Automatic Exchange of Information
Brunei Darussalam is a member of Global Forum on Transparency and Exchange of Information since 2010. Brunei Darussalam is committed to implement automatic exchange of financial account information in tax matters (AEOI) starting 2018 onwards.
AEOI is a process for exchange of information (developed by Organisation for Economic Cooperation and Development (OECD)) which requires a country to obtain financial information (such as depository account, custodial account and equity interest) from their financial institutions and exchange that financial information automatically on annual basis to treaty partners. The objective of AEOI is to detect and deter any tax evasion by taxpayers through the use of offshore bank accounts.
The standard adopted for the implementation of AEOI is known as Common Reporting Standard (CRS) in which it includes the rules and procedures for AEOI and the types of reportable person, reportable account and financial information required to be reported by the financial institutions. The CRS sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as the customer due diligence procedures to be follwed by the abovementioned financial institutions. Financial institutions in Brunei Darussalam are required to collect and report to the Collector of Income Tax Act the abovementioned financial account information starting from 1 January 2017.
Financial institutions are required to collect information from 1st January to 31st December every year and report it to the Competent Authority in the subsequent years. In the case of Brunei Darussalam, financial institutions are required to start collecting financial information starting the year 2017 and report it (including nil returns if applicable) to the Collector of Income Tax no later than 30th June every year.
More than 100 jurisdictions have endorsed CRS and have committed to start implementation of AEOI in either 2017 or 2018. Brunei Darussalam has committed to implement AEOI CRS, with the first exchange to take place by September 2018.
For more detail regarding the CRS please click OECD's website links as follows:
AEOI CRS Legislations in Brunei Darussalam
Legislation that governed the AEOI CRS in Brunei Darussalam enforced on 29th June 2017 are as follows:
Brunei Darussalam has adopted the "wider approach" which requires reporting financial institutions in Brunei Darussalam to collect and retain the CRS information for all account holders and where the account holder is a Passive Non-Financial Entity ("NFE"), the controlling persons of the Passive NFE in the case of new accounts. Reporting financial institutions in Brunei Darussalam for CRS purposes are required to only transmit financial account information relating to tax residents of Brunei Darussalam's relevant tax treaty partners from 2018 to the Collector of Income Tax. Brunei Darussalam will then subsequently exchange the reported information with its relevant tax treaty partners.
List of Participating Jurisdictions
In accordance to the CRS, an account of a professionally managed Investment Entity that is not a Participating Jurisdiction Financial Institution and maintained by a Reporting Financial Institution in Brunei Darussalam is treated as a Passive NFE. Reporting Financial Institution in Brunei Darussalam is required to apply the "look through" to identify the Controlling Persons and report (if any) each reportable controlling person.
In line with the approach outlined in paragraph 31 of the CRS Implementation Handbook, Brunei Darussalam considers all jurisdictions that have publicly and at government level committed to adopt the CRS to be Participating Jurisdictions. You may click here to refer to the above mentioned document.
AEOI CRS Guidance
You may rely to the following materials for interpretive guidance.
A financial institution that is or becomes a reporting financial institution in Brunei Darussalam at any time between 1st January 2017 and 31st December 2017 must apply for CRS Registration by 3st May 2018. Any financial institution that becomes a reporting financial institution after 31st December 2017 must apply for CRS Registration by 31st May of the year following the year in which the financial institution becomes a reporting financial institution.
Application to register should contain the following particulars:
- The name of the reporting financial institution;
- Whether the reporting financial institution is a custodial institution, depository institution, investment entity or specific insurance company, or is two or more of these; and
- The full name, address, designation and contact information of an individual authorized by the reporting financial institution to be the point of contact of the institution for the purposes of the CRS Regulations.
A self-certification form is a certification form filled by Account Holder which provide the Account Holder's status and other information requested by reporting financial institutions in Brunei Darussalam to fulfil its AEOI CRS reporting and due diligence obligations, such as whether the Account Holder is resident for tax purposes in a Reportable Jurisdiction. The domestic laws of various jurisdiction have lay down conditions under which an individual or an entity is to be treated as tax resident. OECD has provided information on Tax Identification Number (TINs) and tax residency rules applicable in jurisdictions that are committed to automatically exchange information to help both account holders and financial institutions to comply their CRS obligation which are as follows:
Brunei Darussalam does not issue TIN for Individuals and Entities. However in the absence of TIN, functional equivalent for Individuals and Entities can be used to identify the Account holders. You can visit Details on Brunei TINs and its functional equivalent on the link below.
Quick access to Brunei Darussalam's Tax Identification number and its functional equivalent
You may click here (http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-identification-numbers/Brunei-darussalam-TIN%20.pdf) to refer to the above mentioned document.