Brunei

Emerging offshore tax haven offers international business companies, limited partnerships, trusts, insurance and banking licences.

OFFSHORE-FOX.COM
with Michael Isaacson

Mention Brunei, and many will likely recall a rash of titillating stories concerning the playboy antics of one of the princes. What is less known is that Brunei -- a tiny yet oil-rich sultanate on the northern coast of Borneo -- has aspirations as an offshore financial centre.

State of Brunei, Abode of Peace (the country's official name) achieved independence in 1984, after having been a British protectorate since 1888. Today's Brunei is a fascinating mixture of polo fields and golden mosques, modern high-tech and wooden-stilt villages.

The country's vast revenues almost exclusively arise from petroleum and natural gas, and much of the state's financial activity is concerned with managing its substantial foreign investments. Brunei's population enjoys one of the highest per capita incomes in Asia.

August 2000 saw the introduction of offshore legislation in Brunei. The sultanate is Muslim and hopes to attract Muslim funds away from conventional money markets.

New laws were drafted covering international banking, insurance, offshore companies, trusts, limited partnerships and registered agents.

The Brunei International Finance Centre (BIFC) is headed up by Robert Miller who played a significant role in setting up the hugely successful insurance sector in Bermuda and later in Labuan.

"Our aim is to become a more relaxed Singapore, with a touch of Bahrain," Mr Miller told Dow Jones Newswire.

It is interesting that Brunei should choose to establish itself as a new offshore tax haven in August 2000, at the very height of the war against traditional offshore centres waged by the OECD. The move was daring and welcome at the same time.

The Brunei International Finance Centre offers the following products and services:

• International Business Companies (IBC). Brunei-registered tax-free International Business Companies may engage in any activity not prohibited under the laws of the country. Directors and shareholders may be individuals of any nationality or corporations. A resident secretary is mandatory. Although bearer shares are not permitted, registered shares may be held by nominees.
   
  Brunei companies may be established as Dedicated Cell Companies (DCC). This corporate form is commonly known as Protected Cell Company in other jurisdictions. A cell company is a single legal entity within which a number of separate cells exist for the purpose of segregating and protecting assets. Creditors are restricted in their rights only to the cell to which they have a claim.
   
• International Limited Partnerships (ILP). Consisting of one or more general partners and limited partners, an ILP may conduct any lawful business anywhere in the world but not with any resident of Brunei. At least one general partner must be a Brunei trust company, an IBC, or another ILP. General partners are liable for debts and obligations of the Limited Partnership but limited partners are not.
   
• International Trusts (IT). Brunei has modern and comprehensive trust legislation. Brunei International Trusts must be settled by non-residents, and at least one trustee must be licensed resident. Generally, only non-residents may be beneficiaries of an International Trust.
   
• International Insurance. Comprehensive legislation covers long-term insurance, general insurance, re-insurance and captive insurance business. The levels of capitalisation vary, beginning at US$ 75,000 for a captive insurance company. Management of an insurer must be approved and must have sufficient knowledge and expertise. No taxes are payable by international insurers registered in Brunei.
   
• International Banking. There are four classes of bank licence available: Full International, International Investment Banking, International Islamic Banking and Restricted International Banking Licences. Banks may be formed by registration as an International Business Company or register a branch of an established bank as a Foreign International Company. International banks pay no tax.