Harmful Tax Practices – 2017 Peer Review Reports on the Exchange of Information on Tax Rulings

Brunei Darussalam

Brunei Darussalam’s implementation of the transparency framework is still in the early stages of development. Brunei Darussalam introduced legislation in February 2017 that allows the Collector of Income Tax to issue taxpayer-specific tax rulings. However, for the year in review, no rulings have been issued by Brunei Darussalam under this new framework, and no rulings requests have been received by Brunei Darussalam.

Brunei Darussalam has met all the terms of reference (ToR) for the calendar year 2017 (year in review) that can be met in the absence of rulings being issued in practice.

Brunei Darussalam can legally issue five types of rulings within the scope of the transparency framework. In practice, Brunei Darussalam has not issued any rulings within the scope of the transparency framework.

As no rulings were issued, no exchange of information was required. Therefore no peer input was received in respect of the exchanges of information on rulings received from Brunei Darussalam.

Introduction

156.  This peer review covers Brunei Darussalam’s implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.

A. The information gathering process

157.  Brunei Darussalam can legally issue the following types of ruling within the scope of the transparency framework: (i) rulings related to preferential regimes;1 (ii) cross-border unilateral advance pricing arrangements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (iii) cross-border rulings giving a unilateral downward adjustment; (iv) permanent establishment rulings; and (v) related party conduit rulings. Rulings are issued by the Revenue Division in the Ministry of Finance with the approval of the Collector of Income Tax.

Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)

158.  For Brunei Darussalam, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2015 but before 1 April 2017; or (ii) on or after 1 January 2012 but before 1 January 2015, provided they were still in effect as at 1 January 2015.

159.  Brunei Darussalam introduced legislation in February 2017 that allows the Collector of Income Tax to issue taxpayer-specific tax rulings. Prior to February 2017, Brunei Darussalam did not have a framework by which to issue tax rulings. For the year in review, no rulings have been issued by Brunei Darussalam under this new framework, and no rulings requests have been received by Brunei Darussalam.

160.  Brunei Darussalam has not issued any rulings during the past rulings period. As no rulings were issued, it was not relevant to identify any exchange jurisdictions for past rulings.

Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)

161.  For Brunei Darussalam, future rulings are any tax rulings within scope that are issued on or after 1 September 2017.

162.  No rulings were issued by Brunei Darussalam during the future rulings period in the year of review. However, Brunei Darussalam indicates that there are processes in place for the issuance and physical record keeping of rulings.

163.  The International Unit under the Revenue Division in the Ministry of Finance is tasked to review and establish whether any rulings issued fall in scope of the transparency framework. Currently, all rulings issued are manually reviewed to establish whether it is in scope of the transparency framework. Although in practice Brunei Darussalam did not issue any future rulings during the year in review, Brunei Darussalam has indicated that potential exchange jurisdictions will be identified in the future via the following process. Information on relevant exchange jurisdiction will be sought from the taxpayer during the ruling application process, prior to the issuance of the ruling. The Revenue Division will also review taxpayer files and consult the Registrar of Companies and Business Names where necessary.

Review and supervision mechanism (ToR I.4.3)

164.  The accuracy of the information gathering process and the identification of rulings in scope of the transparency framework is supervised by the senior management within the Revenue Division.

Conclusion on section A

165.  Brunei Darussalam has met all of the ToR for the information gathering process and no recommendations are made.

B. The exchange of information

Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)

166.  Brunei Darussalam has the necessary domestic legal basis to exchange information spontaneously. Brunei Darussalam notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

167.  Brunei Darussalam is a party to international agreements permitting spontaneous exchange of information, including (i) double tax agreements in force with 16 jurisdictions.2 Brunei Darussalam signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”) on 12 September 2017 and is currently in the process of ratifying the Convention. Once the Convention is ratified and enters into force, the spontaneous exchange of information can also be made with all the jurisdictions that are covered by the Convention.

Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)

168.  Brunei Darussalam notes that the Revenue Division in the Ministry of Finance will be responsible for the completion and quality check of the information required in the template contained in Annex C of the Action 5 Report (OECD, 2015). This would include providing a detailed summary of the ruling following the instructions in Annex C. Brunei Darussalam is also considering using the OECD XML Schema in the future.

169.  The Revenue Division in the Ministry of Finance is the Competent Authority in Brunei Darussalam responsible for the identification, analysis and exchange of information on rulings. As the Revenue Division in the Ministry of Finance is also responsible for the issuance of rulings, all tax rulings will be readily available to the Competent Authority and no delays are expected.

170.  As Brunei Darussalam did not issue any past or future rulings in scope of the transparency framework in the relevant periods, Brunei Darussalam was not required to exchange any information on rulings in the year in review and no data on the timeliness of exchanges can be reported.

Conclusion on section B

171.  Brunei Darussalam has the necessary legal basis to undertake spontaneous exchange of information. Brunei Darussalam has met all of the ToR for the exchange of information process that can be met in the absence of rulings being issued and exchanged in practice and no recommendations are made.

C. Statistics (ToR IV)

172.  As no information on rulings was exchanged for the year in review, no statistical data can be reported.

D. Matters related to intellectual property regimes (ToR I.4.1.3)

173.  Brunei Darussalam does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015) were imposed.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
	No recommendations are made.

References

OECD (2017), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.

OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. https://doi.org/10.1787/9789264241190-en.

OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264115606-en.

Notes

← 1.  Investment Incentive Order.

← 2.  Double tax agreements with Bahrain, China (People’s Republic of), Indonesia, Japan, Kuwait, Lao People’s Democratic Republic, Luxembourg, Malaysia, Oman, Pakistan, Qatar, Singapore, Korea, United Arab Emirates, United Kingdom and Viet Nam.