Brunei’s workforce, primarily concentrated in urban areas like Bandar Seri Begawan, is employed across sectors such as oil and gas, public services, and emerging industries like technology and tourism. Employees are typically paid monthly, as stipulated in employment contracts.

Brunei has no labor unions due to its stable economic structure, but the government enforces strict labor laws to protect workers. There is no personal income tax for individuals in Brunei, simplifying employee payrolls. However, employers must comply with mandatory contributions to social security schemes.

Adherence to payroll and tax regulations is essential for businesses operating in Brunei to avoid penalties from the Ministry of Finance and Economy or the Employees’ Trust Fund Board. Compliance ensures smooth operations, builds trust with employees, and enhances credibility with the government, particularly for international companies seeking to establish a presence in Brunei.

What Is Payroll Tax in Brunei?

Definition and Purpose of Payroll Tax

In Brunei, there is no payroll tax in the traditional sense, as the country does not impose taxes on salaries, bonuses, or other employee compensation.

Instead, employers and employees are required to make contributions to the Employees’ Trust Fund (Tabung Amanah Pekerja, TAP) and the Supplemental Contributory Pension (SCP) scheme.

These contributions, managed by the Employees’ Trust Fund Board under the Ministry of Finance and Economy, fund retirement savings, pensions, and survivor benefits for Brunei citizens and permanent residents.

Employer and Employee Responsibilities

The employer contributions in Brunei consist of two main components: TAP and SCP contributions. Employers contribute 5% of an employee’s gross salary to TAP and 3.5% to SCP, with a minimum SCP contribution of BND 17.50 and a cap at BND 98. Employees also contribute 5% to TAP and 3.5% to SCP. These contributions are mandatory for all Brunei citizens and permanent residents employed in the country.

Employers are responsible for accurately calculating and remitting these contributions monthly by the 15th of the following month via TAP’s dedicated platform. Employees should review their payslips to ensure correct deductions. Non-compliance, such as late payments or underreporting, may result in penalties or audits by the Employees’ Trust Fund Board.

Contribution rates and regulations may be updated periodically. You should regularly check the Ministry of Finance and Economy website or the Employees’ Trust Fund portal for the latest information.

For companies seeking to simplify compliance, partnering with a Brunei Employer of Record (EOR) service can streamline payroll management, ensuring accurate contributions and adherence to local laws.

Employer Contribution Rates in Brunei

Breakdown of Employer Contributions

  • Employees’ Trust Fund (TAP): Employers contribute 5% of the employee’s gross salary to this mandatory retirement savings fund. There are no minimum or maximum earnings limits for TAP contributions.
  • Supplemental Contributory Pension (SCP): Employers contribute 3.5% of the employee’s gross salary, with a minimum contribution of BND 17.50 and a maximum of BND 98 per month. Of the total contributions (employer and employee), 6/7 finances old-age benefits, and 1/7 finances survivor benefits. The maximum monthly earnings used to calculate SCP contributions are BND 2,800.

Industry-Specific Considerations

  • Tax Incentives: The Ministry of Finance and Economy offers tax exemptions for pioneer industries, particularly high-tech and non-oil sectors, to encourage economic diversification. Qualifying businesses may receive exemptions from corporate income tax or import duties through the Brunei Economic Development Board (BEDB).
  • Other Benefits: Additional benefits like private health insurance or housing allowances are not subject to taxation, as Brunei does not impose taxes on such benefits unless specified otherwise. Employers should consult local experts or the Ministry of Finance and Economy for clarity on exemptions.

Compliance

Employers must register with the Registry of Companies and Business Names (ROCBN) and enroll in the TAP and SCP schemes upon hiring employees. The BusinessBN portal simplifies company registration and contribution management. For accurate and up-to-date information, refer to:

Overview of Income Tax in Brunei

Income Tax in Brunei

Brunei does not impose personal income tax on individuals, whether residents or non-residents. This applies to all forms of personal income, including salaries, bonuses, allowances, and capital gains.

However, businesses are subject to corporate income tax on income derived from Brunei, administered by the Revenue Division of the Ministry of Finance and Economy. The petroleum sector faces a higher tax rate.

Corporate Income Tax Rates

  • Standard Rate: Companies are taxed at 18.5% on their net profits derived from Brunei. Residents and non-resident companies are taxed only on Brunei-sourced income.
  • Petroleum Sector: Companies engaged in petroleum operations are subject to a 55% tax rate under the Income Tax (Petroleum) Act, reflecting the sector’s significant contribution to Brunei’s economy.
  • Filing Requirements: Companies must file annual tax returns with the Revenue Division by June 30 of the following year.

Tax-Free Allowances and Deductions

  • Business Expenses: Costs incurred wholly and exclusively for business purposes, such as salaries, rent, and utilities, are deductible.
  • Capital Allowances: Depreciation on capital assets, such as machinery or equipment, can be claimed as a deduction.
  • Investment Incentives: The Brunei Economic Development Board (BEDB) may offer tax exemptions or reductions to qualifying businesses, particularly those in pioneer industries like technology or manufacturing.
  • Donations: Contributions to approved charitable organizations may be deductible and subject to verification by the Revenue Division.

Key Components of Payroll in Brunei

Payroll Cycle and Pay Slips

Brunei predominantly follows a monthly payroll cycle, with salaries paid by the last working day or the first few days of the following month. Bi-weekly or weekly payment schedules are rare but may be used in specific industries like construction. Employers may offer performance-based bonuses or a 13th-month pay, which are processed separately.

Employers are required to provide employees with monthly pay slips detailing:

  • Basic salary
  • Contributions to the Employees’ Trust Fund (TAP) (5% employee contribution)
  • Contributions to the Supplemental Contributory Pension (SCP) scheme (3.5% employee contribution)
  • Other deductions or benefits, such as allowances or overtime pay

Pay slips must comply with regulations set by the Employees’ Trust Fund Board and can be submitted electronically via TAP’s platform.

Employer Responsibilities for Payroll Tax Compliance

Employers in Brunei are responsible for:

  • Calculating and withholding employee contributions to TAP (5%) and SCP (3.5%) from salaries.
  • Contributing an equal amount to TAP and SCP for each employee, with SCP contributions capped at BND 98 per month (based on maximum monthly earnings of BND 2,800).
  • Remitting contributions by the 15th of the following month via TAP’s platform.
  • Registering with the Registry of Companies and Business Names (ROCBN) and enrolling employees in TAP and SCP schemes upon hiring.

Common Payroll Errors and How to Avoid Them

  • Misclassifying Employees: Misclassifying employees as independent contractors can lead to non-compliance with TAP and SCP contributions. Always verify classifications using Brunei’s Employment Order 2009.
  • Incorrect Contribution Calculations: Errors in calculating TAP or SCP contributions, such as failing to cap SCP contributions at BND 98, can result in penalties. Use payroll software or consult the TAP website for accurate calculations.
  • Breaching Overtime Rules: Brunei’s Employment Order sets a 44-hour workweek, with overtime limited to 12 hours per week at 1.5 times the normal rate. Failing to track or compensate overtime correctly can lead to labor disputes.
  • Poor Record-Keeping: Incomplete records of contributions or employee data can complicate audits by the Employees’ Trust Fund Board. Adopt digital payroll solutions to maintain organized records.

Tax Treaties and Withholding Taxes

Brunei’s tax treaties and withholding regulations primarily affect corporate income and cross-border payments.

Brunei’s Double Taxation Treaties

Brunei has double taxation treaties (DTTs) with over 20 countries, including the United Kingdom, Singapore, China, and Japan, to prevent double taxation of corporate income. These treaties allow businesses to claim tax credits or exemptions for taxes paid in Brunei against their home country’s tax liability.

For example, a foreign company in Brunei may benefit from reduced withholding tax rates on dividends or royalties under a DTT. Always verify applicable treaties via the Ministry of Finance and Economy website.

Withholding Tax on Foreign Income

In Brunei, withholding taxes apply to certain payments made to non-residents:

  • Dividends: A 10% withholding tax is applied to dividends paid to non-residents, unless reduced by a DTT.
  • Royalties and Interest: There is generally no withholding tax on royalties or interest paid to non-residents, but specific conditions may apply under the Income Tax Act.
  • Technical Services: Payments for technical services provided by non-residents may be subject to withholding tax at 20%, unless reduced by a DTT.

Employers and businesses must file withholding tax returns and payments by the 15th of the month to comply with Revenue Division regulations.

Brunei Payroll Tax Calculator

The Remote People Global Payroll Calculator is a handy tool that calculates payroll taxes for local and foreign employees in any country. It’s free to use.