force on December 19, 2009, and will be applied in Japan as follows:

The Agreement will set limits on the withholding taxes imposed on dividends, interest, and royalties (copyrights, patents, etc.) in the country of origin.

Also in November 2009, Singapore and Brunei signed a protocol to incorporate the internationally agreed Organization of Economic Cooperation and Development (OECD) standard for the exchange of information for tax purposes in their existing agreement for the avoidance of double taxation.

Lim Hwee Hua, Singapore’s Minister in the Prime Minister's Office, signed the protocol together with Pehin Dato Abd Rahman Ibrahim, Brunei’s Second Finance Minister, in Singapore. Lim Hwee Hua commented: “We are pleased to sign this agreement with Brunei. This agreement marks another significant milestone in the longstanding and special friendship between both countries.”

The protocol will give the tax authorities of both countries a greater ability to exchange taxpayer information and to exchange information on a wider range of taxes. It also provides that neither tax authority can refuse to provide information solely because it does not require the information for its own domestic purposes, or because the information is held by a bank or similar institution.

The protocol will enter into force after Singapore’s legislative amendments to give effect to the internationally agreed standard have been approved by parliament and gazetted into law, and on the thirtieth day following completion of the ratification procedures by both countries.

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Brunei Other International Agreements

Brunei Darrusalam has a number of Bilateral Investment Treaties, and the Ministry of Finance lists their goals as follows:

• To protect Brunei Darussalam investments from expropriation and nationalisations by contracting countries;
• Encourage investment and trade between the two countries;
• Ensure the returns of investment and income remitted back to Brunei Darussalam;
• Ensure appropriate channels to overcome the investment differences.

Bilateral Investment Treaties have been signed with the following countries, listed below, with their effective dates:

In addition, commenting with regard to multilateral investment agreements, the Ministry of Finance reveals that:

"The Government of Brunei Darussalam is also signatory to the ASEAN Agreement on the Protection and Promotion of Investment with all ASEAN countries in 1986. The new ASEAN member countries acceded to the Agreement when they joined ASEAN. In addition, the Government of Brunei Darussalam has also signed the Agreement on the ASEAN Investment Area."

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