Advantages Of Labuan

Labuan International Business and Financial Centre (“Labuan IBFC”) was established in 1990 to complement the activities of Malaysia’s domestic financial market. It is regulated by a one-stop regulator called Labuan Financial Services Authority (“Labuan FSA”).

Labuan IBFC is governed eight (8) cutting-edge legislations as follows:

  • Labuan Companies Act 1990
  • Labuan Business Activity Tax Act 1990
  • Labuan Trusts Act 1996
  • Labuan Foundations Act 2010
  • Labuan Islamic Financial Services and Securities Act 2010
  • Labuan Financial Services and Securities Act 2010
  • Labuan Financial Services Authority Act 1996
  • Labuan Limited Partnerships and Limited Liability Partnerships Act 2010

The following are some of the benefits of Labuan IBFC:

  • A Labuan entity carrying on a Labuan business activity shall be charged a tax rate of 3% a year on the net audited profits. No tax will be applied to a Labuan entity carrying on a non-trading activity (i.e. holding of investments in securities, stocks, shares, loans, deposits or any other properties).
  • No withholding taxes, stamp duty, capital gains tax, import duties, sales tax, estate or inheritance taxes and indirect taxes on a Labuan entity.
  • Foreign exchange control rules and foreign ownership limitations, which may apply in Malaysia, do not apply to a Labuan entity.
  • No tax on any dividend distributed by a Labuan company.
  • 100% exemption for director’s fees received by non-citizen directors of a Labuan company.
  • A Labuan company may apply to establish marketing offices outside Labuan in Malaysia to carry out its marketing activities without losing its Labuan business activity status.
  • Access to Malaysia’s Double Tax Agreements with over 70 countries.
  • No publicly accessible records.
  • A Labuan company may apply for a 2 year renewable work permit for its directors and top management staff including their dependents.
  • Can make an irrevocable election for its profits to be taxed under the Income Tax Act of Malaysia 1967 (“ITA”). The Labuan entity will then be subject to the provisions of the ITA for its tax matters instead of the LBATA.
  • Establish Islamic Sharia compliance financial products and services under the Labuan Islamic Financial Services and Securities Act 2010 (“LIFSSA”).