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Imagine a Country with 0% Income Tax and Subsidized Fuel—Well, It Exists in Southeast Asia

Imagine a Country with 0% Income Tax and Subsidized Fuel—Well, It Exists in Southeast Asia
Credit: Steve Buissinne/Pixabay

Imagine a Southeast Asian country where your income isn’t taxed at all. No income tax, no sales tax, and not even capital gains tax.

Welcome to Brunei Darussalam, an oil-rich nation known for its ultra-minimalist tax system and world-class public services.

Corporate Tax: The Government’s Main Focus

Brunei’s only major tax is corporate income tax. The standard corporate tax rate is 18.5%—one of the lowest in Southeast Asia. However, companies in the oil and gas sector are subject to a special 55% rate under the Income Tax (Petroleum) Act of 1963.

0% Personal Income Tax

In Brunei, individuals pay zero personal income tax—this applies to both citizens and foreign workers.

Instead, all employed citizens and permanent residents are required to contribute 5% of their monthly salary to the Employees Trust Fund (TAP), plus an additional 3.5% to the Supplemental Contributory Pension (SCP)—both part of the country’s national social security scheme.

Moreover, Brunei imposes no taxes on sales, exports, salaries, manufacturing, or capital gains. Property tax is only applied to commercial properties.

Withholding Tax Policy

Brunei does not impose withholding tax on dividends, interest, royalties, or technical services from domestic companies.

However, non-resident companies are subject to withholding tax: 2.5% on interest, and 10% on royalties and technical services.

Free Public Services and Generous Subsidies

Despite its light tax regime, Brunei ensures its citizens have full access to public services. The government provides free education and healthcare, and heavily subsidizes essential goods like rice, sugar, electricity, water, and fuel.

With a modern infrastructure, efficient transportation system, and high political stability, Brunei maintains consistent public spending, supported by strong revenue from oil and gas exports. As of March 2025, the country has a population of around 455,000, according to the Ministry of Finance and Economy Brunei.

A Magnet for Investors

Thanks to low corporate taxes and various incentives—including import duty exemptions and Pioneer Status (which offers up to 20 years of tax exemption)—Brunei is an attractive destination for foreign investors looking to establish businesses without a burdensome tax system.

The government even offers a 1% export tax option and withholding tax exemptions on foreign loan interest for qualifying productive investments.

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