Offshore Jurisdiction Review - Brunei

(Editor's note: The information in this article is based on Streber's personal experiences and has not been independently verified. As always, do your own due diligence.)

Advantages

Brunei is an often-overlooked offshore jurisdiction.

It is a fiercely independent nation full of pride. Privacy is sacred. As a sign of that, the country has signed only a few double taxation agreements (DTA) and tax information exchange agreements (TIEA). There are no ambitions to increase this.

Brunei has no personal income taxes.

Couple this with a rock-solid economy, strict banking secrecy, and a population that speaks English very well, and you have a powerful offshore jurisdiction.

Disadvantages

The offshore sector is not very mature, and the incorporation costs can be significantly higher than other international business company (IBC) jurisdictions.

Incorporating an offshore company in Brunei can take several weeks, although I have been told it can be as quick as a week.

Country Profile

Located on the north side of the island of Borneo, the Sultanate of Brunei traces its roots as far back as the 7th century, although the name Brunei (then Berune) does not appear in literature until the 1300s, when Chinese settlers arrived. Prior to this, Brunei may have been a more or less an autonomous part of the Majapahit Empire. The Chinese held Brunei until the 1400s when Brunei developed close ties with the sultanate of Malacca. It was at this point the country transformed into a Muslim nation, which it remains to this date.

In modern times, Brunei has become one of the wealthiest nations in Asia due to vast natural resources and foreign investment. The sultanate of Brunei enjoys a 0% public debt and one of the highest GDP per capita in the world.

Brunei has very close ties with Singapore, even pegging its currency to the Singapore dollar.

Brunei International Business Company (IBC)

The Brunei IBC has a few differences from the more popular IBC jurisdictions, such as Seychelles, Belize, BVI, etc.

Whereas other IBC jurisdictions charge a much higher annual fee for an authorized share capital, over $50,000 (Belize) or $100,000 (Seychelles) USD, Brunei has a fixed annual fee for any authorized share capital. This makes Brunei superb for fund raising or other types of businesses that have a large number of shareholders.

A secretary is required, and if more than one secretary, one must be local. This is usually provided by the offshore service provider (OSP), but it brings the price up a bit.

Similar to Mauritius GBC class I and II, a Brunei IBC's authorized share capital cannot be the local currency. This is insignificant, but anyone who really wants Brunei dollar could just as well use Singapore dollar since it is pegged 1:1.

A minimum of one director and a minimum of one shareholder is required, both of which can be the same person (legal or natural).

Brunei IBCs pay no tax. No tax is levied on interest, dividends, or other forms of income.

Banking

Banking in Brunei is improving all the time. It still has a long way to go to reach the likes of Singapore and Hong Kong, but it's now so good that I would recommend that a Brunei IBC open a bank account in Brunei. HSBC, Standard Chartered, and the local Baiduri Bank are the banks that are the most open to IBCs. Accounts can be opened remotely by using an introducer.

Banking secrecy is provided by chapters 18 and 19 of the International Banking Order of 2000, which governs banking for non-residents. The penalties for breaking the Brunei banking secrecy are imprisonment for up to two years and a fine up to $100,000 USD. A court order is required to disclose banking information. This is rarely if ever done for what foreign jurisdictions consider to be tax crimes.

However, Brunei courts will force disclosure in cases of money laundering or other severe crimes.

Living in Brunei

With zero income tax and no tax on capital gains and dividends, Brunei can be an attractive location to live in. However, it is not a fully zero tax jurisdiction. There is property tax, a 5% social security tax, and stamp duty on many documents. Overall, though, the tax rates are much lower than most other jurisdictions.

Travelling to and from Brunei is almost exclusively done via Singapore, Malaysia, and Hong Kong, with some flights going to Australia, though there are frequent direct flights from London and Dubai.

Internet in Brunei is slow and expensive, owing largely due to expensive connections with Singapore and connections with the poorly connected Indonesia.

Foreigners cannot own property but there are plenty of rentals. Costs of living are some of the highest in Asia, similar to Singapore and Hong Kong.

Details on immigration (permanent residence, long-stay visa, and work permits) change frequently. Check with a Brunei embassy or consulate for up-to-date information.

Brunei is definitely worth taking a look at if you need an offshore company with strict privacy protection.


Streber works as a consultant and director for a wide range of companies and has broad experience in offshore banking, offshore incorporation (formation and maintenance of offshore companies), taxation, privacy, ecommerce, merchant accounts, online payments, and all other things the privacy-minded entrepreneur might find interesting. You can read Streber's blog on offshore incorporation and offshore banking here.

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