Corporate tax to be cut to 22% next year
BANDAR SERI BEGAWAN
BRUNEI will reduce the corporate tax to 22 per cent in 2011 from the current 23.5 per cent, the Second Minister of Finance announced in a speech during the State Legislative Council Meeting (LegCo) yesterday.
Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abdul Rahman Hj Ibrahim said the move was in recognition of the support given by local and foreign companies for government initiatives implemented since 2008 that resulted in a yearly increase in tax collections.
"Even though corporate tax was reduced by 30 per cent in 2007, we are still receiving a steady increase in tax revenues year by year," Pehin Dato Hj Abdul Rahman said during the LegCo session.
The minister said that the threshold for taxable profit was increased in 2008 to $250,000 from $100,000 to assist small to medium enterprises.
"In addition to that, for the initial profit of $100,000, tax levied is 25 per cent (full rate tax) compared to $50,000 previously. Also, following the profit of $250,000, tax levied is 50 per cent (full rate tax) compared to $50,000 previously," he said.
Pehin Dato Hj Abdul Rahman said new companies are still exempt from paying taxes on the first three years of their operation.
He said the new tax schedule was introduced in hopes of reducing the financial burden on SMEs with annual profits of less than $250,000.
"For 2011, tax rate is only 5.5 per cent for the initial $100,000 while the following profit of $150,000 is taxed at 11 per cent only," he said.
To further reduce the burden and encourage private companies to recruit more Bruneians, the minister added that the Employee Trust Fund (TAP) and Supplemental Contributory Pension (SCP) contributions by employers is awarded a further deduction of 100 per cent.
He said the new schedule would encourage SMEs to be more competitive as they would have extra capital to put back into the business, thus making them more competitive and progressive.
"Besides that the government also hopes it would result in the creation of more job opportunities for young Bruneians to further reduce unemployment rates in the country, increase the level of comfort in the workplace, attract local and foreign workers (skilled and professional) and improve training programmes, especially for Bruneians and support initiatives to expand and compete regionally and internationally," he said.
Pehin Dato Hj Abdul Rahman also mentioned that the steps taken to streamline the Income Tax Act has helped Brunei climb 12 steps in the category of 'Paying Taxes' under the 'Ease of Doing Business 2010' report released by the World Bank.
"Brunei currently ranks 22 as compared to 34 last year," he said.
The Brunei Times