Brunei Darussalam operates a distinct tax system compared to many other nations, notably characterized by the absence of personal income tax for its residents. This means individuals earning income from employment within Brunei are not subject to income tax deductions from their salaries. However, employers in Brunei still have significant tax-related obligations, primarily centered around mandatory social security contributions for their employees.
Understanding these employer obligations, particularly regarding contributions to national schemes, is crucial for businesses operating or planning to operate in Brunei. While employees do not face income tax deductions, employers must comply with regulations concerning employee welfare and retirement savings. This framework simplifies some aspects of payroll but places specific responsibilities on the employer regarding contributions and reporting.
Employer Social Security and Payroll Tax Obligations
Employers in Brunei are required to contribute to two main national schemes for their employees: the Tabung Amanah Pekerja (TAP) and the Skim Persaraan Caruman Tambahan (SCP). These schemes are mandatory for all employees who are citizens or permanent residents of Brunei Darussalam, aged between 18 and 60. There is no separate payroll tax levied on employee income in the traditional sense, as there is no personal income tax.
Contributions to TAP and SCP are calculated based on the employee's monthly gross salary, which typically includes basic salary and fixed allowances.
The contribution rates for 2025 are expected to remain as follows:
| Scheme | Employer Contribution | Employee Contribution | Total Contribution |
|---|---|---|---|
| TAP | 5% | 5% | 10% |
| SCP | 3.5% | 3.5% | 7% |
| Total | 8.5% | 8.5% | 17% |
These contributions must be paid monthly by the employer. The employer is responsible for deducting the employee's portion from their salary and remitting the total contribution (employer + employee portions) to the respective funds.
Income Tax Withholding Requirements
As Brunei Darussalam does not impose personal income tax on its residents, employers are generally not required to withhold income tax from the salaries of resident employees. The concept of Pay As You Earn (PAYE) or similar income tax withholding systems for employees' salaries does not apply in Brunei for residents.
For non-resident individuals earning income from Brunei sources, specific tax rules may apply, though employment income for non-resident employees physically working in Brunei is typically treated similarly to residents regarding the absence of personal income tax. Corporate tax withholding rules may apply to certain payments made by companies, but this is distinct from employee income tax withholding.
Employee Tax Deductions and Allowances
Since there is no personal income tax for residents in Brunei, the concept of employee tax deductions, personal allowances, or tax reliefs against income does not exist. Employees receive their gross salary less their mandatory contributions to TAP and SCP. There are no provisions for claiming expenses, reliefs for dependents, or other common deductions found in personal income tax systems.
Tax Compliance and Reporting Deadlines
The primary tax compliance obligation for employers concerning employees revolves around the timely and accurate calculation and remittance of TAP and SCP contributions.
Employers are required to:
- Register with the TAP and SCP boards.
- Calculate the correct monthly contributions for each eligible employee based on their gross salary.
- Deduct the employee's share of contributions from their salary.
- Remit the total contributions (employer and employee shares) to the TAP and SCP boards by the stipulated deadline each month.
The deadline for submitting contributions is typically the 15th day of the following month. Late payments may incur penalties. Employers are also required to maintain proper records of employee salaries and contributions. Annual reporting requirements related to employee earnings for income tax purposes do not exist due to the absence of personal income tax.
Special Tax Considerations for Foreign Workers and Companies
Foreign workers residing in Brunei Darussalam for employment purposes are generally treated the same as residents regarding personal income tax – meaning they are not subject to personal income tax on their employment income earned in Brunei. However, eligibility for mandatory TAP and SCP contributions is typically limited to Brunei citizens and permanent residents. Therefore, employers of foreign workers who are not citizens or permanent residents are generally not required to make TAP and SCP contributions for them.
Foreign companies operating in Brunei are subject to corporate income tax on their profits derived from Brunei. The corporate tax rate is currently 18.5%. This applies to both resident and non-resident companies with a presence or source of income in Brunei. While this is a significant tax consideration for foreign businesses, it is separate from the obligations related to employee income tax or social security contributions for non-eligible foreign workers. Companies employing foreign workers must ensure compliance with immigration and labor laws, but their tax obligations related to these employees are primarily limited to the absence of personal income tax withholding and, usually, no requirement for TAP/SCP contributions.
