A Guide To Applying For Business Licenses In Brunei

Brunei is a small but prosperous country in Southeast Asia, with a stable economy and business-friendly policies that make it an attractive destination for foreign investors. The process of registering a business in Brunei is complex and time-consuming, and it can take up to twelve weeks to complete. The first step is to choose the appropriate legal structure for your business, with options including sole proprietorships, partnerships, private limited companies, and public limited companies. The most common structure for foreign investors is a private limited company due to its flexibility and ease of incorporation. After choosing a business entity, you must reserve your company name by submitting an application to the Companies Registrar at the Brunei International Financial Centre (IFC). Once your name is approved, you can proceed to register your business with the Registrar of Companies, providing the necessary documents and paying the registration fee. Certain business activities, such as those involving food products or hiring foreign workers, may require additional licenses and permits. Finally, all businesses in Brunei must register for tax and social security.

Choosing a business structure

When starting a business in Brunei, the first step is to choose the appropriate legal structure for your business. There are three main types of business structures in Brunei: sole proprietorship, partnership, and company. Each type of business structure has its own advantages and requirements that you should consider before making a decision.

Sole proprietorship is the simplest form of business entity, where the owner and the business are considered the same entity. This means that the owner has unlimited liability and is personally liable for any debts, losses, and obligations of the business. Sole proprietorships are not allowed to be opened by non-residents and have a registration fee of $30.

Partnerships are similar to sole proprietorships in that they do not constitute a separate legal entity, and all partners are subject to unlimited liability. Partnerships must have a minimum of two partners and can have a maximum of twenty partners. Like sole proprietorships, partnerships cannot be opened by non-residents and have a registration fee of $30.

A company is a separate legal entity from its directors and shareholders. There are two types of companies: private limited companies and public limited companies. A private limited company is the most common legal structure for foreign investors due to its flexibility and ease of incorporation. It requires a minimum of two shareholders and two directors, one of whom must be a resident of Brunei Darussalam. The registration fee for a company is $300.

When choosing a business structure, it is important to consider the level of liability protection, the number of owners or shareholders, the residency requirements, and the registration fees involved. It is also essential to review the eligibility requirements, as certain business structures are restricted to local citizens or permanent residents of Brunei.

Once you have chosen the appropriate business structure, you can proceed with the next steps of registering your business in Brunei, such as reserving your company name, submitting the necessary documents, and obtaining the required licenses and permits.

Registering your business name

Choose a unique and appropriate name:

Before submitting your desired company name, it's important to conduct a thorough business name search to ensure its availability. You can do this by searching for your proposed name on the OCP Homepage (www.ocp.mofe.gov.bn). Choosing a unique name will increase the chances of your application being approved and reduce the risk of complaints against your business. It's important to avoid names that are identical or similar to existing registered names. Additionally, keep in mind that certain words are prohibited from being used in business names, such as "Royal", "Diraja", "Brunei", "Co-operative", "Savings", or "Trust/Trustee". This is to prevent any implication of a connection with the Sultan or the Government of Brunei.

Submit your application:

Once you have chosen a unique and suitable name, you can proceed to submit your application to the Companies Registrar at the Brunei International Financial Centre (IFC). Your application should include your desired company name and a description of the proposed business activities. There may be a fee associated with submitting your application, which can vary depending on your business entity. Once your application is approved, your chosen name will typically be reserved for a period of 120 days.

Obtain approval:

After submitting your application, you will need to wait for approval from the relevant authorities. This process may involve additional requirements or steps, depending on the nature of your business. It's important to comply with all existing rules and regulations related to your business activities. Once your business name is approved, you will be one step closer to officially registering your business in Brunei.

Register your business:

With your business name approved, you can now proceed to the next step, which is registering your business with the Registrar of Companies at the IFC. This step will require you to submit several documents, including the Memorandum and Articles of Association, Form X (Notice of Situation of Registered Office and Office Hours), Form XXVII (Particulars of Directors and Officers), and Form XXVIII (Consent to Act as Director or Officer). Additionally, you will need to pay the registration fee, which can vary depending on your business entity.

By following these steps and guidelines, you can successfully register your business name in Brunei. Remember to refer to the official government sources and seek professional advice if needed to ensure compliance with all the necessary requirements and regulations.

Obtaining business licenses and permits

Once your business is registered, you may need to obtain additional licenses and permits to operate legally in Brunei. The requirements vary depending on your business activities.

Some common licenses and permits include:

• Halal Certification (if your business involves food products)
• Work Permit (if you plan to hire foreign workers)

You can obtain these licenses and permits from the relevant government agencies.

In addition, there are several business activities that are exempt from needing a business license. These include:

• Bakery, food establishment, and places of visit and other public entertainment establishments
• Hawker
• Motor Vehicle Dealer
• Gas station, including places for storing oil and other inflammable materials
• Retail stores
• Timber storage and furniture factories
• Workshops

Businesses that fall under these activities can start operating once they have received approval for their business name or company incorporation at the Registry of Companies and Business Names. However, they still need to comply with existing rules and regulations regarding the type of business they plan to conduct.

It is important to note that the process of obtaining licenses and permits can be complex and time-consuming, and it is recommended to seek professional assistance to ensure compliance with all legal requirements.

Registering for tax and social security

All businesses in Brunei are required to register for tax and social security. The relevant bodies for this are the Inland Revenue Department and the Employees Trust Fund, respectively.

The tax system in Brunei is advantageous for businesses, with no personal income tax, no sales tax, and no value-added tax (VAT). The corporate income tax rate is 18.5% (or 22% according to another source), and there is no capital gains tax. Withholding tax rates vary depending on the type of income: dividends are not taxed, interests are taxed at 2.5%, and royalties at 10%. Petroleum operations are taxed at a fixed rate of 55%.

Businesses in Brunei are also exempt from manufacturing tax. Additionally, there are tax incentives for SMEs, such as tax exemptions for imported raw materials and machinery, the food industry for export and the domestic market, and industries that use marine resources.

While there are no social security taxes in Brunei, all citizens must contribute 5% of their salary to a state-managed provident fund.

Opening a corporate bank account

The final step in starting a business in Brunei is to set up a corporate bank account. You will need to provide proof of your company registration to do this. It is recommended that you research the various banks to find out which branches and ATMs are closest to your workplace or residence.

There are seven banks licensed to operate in Brunei, with the three major banks being Perbadanan Tabung Amanah Islam Brunei (TAIB), Baiduri Bank, and Bank Islam Brunei Darussalam. The four banks with international ownership are RHB Bank, Maybank, Standard Chartered Bank Brunei, and CIMB Brunei. HSBC used to operate in the country but sold its operations to Baiduri Bank in 2017.

To open a corporate bank account, you will need to visit a local branch. While you can start the application process online, supporting documents must be presented in person. Most bank branches have English-speaking staff. It is recommended that you book an appointment in advance.

The following documents are required to open a bank account:

• Passport
• Visa
• Rental agreement
• Financial history
• Three months of bank statements
• Employment contract

Banks are legally obliged to check the identity of those who request to open an account with them to prevent money laundering.

Frequently asked questions