Labuan International Business Financial Centre – The Midshore Jurisdiction

Author:Labuan IBFC Inc.
Profession:Labuan IBFC Inc

Labuan is a financial centre located in Malaysia. The following article discusses its role and features, including tax and trusts regimes.

  1. Introduction

    Labuan is a midshore jurisdiction. It possesses a robust regulatory framework and the flexibility and competitiveness of an international financial centre. The jurisdiction provides a wide range of business and investment structures for cross-border transactions, international business dealings and wealth management demands. The Labuan Financial Services Authority (Labuan FSA) regulates its financial services industry.

  2. Labuan as an Asian business hub

    Labuan, located in East Malaysia, lies in the heart of the Asia Pacific region and shares a common timezone with major Asian cities. Malaysia is a member of ASEAN. As such, Labuan provides a convenient business environment for companies looking to expand into Asia. This includes the advantages of extensive trade links that Malaysia has with other ASEAN member countries and beyond. Furthermore, the business language of Labuan is English.

  3. Exchange controls

    Unlike the rest of Malaysia, Labuan has no exchange controls. As such, all transactions can be carried out in foreign currencies through Labuan's efficient banking system. Labuan entities are not permitted to conduct business in Malaysian Ringgit (MYR).

  4. Principal legal structures

    One of the key advantages of Labuan as a jurisdiction is its strong legal system, based on English common law. Labuan's legal framework empowers the Labuan FSA to administer, license and provide for the setting up of all Labuan entities participating in the international business and financial centre. The jurisdiction's tax provisions are contained within the Labuan Business Activity Tax Act 1990 (LBAT').

  5. Company law framework

    In Labuan, 100% foreign ownership is permitted. A company can be formed by one or more shareholders, which can be corporate entities or individuals, of any nationality or residency. The company may have one or more directors appointed (either natural or corporate persons) and there are no requirements as to their nationality or residency.

    All Labuan companies must employ a Labuan trust company providing the registered address and resident secretary service. Companies must also keep their books and records at their registered office.

  6. Tax framework

    Labuan has a simple tax framework that covers Labuan business activity carried on by a Labuan entity in, from or through Labuan. Tax is charged at a rate of 3% for a year of assessment on the net audited profits of a Labuan entity carrying on a Labuan business...

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