Understanding Payroll in Brunei: What Global Companies Need to Know About Brunei Payroll
Oct 3, 2017
Brunei’s vibrant economy is fueled by its abundant oil and gas reserves, which produce 6.2 million tons annually and account for nearly 90% of the nation’s GDP. Such natural wealth helps Brunei provide one of the world’s highest standards of living for its 413,000 people. The per capita GDP in 2016 was Intl. $79,710, ranking the oil-rich state as the fifth richest country in the world. Besides oil and gas, Brunei also has leading companies in industries like construction, agriculture, forestry, manufacturing, and services.
Its economic buoyancy and favorable tax climate help Brunei attract foreign investment from global companies. Thousands of foreign workers from all over the world work in Brunei’s oil and gas industry. As a result, these companies face pressing concerns over compliance to meet payroll regulations for these expatriates.
Companies can set up a local business in Brunei as a sole proprietorship or a partnership by registering with Brunei’s Registrar of Companies online. Specific steps for foreign companies are outlined on the Registrar's website.
Global companies expanding their business and global payroll in Brunei must work through the state’s financial channels, namely, the Ministry of Foreign Affairs and Trade and the Brunei Economic Development Board, to establish sole proprietorships or business partnerships.
Foreign enterprises can have 100% ownership of a business’s scope and operation in Brunei, without a need for a local partner. However, for certain petroleum and government projects, it becomes necessary for a global company to establish a partnership with a local partner. In these cases, approval of such partnerships can take months.
Employment Law & Employee Rights
Employment law in Brunei includes specific protections for female and minor workers. The minimum age for working in Brunei is 16 years old, and women are prohibited from working in uncertain jobs or at night. The average workweek for male workers is six days a week, with one day of rest.
To work in Brunei, employees and employers must complete the state application and register with the supporting documents, including a valid identity card or passport for each employee, a housing lease agreement for each employee, a business office lease, a valid passport for the employer, and a supporting or approval letter from pertinent government agencies. Companies with foreign workers must follow regulations set in the Foreign Workers Recruitment License. Foreign workers can be sent home if companies are found to be in violation of these statutes.
Compensation & Severance
Brunei does not adhere to any minimum wage regulation. Employees are able to negotiate their own salary with employers directly. Employment contracts in Brunei must be in writing and in the state’s official language of Bahasa Malaysia.
Foreigners working in Brunei should be aware of the rules of Shariah law, which governs the entire state. In place since 2014, Shariah law stipulates an alcohol ban throughout the country, even for foreigners and non-Muslims. It makes space for Friday prayer time for workers and fasting throughout the month of Ramadan. Lastly, foreigners should never utter a negative word about the Sultan of Brunei.
Tax Requirements & Withholding
All companies operating in Brunei are taxed on earnings at the government rate of 18.5%. Oil and gas companies are taxed at a much higher rate of 55%. There are various taxes on non-residents for payments, royalties, and other income or holdings. For example, a 20% withholding tax on income is levied on a non-resident company director. Others are subject to a withholding tax of 15%. Real estate property is taxed 12% in one region but is tax-exempt in the rest of the nation. Overall, there are no government taxes on an employee’s personal income, capital gains, and goods and services.
Time Off & Paid Leave
Once they have worked for a company for a full year, Brunei employees receive 12 paid days of annual leave. Two extra leave days are added after five years of service. In addition, employees are entitled to 11 public holidays and five days of sick leave every year. For maternity leave, employers are obliged to give women a minimum of 91 days off with 100% compensation.
|Date||Brunei's Public Holiday Schedule|
|January 1st||New Year's Day|
|Sometime in January||Chinese New Year|
|February 23rd||National Day|
|27 Rajab||Israk Mikraj|
|1 Ramadan||Beginning of Ramadan|
|May 31st||Royal Brunei Armed Forces Day|
|17 Ramadan||Nuzul Al-Quran/revelation of the Quran|
|1 - 3 Shawwal||End of Ramadan|
|July 15th||H.S. The Sultan's Birthday|
|10 Dhu al-Hijjah||Eid al Adha|
|1 Muharram||Awal Muharram/Islamic New Year|
|12 Rabiulawal||Birthday of Prophet Muhammed|
A Profitable Prospect
Brunei’s oil-rich business structure, political environment, and dominant Muslim culture can make it a complex place to do business. Setting up employees on an international payroll solution can take enormous resources and time to get operating efficiently. To expedite this process, global companies often outsource payroll details to a global payroll management company. This added assistance makes it easier to navigate the challenges of doing global business in the state of Brunei.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.