INGENIEUR
Guide to Labuan International Business and Financial Centre
By Labuan IBFC Incorporation Sdn Bhd
FINANCE
The Labuan International Business and Financial Centre ( Labuan IBFC ) was established 30 years ago to complement :
● The activities of the domestic financial market in Kuala Lumpur ; and
● The development of economic activities in Labuan , a federal territory in Malaysia .
The jurisdiction presents a comprehensive mid-shore solution striking the ideal balance between client confidentiality and compliance with international best standards and practices . Its business-friendly environment , anchored by a simple and attractive tax system , is well-supported by a robust , modern and internationally-recognised legal framework enforced by its regulator , Labuan Financial Services Authority ( Labuan FSA ).
Labuan IBFC boasts a wide range of business and investment structures facilitating crossborder transactions , business dealings and wealth management needs . These unique qualities offer sound options for regional businesses going global or global businesses looking at penetrating Asia ’ s burgeoning markets . The Labuan FSA is the one-stop regulator for the jurisdiction while its wholly-owned subsidiary , Labuan IBFC Inc Sdn Bhd , promotes and markets Labuan IBFC as the preferred international business and financial centre in Asia Pacific .
Labuan IBFC offers a wide range of structures and solutions , as illustrated in Figure 1 .
The offerings within a Conventional or Islamic framework are :
● Company Incorporations
● Fund Management
● Insurance ( Insurance , Reinsurance , Captive , Takaful , and Retakaful )
● Private Wealth Management
LABUAN LEGISLATION
Four Acts were enacted in 2010 by the Malaysian Parliament and comprehensive amendments were made to four existing Acts during the same year .
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As a result , Labuan IBFC is now governed by the following legislations :
● Labuan Companies Act 1990
● Labuan Business Activity Tax Act 1990
● Labuan Trusts Act 1996
● Labuan Foundations Act 2010
● Labuan Limited Partnerships and Limited Liability Partnerships Act 2010
● Labuan Financial Services and Securities Act 2010
● Labuan Islamic Financial Services and Securities Act 2010
● Labuan Financial Services Authority Act 1996
LABUAN TAX FRAMEWORK
The tax laws relating to Labuan entities are set out in the Labuan Business Activity Tax Act 1990 ( LBATA ). According to Section 4 ( 1 ) of LBATA , tax shall be charged at a rate of 3 % a year on the net audited profits of a Labuan entity carrying on a trading activity .
In the instance of a Labuan entity carrying on a non-trading activity , no tax will be applied for that assessment year . A Labuan non-trading activity is defined as activity relating to the holding of investments in securities , stocks , shares , loans , deposits or any other properties situated in Labuan and held by a Labuan entity on its own behalf while a Labuan trading activity includes banking , insurance , trading , management , licensing , shipping operations or any other activity .
The concessionary tax treatment offered by LBATA is also complemented by Statutory Orders exempting Labuan companies from taxation , withholding taxes and stamp duty as well as partial exemption from salary taxes in certain cases .
Foreign exchange control rules , foreign ownership limitations , capital gains tax , estate or inheritance taxes and indirect taxes which may apply in Malaysia , do not apply to Labuan companies or structures .