Imposing unincorporated business profit taxes

What are your thoughts on the Brunei government imposing personal income taxes on Bruneians?

Immediately, the first thoughts come to mind:

  • The new regulation would require taxes to be paid by all unincorporated businesses.
  • This includes all sole proprietorships and partnerships operating as business names.
  • Taxes would probably start low 5%, then gradually ramp up. The opposite of that - starting taxes high, would discourage start ups but encourage established businesses to incorporate to avail themselves of the lower corporate rate of tax. I think they would not do this, but just impose a flat 5% of income tax on unincorporated businesses.
  • Instant across-the-board rise in cost of living and doing business. Landlords operating as sole proprietorships would simply pass the increase in taxes on to their tenants.
  • The first thing the public would ask is … what is the cost-benefit analysis of imposing this new regulation?

Some more analysis after the break.

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