Labuan Financial Services / Labuan Banking
Labuan Banking
All Banking entities set up in Labuan IBFC are governed and regulated under the Labuan Financial Services and Securities Act 2010, Part VI, specifically under the provisions stated in Sections 87 to 100.
All Labuan registered banks are deemed Labuan Trading Companies, as defined in Sections 2 of the Labuan Business Activity Tax Act 1990, and its tax rate at 3% of audited net profits with fulfilled substance requirement.
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Key Advantages
- NO withholding tax on payments of dividend or interest made to non-Resident.
- NO stamp duty on all instruments relating to offshore business activities including share transfer
- NO import duty/ sales tax
- NO foreign exchange controls
- NO capital gain tax / inheritance tax
- Double Tax Agreements between Malaysia and over 70 countries
- 100% exemption for director’s fees received by non-citizen directors of Labuan companies
Labuan Bank and Labuan Investment Bank
Comparison between Labuan Bank (full-fledged bank) and Labuan Investment Bank
Labuan Bank (Full-Fledged Bank)
Labuan banking business is the business of,
- The business of receiving deposits on current account, deposit account, savings account or any other account as may be specified by the Authority,
- Labuan investment banking business,
- Labuan financial business,
- Building credit business
- Credit token business
- Development finance business
- Leasing business
- Factoring business
- Money-broking business
- Labuan Islamic financial business
- Labuan Islamic banking business,
- Labuan Islamic banking business,
- Such other business as the Authority, with the approval of the Minister may specify.
Note
Deposits are permitted, no cash receipt or withdraw over the counter.
Labuan Investment Bank
Labuan investment banking is defined as the business of,
- Providing credit facilities,
- Providing consultancy, advisory services relating to corporate and investment matters including dealings in securities or making and managing investments on behalf of any person,
- Business of undertaking foreign exchange transactions, interest rate swaps, dealings in derivative instruments or derivative financial instruments, or
- Any other similar risk management activities,
- Labuan Islamic investment banking business, Labuan financial business, or
- Such other business as Labuan FSA may specify, with the approval of the Minister of Finance.
Note
Labuan investment banks are not allowed to accept deposit.
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FAQ
One share in any denomination in foreign currency except Malaysia Ringgit
Approximately 7-14 business days upon complete collection of the required documents
The director and the shareholder must be at least one person and can be the same person. It
can be fully owned by a foreigner.
A resident secretary is required.
• Trading company – please see attachment “LFSA – Code 20” for allowed activities under trading company.
• Non-trading company/investment holding – income mainly from dividend or interest.
*Kindly take note that the tax for general trading or import/export services is ranging from 15% – 24% under Malaysia Income Tax Act 1967.
• Trading company companies are taxed under Malaysia Income Tax Act 1967, which the tax ranging from 15%-24% of its profit except for Labuan licensed company. (Audit required)
• Tax for Labuan licensed company and business nature under “Code 20” is 3% of its audited net profit with fulfilled its substance requirements. (Audit required)
• Investment holding companies are not subjected to tax (0% tax) with the submission of yearly management account and fulfilled substance requirement.
No.
• CTC of Passport
• CTC of Proof of address (such as the most recent utility bill, internet bill, insurance statement, etc)
*CTC – Certified True Copies: Certification of documents must be made by competent persons such as a notary public, solicitor, chartered secretary, or certified public accountant,
and made in accordance with the law in Malaysia or in the country where the certification was made.