Brunei Darussalam

Depreciation and amortisation

Depreciation and amortisation are not tax deductible.

Start-up expenses

Pre-operating expenses are not qualified for business deduction as the said expenditure was incurred prior to the production of income period.

Interest expenses

Interest expenses are tax deductible if incurred for the purpose of the business.

Bad debt

Bad debt is qualified for tax deduction if there is sufficient evidence of reasonable steps taken for recovery. General provisions for bad debts are not deductible.

Charitable contributions

Charitable contributions for the purpose of supporting businesses and members of the public are tax deductible.

Donations are deductible only if they are made to an approved recipient for the benefit of the local community. The deduction allowed shall not exceed one-sixth of the net statutory income remaining after deductions to the approved recipients.

Pension expenses

Pension expenses are tax deductible.

Payments to directors

Director remunerations are subject to the satisfaction of the Collector of Income Tax that the quantum of total director remuneration package (including salary, bonus, fees, and any other benefits-in-kind) must be realistic, reasonable, and in line with commercial standards.

In the event that the remuneration paid is not commensurate with the services rendered by the directors, the tax authority may disallow the expenditure to the company. The principle is that expenditure will only be allowed if it is ‘wholly and exclusively incurred in the production of income’.

Research and development (R&D) expenses

Brunei allows tax deductions for expenditures incurred on or after specified dates for companies engaged in manufacturing or specified service trades. These deductions include costs related to R&D conducted directly by the company, excluding certain capital expenditures, and payments made to approved R&D companies conducting research on behalf of the company.

Fines and penalties

Fines and penalties are generally not deductible.

Taxes

Taxes on income are generally not deductible, whereas indirect taxes are deductible.

Net operating losses

Utilisation of capital allowance is also restricted to income from the same underlying business source. Business losses can be set off against income from all sources in the current year after utilising all capital allowance.

Unutilised losses in a year of assessment can only be carried forward for a maximum period of six consecutive years of assessment while unabsorbed capital allowance can be carried forward indefinitely.

Currently, there are no provisions to carry back losses to prior years of assessment.