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W E L C O M E to the Briefing On New and Amendments to Legislations Economic Development Board (Amendment) Order, 2001 Investment Incentives (Amendment)

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Presentation on theme: "W E L C O M E to the Briefing On New and Amendments to Legislations Economic Development Board (Amendment) Order, 2001 Investment Incentives (Amendment)"— Presentation transcript:

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2 W E L C O M E to the Briefing On New and Amendments to Legislations Economic Development Board (Amendment) Order, 2001 Investment Incentives (Amendment) Order, 2001 Industrial Coordination Order, 2001 Income Tax ( Amendment ) Order By Department of Economic Planning And Development Prime Minister’s Office

3 2 Economic Council’s Recommends  Strategy for Sustainable Growth Strengthening Government Finances Strengthening the Private Sector Establishing the Foundations for Sustainable Growth

4 3 Mechanisms  Reviewing, Enacting & Amending Laws and Regulations to Improve Investments Environment through:- Increasing Transparency Strengthening & Widening Institutional Support Streamlining Rules and Procedures Providing Competitive Incentives for Establishment of Promoted Industries

5 4 Legislations Enacted & Amended  Economic Development Board (Amendment) Order, 2001  Investment Incentives Order, 2001  Industrial Coordination Order, 2001  Income Tax ( Amendment ) Order 2001

6 Economic Development Board (Amendment) Order, 2001

7 6 EDB (Amendment) Order, Objectives  To Increase the Effectiveness and Further Strengthen and Widen the Role of EDB:- As an autonomous Statutory Body Agency Formulating Investment Policies Agency Promoting Inward & Outward Investments Agency Promoting All Other Economic Activities

8 7 EDB (Amendment) Order, Institutionalising Authorities  Enhancing EDB’s role through: Transferring the authority of administering the Act to the Minister of Industry & Primary Resources Empowering the Minister to give directions to the Board & for the Board to advise the Minister Allowing the Board to appoint committees and to form other agencies Empowering Employees by delegating its Functions, Duties & Power (except in certain financial matters)

9 8 EDB (Amendment) Order, Functions Enhancements  To Promote Brunei Darussalam as an Investment Destination  To Formulate Plans & Policies on Investments Incentives Market Strategies to Encourage Investments in High Tech & Skill Intensive Industries

10 9 EDB (Amendment) Order, Functions Enhancements (cont)  To Promote, Facilitate & Assist in the Development of Industrial Activity: To Encourage Upgrading of Skills & Technology Transfer to Local & Foreign Investors Through Automation, Training, R&D Activities To Support the Development of Local Entrepreneurs & SME Business Activities

11 10 EDB (Amendment) Order, Activities Enhancements  To underwrite Industrial Enterprises Issuance of: Stocks Shares Bonds Debentures

12 11 EDB (Amendment) Order, Activities Enhancements (cont)  To Develop & Manage: Sites & Parks Estates Identified Zones Other Industrial & Business Premises locally & elsewhere

13 12 EDB (Amendment) Order, Activities Enhancements (cont.)  To Foster Growth of Service Industries by Developing Appropriate Infrastructure Formulating & Implementing Appropriate Policies, Plans & Support Programs  To Offer Assistance to Facilitate the Implementation & Cooperation of Projects for New & Existing Firms

14 Investment Incentives Order, 2001 The old Investment Incentives Act (Cap 97) is being replaced (repealed) by this Order Order to be construed as one with the Income Tax Act (Cap 35)

15 14 Investment Incentives Order, Objectives  To Promote the Diversification of the Economic Activities by Providing Tax Based Incentives to Promoted Activities  Encourage investment and reinvestment activities to upgrade technology, undertake research and development, increase production capacities and expand markets coverage.

16 15 Investment Incentives Order, Institutional Authority  Transferring the authority to administer the act to the Minister of Industry & Primary Resources

17 16 FORM OF INCENTIVES Investment Incentives Order, FORM OF INCENTIVES  Relief from 30% corporate tax  Concessionary tax 100% relief of expansion income 100% relief of expansion income 100% relief of export profit Tax relief equivalent to ½ of qualified export income 100% relief of export profit Tax relief equivalent to ½ of qualified export income Corporate tax of between 29 – 10% Corporate tax of between 29 – 10% Relief from import duties on capital goods and raw materials Relief from import duties on capital goods and raw materials 100% allowance on fixed capital expenditure incurred within 5 or 11 years 100% allowance on fixed capital expenditure incurred within 5 or 11 years  Exemption from 20% withholding tax on interest remitted to overseas lenders

18 17 Investment Incentives Order, Promoted Enterprise and Companies  Pioneer Enterprise( incl. Activities in High Tech Park)  Expansion of Established Enterprises  Pioneer Service Enterprises  Expanding Service Company  Post Pioneer Company  Export Enterprise  Export Service Company  International Trading Company  Warehousing & Servicing Company

19 18 Investment Incentives Order, Promoted Activities (cont) Investment in New Technology Company Investment in Venture Company Investment in Overseas Investment Company Investments in  added capacities in manufacturing industries,  niche services,  research and development activities,  construction activities,  sound waste management practice,  tourism infrastructure

20 19 Investment Incentives Order, Pioneer Entreprise Objective:  To encourage the development of commercial scale new manufacturing and primary industries including High Tech & R & D activities Tax incentives  Corporate Tax relief of 5 to 8 years depending on fixed capital expenditure > B$500,000 <2.5 million – tax relief up to 5 years < B$2.5 million – tax relief up to 8 years  Further extension of tax relief of up to 11 years

21 20 Investment Incentives Order, Pioneer Enterprise (cont’) Incentive:  11 years Corporate Tax Relief for Activities Located in High Tech Park  Further extension of up to 20 years at the discretion of the Minister  Exemption from Custom Duties on Raw Materials & Capital Goods  Exemption from Withholding Tax on Interest Remitted to Overseas Lender

22 21 Investment Incentives Order, Pioneer Service Companies Objective:  To encourage the development of new services activities not yet established on a commercial scale in Brunei Darussalam Incentives  8 years Corporate Tax Relief  Extendible Up to 11 years  Exemption from Custom Duties on Capital Goods  Exemption from 20% Withholding Tax on Interest Remitted to Overseas Lender

23 22 Investment Incentives Order, Post Pioneer Companies Objective:  To encourage the post pioneer industries to undertake reinvestment activities Incentives  Concessionary corporate tax (maximum 10% minimum 29%) for a period of 6 years  Extension for a period not exceeding 11 years

24 23 Investment Incentives Order, Expanding enterprise Objective:  To encourage existing industries to undertake reinvestment activities and expands production Incentives  3 to 5 years Tax relief of expansion income depending on new Capital Expenditure  Extension for a period not exceeding 20 years

25 24 Investment Incentives Order, Expanding Service Companies Objective:  To encourage existing services industries to undertake reinvestment activities and expand the scale of its companies Incentives  Relief of 100% expansion income for a Period not Exceeding 11 years

26 25 Investment Incentives Order, Export enterprise Objective : To encourage the production for export Incentives:  8 to 15 years Tax Relief of 100% export profit depending on the type of industry 8 years for non-pioneer enterprise 6 years for pioneer enterprises Extendible Up to 11 years

27 26 Investment Incentives Order, Export enterprise ( cont)  15 years, if Enterprise incurred Capital Expenditure more than $50 million or Enterprise incurred Capital Expenditure not less than $500,000 provided 40% paid up capital owned by Citizens & Residents Activities promote Economic & Technological Development of Brunei  Tax Relief can be extended on terms & conditions agreed by the Minister

28 27 Investment Incentives Order, Export enterprise Conditions for relief:  Export sales shall not be less than 20% or $20,000 of total sales at the first year of assessment  The export sales for subsequent years shall not be less than $20,000  Unless otherwise stated by the Minister the tax relief will not be available if the minimum requirements of $20,000 is satisfied  The Minister may provided relief if the total value of export is more than $20,000 although less than 20% of total sales  No export product or produce shall be relanded in Brunei Darussalam without authorisation

29 28 Investment Incentives Order, Export Service Company Objective: Encourage services industries to venture into export market particularly in BIMP EAGA region Incentives:  5 years Tax Relief for qualifying income Extendable Up to 11 years Another 5 years as long as aggregate tax relief does not exceed 20 years  Exemption from Custom Duties on Capital Goods  Exemption from Withholding Tax on Interest Remitted to Overseas Lender

30 29 Investment Incentives Order, International Trading Companies Objective: Encourage the development of international trading companies exporting local goods including goods from small and medium enterprises and and entreport trade. Incentives:  8 years Corporate Tax Relief for 50% of qualifying export income

31 30 Investment Incentives Order, Warehousing & Servicing Company Objective:  To support export oriented trading activities, promote the development of specialized services for export and transshipment activities Incentives:  11 years Corporate Tax Relief  Extendible up to 20 years Condition for relief:  Company must shall not acquire any sales or service from any other person in connection with its trade or business without written approval of the Minister  Company must incur fixed capital expenditure of not less than $2 m

32 31 Investment Incentives Order, Investments in New Technology Company Objective:  Encourage holdings companies to invest in new technology companies for the purpose of introducing the technology into Brunei Darussalam Incentive:  Deduction of losses made by new technology company within qualifying period from eligible holding company income within 6 years after the qualifying period “Qualifying period” is a period of 3 years from commencement day

33 32 Investment Incentives Order, Investment in Venture & Overseas Investment Companies Objective:  Encourage holdings companies to invest in venture capital and overseas investment companies for the purpose of introducing the technology into Brunei Darussalam and developing export market Incentives  Holding company can offset against its statutory income losses:- from sale of its shares in a Venture Company,Technology Investment Company & Overseas Investment Company made within 3 to 8 years after the purchase of share from the liquidation of Venture Company, Technology Investment Company & Overseas Investment Company made within 8 years after purchase of shares

34 33 Investment Incentives Order, Investment in Venture & Overseas Investment Companies Eligibility Criteria:  Holdings companies must be resident in Brunei Darussalam  Invested not less than 60% of its shareholder fund in Brunei Darussalam  Holds not less than 30% of share in venture capital, overseas investment companies and technology investment company Incentives

35 34 Investment Incentives Order, Investment Allowances Objective:  Encouraging investments in added capacities in manufacturing industries, niche services, research and development, construction industry, recycling of waste, tourism infrastructure. Incentives:  Allowances up to 100% for fixed capital expenditures incurred within 5 years for :- –Manufacture or increased manufacture of any product –Provision for specialised engineering or technical services –R&D activities –Construction Operation –Recycling domestic & industrial waste  Allowances up to 100% for fixed capital expenditures incurred within 11 years for:- –Promotion of tourist industry

36 35 Investment Incentives Order, Relief from Import Duties For Pioneer & Export Oriented Companies:- Objective: To reduce the costs of inputs and capital goods thus enhance competitiveness of pioneer and export oriented enterprise and companies Incentives:  Exemption from Import Duties on Capital Goods incl. Prefabricated factory or building structure, Intermediate and Raw Materials

37 Industrial Coordination Order, 2001

38 37 Industrial Coordination Order, Objectives  To Provide for the Coordination & Orderly Development of Manufacturing Activities Under One Roof: To centralise the authority that will issue licenses for manufacturing activities

39 38 Industrial Coordination Order, General Content  To achieve main objective: A council to advise the Minister called “The Industrial Coordination Advisory Council” shall be established All Manufacturing Activities Outside the Jurisdiction of the Miscellaneous Licenses Act shall be licensed under this Order Licensing Officers for Licensing & Enforcing the Order shall be appointed

40 Income Tax Act (Amendment) Order, 2001

41 40 Income Tax ( Amendment ) Order, 2001 Incentives: Double Deduction on special expenditure Allows firms to submit application for eligible expenditure incurred by firms to be double and deducted from the profit and loss account submitted to Comptroller of Income Tax. Writing down allowance Allows firm to deduct a certain percentage of the cost of acquiring patent and know how net profit.

42 41 Income Tax ( Amendment ) Order, Double Deduction( Promotion of Export) Objective: To promote the extensive use of local products and assist resident firms in promoting products to overseas market particularly in non traditional markets Incentive Double Deduction for Promotion of Export (Expenses related to Approved Trade Fairs, Exhibition or Trade Missions or Maintenance of Overseas Trade Office):-  Expenses for establishing, maintaining or participating in approved overseas trade fair, exhibition or trade mission  Expenses for establishing, maintaining or participating in approved local trade fair

43 42 Income Tax ( Amendment ) Order, Double Deduction( Promotion of Export) cont Incentive:  Expenses for providing services in establishing, maintaining or participating in approved local and overseas trade fair or mission  Expenses for maintaining an approved overseas trade office

44 43 Income Tax ( Amendment ) Order, Double Deduction( Promotion of Export) cont Incentive:  Double Deduction for Promotion of Export Development Expenditure & Certain Advertising Expenses:- Export market development expenditure for carrying out an approved marketing project overseas Advertising expenses in respect of advertisements placed in any approved Brunei publications designed for publicity overseas

45 44 Income Tax ( Amendment ) Order, R&D Double Deduction Objective: To promote firms to continue undertaking the research and development activities post tax relief period to improve competitiveness Incentive:  Expenditure incurred on approved R&D project undertaken directly by a person in manufacturing trade or business or indirectly by subcontracting to a research and development company directly by a person in trade or business for the provider of specified services or indirectly through a research and development companies by to a R&D company

46 45 Income Tax ( Amendment ) Order, R&D Double Deduction Eligibility criteria: 1. Must be approved by the Minister 2. Specified services are services:- which relate to the development of computer programme Technology involved in acquiring, storing, processing or distributing information by use of computers or computers programme Technology applied to primary industries Medical research and other services activities 3. Minister will specify the amount of expenditure Conditions for approving R & D projects Period for which the deduction is to be allowed

47 46 Income Tax ( Amendment ) Order, Writing Down Allowances for approved know how of patent Objective: To assist firms in acquiring technology and knowhow needed to improve competitiveness as well as promoting research and development activities that add value to existing technology and products. Incentive: Writing down allowances of 25% of capital expenditure in acquiring any approved know how or patents rights for use in relevant trade or business

48 47 Income Tax (Amendment) Order, Writing Down Allowances for approved know how of patent Conditions:  Allowance can be written down for 4 years after the expenditure is being made  Writing down allowances within the 4 assessment years will be stopped if :- The rights expire and are not revived Rights are sold Part of the rights are sold and the net proceed are more than the expenditure remain unallowed (75% )

49 48 Thank You


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