Business tax to be cut in stages from 30 to 27.5%
BANDAR SERI BEGAWAN
BRUNEI will lower its business tax in stages, from the current 30 per cent to a projected 27.5 per cent in 2008, in a bid to boost local small and medium enterprises and attract foreign investors.
Other incentives have also been introduced in the amended regulations of the corporate tax, whereby capital allowances will be provided to encourage investment and business activities in specific sectors, said Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abdul Rahman Hj Ibrahim, the Second Minister of Finance.
During yesterday's presentation of the total budget allocation at the State Legislative Council meeting, the minister disclosed that the initial allowance for expenditure in industrial building and infrastructure will increase from 10 per cent to 20 per cent.
The annual capital allowance will also be raised from 4 per cent compared to the current 2 per cent.
As an encouragement towards developing the country's tourism sector, hotels will also be eligible for claiming allowance tax for industrial buildings, the minister said.
In addition to the lowering of business tax, different tax rates will also be introduced based on the tax threshold.
"For a chargeable income in the amount of the first $50,000, corporate income tax will only be imposed at 25 per cent of the full rate," the minister said.
"For the next $50,000 of profit, corporate income tax will only be imposed at 50 per cent of the full rate," he added.
Furthermore, he said that newly-incorporated businesses will be exempt from income tax for the first $100,000 of profit made during the first three years of operations.
"The introduction of this tax threshold will reduce the tax burden of small companies which earn less than $100,000 profit annually, whereby for their first $100,000 of profit, businesses will be taxed 11.25 per cent only, " he said, adding that newly-established businesses will be exempt from tax in their first three years of operation.
The Brunei Times