Trusts are a way of looking after assets (money, investments, land or buildings) for its beneficiaries and it is a legal arrangement where one or more trustees are made legally responsible for holding such assets. In this situation, the trust is set up by the settlor who is the person who entrusts the said property to a trustee, and the terms of the trust is set out in a trust deed, which details the parameters of the trust.
The Labuan Trust Act 1996 governs trusts on Labuan IBFC. A Labuan Trust is considered an investment holding vehicle and by definition conducts only investment holding activities as defined in Section 2 of the Labuan Business Activity Tax Act 1990; Section 9 of the same Act further provides that all Labuan Non Trading Companies including investment holding companies, such as Trusts will not be subject to tax.
The Labuan Trusts Act 1996 provides for various types of trusts to be established including but not limited to:
- Purpose trusts
- Discretionary trusts
- Educational trusts
- Interest in Possession trusts
- Parental Trusts for children
- Maintenance trusts
- Trusts for vulnerable people
- Heritage trusts
- Charitable trusts which includes the unique provisions for "advancement of human rights and fundamental freedom"
- Spendthrift or protective trusts
- Labuan special trusts
In addition, the Act also specifically provides that there is no requirement to register any Trust with Labuan FSA
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