High-net-worth individuals (HNWIs) or families and those involved in wealth management in search of a safe refuge can expect a warm welcome at Labuan International Business and Financial Centre (Labuan IBFC), especially now with the new and amended laws, enacted earlier in 2010.
The range of business entities permitted in the jurisdiction has been expanded to meet the changing needs of modern business and wealthy individuals. Depending on the objective, an investor can now structure a protected cell company (PCC), a limited partnership or limited liability partnership, a private trust company or a foundation. These options were previously not available in Labuan IBFC but the jurisdiction has now moved forward to broaden the opportunities.
For those contemplating investing in the domicile but uncertain as to the tax obligations their proposed business structure would attract, the new provisions provide certainty and clarity.
Once a structure has been planned by a prospective client and their professional advisers, it may be submitted to the Malaysian Inland Revenue Board for an advance tax ruling. This avenue is provided for under the revised Labuan Business Activity Tax Act 1990 (LBATA) as part of Labuan IBFCs move to deliver greater certainty and clarity to investors.
The good news does not end there. With four new laws and radical amendments to four existing Acts governing the jurisdiction, there are significant opportunities waiting for those intrepid enough to seek them out.
The new Acts are the Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA); Labuan Financial Services and Securities Act 2010 (LFSSA); Labuan Foundations Act 2010 (LFA); and the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010 (LLPLLPA). Those Acts radically amended are the Labuan Companies Act 1990 (LCA); Labuan Business Activity Tax Act 1990 (LBATA); Labuan Financial Services Authority Act 1996 (LFSAA), which renames the regulator, formerly known as Labuan Offshore Financial Services Authority); and the Labuan Trusts Act 1996 (LTA).
This article is confined to highlights of those Acts relating to wealth management, the amended LTA 1996 and the new LFA 2010.
Labuan Trusts Act - as modern as can be
Because the times "they are a-changing", Labuan has amended the LTA 1996 to enhance the jurisdiction's appeal.
An instance of this modernisation is the retention of day-to-day control over the direction and management of investments and...