Tax Benefits for Real Estate Investors in Brunei

Published on October 5, 2025 and written by Cyril Jarnias

Brunei, a small sultanate nestled on the island of Borneo, is often overlooked in discussions about international real estate investment. Yet, this country offers a particularly attractive tax environment for foreign real estate investors. With its stable economy, strong currency, and advantageous tax system, Brunei deserves special attention from investors seeking unique opportunities in Southeast Asia.

In this article, we will explore in detail the tax benefits that Brunei offers to international real estate investors. We will examine the local tax system, existing international agreements, specific real estate taxes, and compare these advantages to those of other popular real estate investment destinations.

An Exceptionally Favorable Local Tax Regime

Brunei’s tax system is renowned for being one of the most advantageous in the world, making it a prime destination for international real estate investors. The country does not levy personal income tax, a characteristic that clearly distinguishes it from most other nations.

This absence of income tax also applies to rental income generated from real estate properties. Therefore, if you invest in real estate in Brunei and rent it out, you will not be taxed on the income you earn from it. This is a significant advantage compared to many other countries where rental income is subject to sometimes heavy taxation.

Furthermore, Brunei does not apply capital gains tax. This means that if you decide to sell your property and make a profit, you will not be taxed on this capital gain. This tax policy is particularly attractive for investors seeking to maximize their long-term returns.

It is important to note that this absence of income tax and capital gains tax applies not only to Brunei citizens but also to foreign residents and international investors. This is a key factor that makes Brunei so attractive to real estate investors worldwide.

However, it should be mentioned that Brunei does apply corporate tax. The standard rate is 18.5%, but there are numerous exemptions and tax incentives, particularly for companies involved in real estate development or property management. These incentives may include temporary tax exemptions or reduced tax rates, which can be especially interesting for investors considering structuring their real estate investments through a local company.

Advantageous International Agreements: The Icing on the Tax Cake

Beyond its attractive local tax regime, Brunei has also concluded several Double Taxation Avoidance (DTA) agreements with other countries. These agreements play a crucial role for international investors, as they prevent being taxed twice on the same income – once in the country where the income is generated (Brunei) and again in the investor’s country of residence.

Brunei has signed DTAs with several countries, including:

• The United Kingdom
• Japan
• Singapore
• Indonesia
• Malaysia
• China
• Oman
• Vietnam

These agreements are particularly beneficial for real estate investors from these countries. For example, a British investor who receives rental income from a property in Brunei will not be taxed on this income in the United Kingdom, thanks to the DTA in place.

It is important to note that even if your country does not have a DTA with Brunei, you can still benefit from the country’s advantageous tax regime. However, you will need to check the tax laws of your country of residence to understand how this income will be treated.

These international agreements enhance Brunei’s appeal as a real estate investment destination. They offer additional legal and tax security to foreign investors by clarifying how income generated in Brunei will be treated in their home countries.

Moreover, Brunei is a member of ASEAN (Association of Southeast Asian Nations), which can offer additional benefits to investors from the region. ASEAN has established several agreements aimed at facilitating cross-border investments among its members, which can simplify procedures for real estate investors from countries like Singapore, Malaysia, or Indonesia.

It is also interesting to note that Brunei recently signed the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement. Although this agreement mainly focuses on trade, it could have positive implications for real estate investors in terms of facilitating capital flows and strengthening regional economic stability.

Property Taxes in Brunei: A Light Burden for Property Owners

When discussing real estate investment, it is crucial to understand not only taxation on income and capital gains but also specific taxes related to real estate ownership. In Brunei, these taxes are remarkably light, contributing to making the country an attractive destination for real estate investors.

Property tax in Brunei is extremely low compared to many other countries. It is calculated based on the annual rental value of the property, with rates varying according to property type:

• For residential properties: 12% of the annual rental value
• For commercial properties: 12% of the annual rental value

It is important to note that the annual rental value is generally well below the actual property value or effective rental income. This means that even with a 12% rate, the actual amount of property tax remains very moderate.

Furthermore, there is no separate occupancy tax in Brunei, unlike many other countries where residents must pay both property tax and occupancy tax. This absence of occupancy tax represents additional savings for owner-occupiers and tenants.

Another interesting aspect of Brunei’s real estate tax system is the absence of inheritance tax on real estate properties. This means that if an investor passes away, their heirs can inherit their real estate properties without having to pay additional taxes. This characteristic makes Brunei particularly attractive for those looking to build long-term real estate wealth and pass it on to their heirs.

It should also be mentioned that Brunei does not apply real estate transaction taxes. In many countries, buying or selling real estate is subject to transfer duties or transaction taxes, which can represent significant costs. The absence of such taxes in Brunei significantly reduces entry and exit costs for real estate investors.

However, it is important to note that non-residents wishing to purchase real estate in Brunei must obtain government approval. This procedure, although it may seem restrictive, aims to protect national interests while allowing foreign investors to participate in the local real estate market.

Brunei vs. Other Tax Havens: An Enlightening Comparison

To truly appreciate Brunei’s tax appeal for real estate investors, it is helpful to compare it to other destinations renowned for their tax advantages. This comparison will highlight Brunei’s unique strengths while providing a broader perspective on options available to international investors.

Brunei vs. Singapore

Singapore is often considered one of the most attractive financial centers in Asia. However, when it comes to real estate income taxation, Brunei stands out clearly:

– Income tax: Singapore taxes rental income up to 22%, while Brunei has no income tax. – Capital gains tax: Singapore does not tax real estate capital gains, just like Brunei. – Property tax: In Singapore, it can reach 10% for residential properties not occupied by their owners, compared to a fixed rate of 12% on annual rental value in Brunei.

Brunei vs. Hong Kong

Hong Kong is another major financial center in Asia, but its tax regime for real estate is less advantageous than Brunei’s:

– Income tax: Hong Kong taxes rental income at a progressive rate of up to 17%, while Brunei has no income tax. – Capital gains tax: Hong Kong does not tax real estate capital gains, like Brunei. – Stamp duty: Hong Kong applies high stamp duties on real estate transactions (up to 15% for non-residents), while Brunei has no such taxes.

Brunei vs. Dubai (United Arab Emirates)

Dubai is often cited as a tax haven, particularly for real estate. Here’s how it compares to Brunei:

– Income tax: Like Brunei, Dubai does not tax income, including rental income. – Capital gains tax: Neither Dubai nor Brunei taxes real estate capital gains. – Property tax: Dubai applies an annual property tax of 5% of the rental value for residential properties, which is generally higher than the 12% of annual rental value in Brunei.

Brunei vs. Monaco

Monaco is renowned for its advantageous tax regime for wealthy individuals. Here’s how it compares to Brunei:

– Income tax: Like Brunei, Monaco does not tax personal income, including rental income. – Capital gains tax: Monaco does not tax real estate capital gains, just like Brunei. – Inheritance tax: Monaco applies high inheritance taxes for non-residents (up to 16%), while Brunei has no inheritance tax.

This comparison highlights Brunei’s unique tax advantages. Although other jurisdictions offer certain tax benefits, Brunei stands out for its combination of no income tax, no capital gains tax, no inheritance tax, and relatively low property taxes.

It is important to note that choosing an investment destination should not be based solely on tax advantages. Other factors such as political stability, economic growth, real estate market liquidity, and restrictions on foreign ownership must also be considered. However, from a purely tax perspective, Brunei offers an extremely attractive environment for international real estate investors.

Conclusion: Brunei, a Tax Gem for International Real Estate Investment

At the conclusion of this in-depth analysis, it clearly appears that Brunei offers an exceptionally favorable tax environment for international real estate investors. The absence of income tax, capital gains tax, and inheritance tax, combined with moderate property taxes, places Brunei among the most attractive destinations in the world for real estate investment from a tax perspective.

The double taxation avoidance agreements concluded by Brunei with several countries further enhance its appeal, offering additional tax security to international investors. Moreover, Brunei’s membership in ASEAN and its participation in RCEP open interesting prospects for regional and international investors.

However, it is important to remember that taxation should not be the only decision criterion for real estate investment. Potential investors must also consider other factors such as the country’s political and economic stability, local real estate market growth prospects, restrictions on foreign ownership, and market liquidity.

Brunei, with its stable monarchy, developing economy, and efforts to diversify its economy beyond oil and gas, offers an interesting context for real estate investment. However, Brunei’s real estate market is relatively small and less liquid than more established destinations like Singapore or Hong Kong, which can present both challenges and opportunities.

Ultimately, Brunei’s extremely favorable tax regime makes it a serious option to consider for international real estate investors seeking tax optimization. Whether for generating untaxed rental income, realizing untaxed capital gains, or building inheritable real estate wealth without inheritance taxes, Brunei offers tax advantages that are hard to match.