Labuan Financial Services Regulatory Provider

OUR FISCAL POLICY

Inland Revenue Board of Malaysia (“IRB”) being the agency responsible for the administration of tax matters
Compliant with international tax standards and practices
The income tax legislation in Labuan is the Labuan Business Activity Tax Act 1990 (“LBATA”), which has been updated in recent years to comply with the Organisation for Economic Co-operation and Development’s (“OECD”) and Inclusive Framework on Base Erosion and Proﬁt Shifting (“BEPS”)
Economic substance requirements were introduced as a pre-requisite for the preferential tax rates under the LBATA to be applied
Labuan Investment Committee was set up to conduct consultations with stakeholders on Labuan tax matters and to resolve implementation issues

Income from Labuan trading activities (as defined) taxed at 3% of net audited profits

Non-trading income (e.g., from investment holding activities) attracts no tax

Clear and prescribed substance requirements based on business activities via a gazette issued by Parliament of Malaysia

Fiscal Regime is perpetual not time bound

May irrevocably elect to be taxed at the domestic tax rate at 24%

Benefits of the many bilateral tax agreements i.e., simple tax structure (0% or 3%)

Exemption from stamp duty

Access to most of Malaysia’s 70+ double taxation agreements*

100% foreign ownership

Access to live in Malaysia

Exemption from withholding tax on dividends, interest, royalties, service fees and lease payments to non-resident