Labuan IBFC: Tropical Paradise in the South China Sea.
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Transcript of Labuan IBFC: Tropical Paradise in the South China Sea.
Labuan IBFC:
Tropical Paradise in the South China Sea
WHERE IS LABUAN?WHERE IS LABUAN?1
6087 453 858 [email protected] www.ectrustco.com
WHO ARE WE?WHO ARE WE?
6087 453 858 [email protected] www.ectrustco.com
EC Trust (Labuan) Bhd Incorporated under Labuan Companies Act, 1990 on 3rd March 2003
Licensed Trust Company under Labuan Financial Services and Securities Act 2010
Providing professional services:1.Incorporation services and formation of Labuan entities
2. In-house customised support services –
a) Corporate secretarial services
b) Trusts, holding of shares on trust
c) Bank account
d) Legal advice
e) Accounting
f) Custodial services
2
WHO ARE WE?WHO ARE WE?
6087 453 858 [email protected] www.ectrustco.com
PETER SEARLE B.A. LLB (Hons), LLMManaging DirectorQualifications:• Honours degree in Law, including International Law - Australian National University, 1979 • Admitted as a Solicitor and Barrister - Supreme Court of Victoria in 1982•completed a Masters of Law in Taxation at Monash University in 1985
Tax and trust law specialist for over 33 years:
1977 - 1980 Australian Taxation Office Canberra
1982 - 1985 Senior Taxation Manager, Coopers and Lybrand
1986 - 2002 Australian barrister
2002 - Managing Director and Trust Officer, EC Trust (Labuan)
3
WHO ARE WE?WHO ARE WE?
6087 453 858 [email protected] www.ectrustco.com
MARINA MALIM BLS (Hons)Director
Qualifications:• Degree of Legal Studies (Hons) - University Teknologi MARA (UiTM) • Pursuing her Institute of Chartered Secretaries and Administrator (ICSA) certificate from MAICSA
Experience:
• 2009- present. Director and Trust Officer of EC Trust (Labuan) Bhd
• Specialising in legal and compliance issues, Labuan company formation and
incorporation, licensing, tax planning and secretarial matters under the Labuan laws
4
LEGAL FRAMEWORK LEGAL FRAMEWORK
6087 453 858 [email protected] www.ectrustco.com
7
Modern company concepts
English common law tradition with
modern legislation
Make offers or invitations to 50 persons (without Authority’s approval)Restructure or reduce capital (without court
approval)
Purchase or finance acquisition of own shares
Carry on business with residents
Operate private fund (by notification)
Dissolve without court approval and appointment of liquidator
Company record not open to public inspection
Issue no par value shares or fractions of shares
Stability, certainty, reliability and protection
• Labuan is part of Malaysia and therefore, qualifies for double taxation relief where Malaysia is contracting party to a specific DTA.
• Companies that wish to invest in countries where a DTA does not exist between both countries, can establish a Labuan intermediary company with the benefit of Malaysian treaties.
• Malaysia has 70 DTAs.
DOUBLE TAX AGREEMENTS DOUBLE TAX AGREEMENTS
6087 453 858 [email protected] www.ectrustco.com
9
10 MALAYSIA : 70 DOUBLE TAX AGREEMENTS
Labuan company is regarded as non-resident for exchange control purposes.
Labuan company is generally not subject to any exchange control requirements.
EXCHANGE CONTROL EXCHANGE CONTROL
6087 453 858 [email protected] www.ectrustco.com
11
TAX BENEFITSTAX BENEFITS
6087 453 858 [email protected] www.ectrustco.com
Labuan Company
Labuan Company
Other ActivitiesOther Activities
Labuan Business Activity
Labuan Business Activity
TradingTrading
Non-TradingNon-Trading
Income Tax Act 1967
Income Tax Act 1967
LBATA 19903% or
MYR20,000
LBATA 19903% or
MYR20,000
Not taxableNot taxable
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“Labuan trading activity” includes banking, insurance, trading, management, licensing, shipping operations or
any other activity which is not a Labuan non-trading activity
(Section 2 of Labuan Business Activity Tax Act 1990)
________________________________________________________
Tax charged at the rate of 3% based on the net profits reflected in the audited accounts.
or upon election i.e. Labuan Company may choose to pay a fixed sum of
MYR 20,000.
LABUAN TRADING ACTIVITIES LABUAN TRADING ACTIVITIES
6087 453 858 [email protected] www.ectrustco.com
13
“Labuan non-trading activity” means an activity relating to the holding of investments in securities, stock,
shares, loans, deposits or any other properties by a Labuan entity on its own behalf;
________________________________________________________
Gains from Labuan non-trading activities which include receipt of dividends, sale of investments and interest income from Labuan
non-trading activities are not subject to tax
in Malaysia.
LABUAN NON-TRADING ACTIVITIES LABUAN NON-TRADING ACTIVITIES
6087 453 858 [email protected] www.ectrustco.com
14
The chargeable profits of Labuan entity carrying on
Labuan trading activity will be taken from net profits as reflected in the audited accounts.
No audited accounts need to be submitted with tax return if elect to pay MYR 20,000.
TAX REQUIREMENTS TAX REQUIREMENTS
6087 453 858 [email protected] www.ectrustco.com
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TAX BENEFITSTAX BENEFITS
6087 453 858 [email protected] www.ectrustco.com
Other Tax Benefits
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No witholding
taxes
Personal tax
exemption
No indirect taxes
Exempt from stamp
duty
Tax free dividends
No Indirect Taxes
No indirect taxes such as sales taxes,
service taxes, excise / import duties
and export duties levied on Labuan companies
since Labuan enjoys free port status
TAX BENEFITS TAX BENEFITS
6087 453 858 [email protected] www.ectrustco.com
17
No Withholding Taxes
Royalties, interest and technical or management fees paid by Labuan company to non – resident person or Labuan
Company are exempted from income tax and thus not subjected to withholding tax (“WHT”).
TAX BENEFITS TAX BENEFITS
6087 453 858 [email protected] www.ectrustco.com
18
Exempt from Stamp Duty
Labuan companies qualify for stamp duty exemption on:
Instruments executed by Labuan company in connection with Labuan business activity.
Memorandum & Articles of Association of Labuan company.
Instruments of transfer of shares in a Labuan company.
TAX BENEFITS TAX BENEFITS
6087 453 858 [email protected] www.ectrustco.com
19
Personal Tax Exemption for Expatriates of Labuan Company
100% exemption on director fees
received by a non-citizen director
50% tax exemption on gross employment income
of a non Malaysian Resident working in a
managerial capacity in a Labuan financial institution
TAX BENEFITS TAX BENEFITS
6087 453 858 [email protected] www.ectrustco.com
20
Tax Rebate for Malaysians
50% tax exemption
on Labuan allowances and housing allowances
of Malaysian citizens working in a
Labuan financial institution
TAX BENEFITS TAX BENEFITS
6087 453 858 [email protected] www.ectrustco.com
21
Tax Planning Opportunities
outbound investment / international trading
international investment
leasing activities
holding Investment Company
WHY CHOOSE LABUAN ENTITIESWHY CHOOSE LABUAN ENTITIES
6087 453 858 [email protected] www.ectrustco.com
23
A hub for
A Hub for Investments and International Trading
6087 453 858 [email protected] www.ectrustco.com
Malaysian Co.Malaysian Co. Labuan Co. (LC)Labuan Co. (LC)
ChinaChina
ThailandThailand
SingaporeSingapore
IndiaIndia
24 WHY CHOOSE LABUAN ENTITIESWHY CHOOSE LABUAN ENTITIES
A Hub for International Trading and Investments
Dividend income from the Labuan Company
– Dividend income received from the Labuan Company is tax exempt in Malaysia and world-wide under the participation exemption.
– Dividend income received is available for an exempt distribution in Malaysia.
6087 453 858 [email protected] www.ectrustco.com
25 WHY CHOOSE LABUAN ENTITIESWHY CHOOSE LABUAN ENTITIES
A Hub for Investments and International Trading
Dividend income received is available for exemption as follows:-
6087 453 858 [email protected] www.ectrustco.com
ShareholdersShareholders
Labuan Co.Labuan Co.
Malaysian Co.Malaysian Co.
Exempt dividend
Exempt dividend
26 WHY CHOOSE LABUAN ENTITIESWHY CHOOSE LABUAN ENTITIES
A Hub for International Investment
Labuan entities may be used to penetrate into
Asian market
6087 453 858 [email protected] www.ectrustco.com
Foreign Co.Foreign Co. Labuan Co. (LC)Labuan Co. (LC)ThailandThailand
SingaporeSingapore
VietnamVietnam
CambodiaCambodia
27 WHY CHOOSE LABUAN ENTITIESWHY CHOOSE LABUAN ENTITIES
A Hub for Leasing Activities
Leasing business means:
Business of letting or sub-letting property on hire for the purpose of the use of such property by the hirer regardless whether the letting is with or
without an option to purchase the property, including charters of ships,
“property” includes any plant, machinery, equipment or other chattel attached or to be attached to the earth
“charters of ships” means bareboat charters only and does not include the transportation of passengers or cargo by sea or the charter of ships on a voyage or time charter
6087 453 858 [email protected] www.ectrustco.com
28 WHY CHOOSE LABUAN ENTITIESWHY CHOOSE LABUAN ENTITIES
Flow Chart
6087 453 858 [email protected] www.ectrustco.com
29 WHY CHOOSE LABUAN ENTITIESWHY CHOOSE LABUAN ENTITIES
An annual license fee of MYR 40,000 is payable
plus MYR 20,000 for each subsequent transaction
conducted with Malaysian residents.
Labuan leasing companies providing lease facilities to non-
residents or conducting “out-out” transactions are
not required to pay annual fees or the subsequent
transaction fees.
6087 453 858 [email protected] www.ectrustco.com
30 WHY CHOOSE LABUAN ENTITIES?WHY CHOOSE LABUAN ENTITIES?
Patent, Royalty and Copyright HoldingIntellectual property including
– computer software, – technical knowledge, – patents, – trademarks and – copyrights,
can be owned by, or assigned to, a Labuan company.
The rights can be franchised to companies around the world and the resultant income may be accumulated in Labuan or distributed by the Labuan company free of withholding tax and received tax free under the participation exemption.
6087 453 858 [email protected] www.ectrustco.com
31 WHY CHOOSE LABUAN ENTITIES?WHY CHOOSE LABUAN ENTITIES?
Labuan IBFC: New Regulatory Updates
32
New Legislation
Labuan Companies
Act 1990
Labuan Business
Activity Tax Act
1990
Labuan Financial Services
Authority Act 1996
Labuan Trusts Act
1996
Labuan Financial
Services and Securities Act
2010
Labuan Islamic
Financial Services and Securities Act
2010
Labuan Foundations
Act 2010
Labuan Limited
Partnerships And Limited
Liability Partnership
Act 2010
6087 453 858 [email protected] www.ectrustco.com
33
Modern company concepts
Restructure or reduce capital (without court approval)
Purchase or finance acquisition of own shares
Carry on business with residents
Dissolve without court approval and appointment of liquidator
Company record not open to public inspection
Issue no par value shares or fractions of shares
Labuan Companies Act 1990
6087 453 858 [email protected] www.ectrustco.com
35
Labuan Business Activity Act 1990
Allowed
Shipping Operations in Malaysia “Labuan trading activity” includes banking,
insurance, trading, management, licensing,
shipping operations or any other activity which is not a Labuan non-trading activity
“Shipping operations” means the transportation of passengers or cargo by sea or the letting out on a charter of ships on a voyage or time charter basis – Section 2
6087 453 858 [email protected] www.ectrustco.com
37
Labuan Business Activity Act 1990
Labuan entities elect under Income Tax Act 1967 to re-engage DTA benefits
DTA BenefitsBenefits in source country
1. Business profits exempt
2. Lower withholding tax rates
6087 453 858 [email protected] www.ectrustco.com
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Labuan Business Activity Act 1990
Information sharing
Malaysian Government will not permit fishing expeditions.
No automatic information sharing.
Prima facie case must be made out by the
Government making the request.
6087 453 858 [email protected] www.ectrustco.com
39
Labuan Business Activity Act 1990
Advance Ruling
Section 17B
6087 453 858 [email protected] www.ectrustco.com
Advance Ruling enables Labuan entities to seek a ruling of the Director General of IRB on the application of LBATA to Labuan entities.
40
Labuan Financial Services
And Securities Act
2010
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41
Labuan Financial Services and Securities Act 2010
6087 453 858 [email protected] www.ectrustco.com
Securities lawsLabuan Insurance
Exchanges (LFX)
Labuan Trust Company
Labuan Banking
42
Labuan Financial Services and Securities Act 2010
Key Features
1. Make invitations to 50 persons without the Authority’s approval
2. Operate private funds without prior approval from any Authority
3. Operate in a strictly confidential and private business environment which is entrenched by Malaysian Statutes supported by fiercely independent government in Malaysia’s post-colonial era
6087 453 858 [email protected] www.ectrustco.com
43
Labuan Financial Services and Securities Act 2010
6087 453 858 [email protected] www.ectrustco.com
Key Features
4. Licensed insurance brokers being financial planners -
The new definition of insurance broker has been extended to expressly include a person who is licensed to “analyse the financial circumstances of another person and provides a plan to meet that other person’s financial needs and objectives…”
44
Labuan Foundations (LF)
Labuan Foundations Act 2010
Capacity of LF
Founder of LF
Beneficiaries
Purpose and Objective
Management
S.50 LF is a body
corporate and may sue and be
sued in its corporate name
S.5(1)A resident or a non - resident
S.6(1)A resident or a non - resident
S.7(1) The main
purpose of LF shall be the
management of its property.
Founder act as an officer of LF
Property of LF cannot include
Malaysian property except
with prior approval from
authority or LF is charitable
Income derived from Malaysian property falls
under ITA 1967
Income derived from non -Malaysian
property falls under LBATA
S.7(2) LF may also
include other lawful objects
Provide for the appointment of
a council to manage LF.
46
Labuan Foundations (LF)
Labuan Foundations Act 2010
Confidentiality:-
No information or documents
concerning LF may be divulged to a
third party unless with court order
Benefits
Asset protection:-
LF grants asset protection unless the assets are
fraudulently disposed to LF.
Unenforceability of a foreign claim
Distribution of assets :-
Permissible to beneficiary unless the
distribution is to defeat the
creditor claim.
Rights to information :-
Rights of beneficiaries to
request for information
concerning the property of LF
6087 453 858 [email protected] www.ectrustco.com
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Labuan Foundations Act 2010
Foundation is a legal entity.
Liability of foundation is limited to the value of its net assets.
Allows redomicilation of foundation into or out of Labuan.
Where LF is dissolved and there remains some property after its dissolution, those properties shall be the property of the beneficiary(ies).
A foundation can be deemed Islamic if it subscribes to Shariah principles and appoints a Shariah advisor.
6087 453 858 [email protected] www.ectrustco.com
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Labuan TrustAct 1996
Labuan Special Trust
Allow trust to hold shares in Labuan Holding Company,
which in turn may hold assets such as cash, real estate, art,
securities, businesses, insurance policies etc
Retention of day-to-day control over the direction and management of
investments and businesses can be held by a settlor or protector and the trustee
is not liable for losses.
Default provision : exist perpetuity
Flexibility for a fixed-term trust to be
converted to perpetual or vise versa
Purpose trust, charitable trust, promotion of religion,
advancement of human rights and fundamental freedom
6087 453 858 [email protected] www.ectrustco.com
50
What are you waiting for?
Come to Labuan or visit our website at www.ectrustco.com and join the ranks of
successful companies and individuals
gaining the benefits of Labuan, Malaysia.
WHAT ARE YOU WAITING FOR? WHAT ARE YOU WAITING FOR?
6087 453 858 [email protected] www.ectrustco.com
51
EC Trust (Labuan) Bhd.Wisma EC TrustU0195 Jalan Merdeka87007 Labuan F.TMalaysia
Tel : +60 87 453 858Fax: +60 87 453 616
Email: [email protected]: www.ectrustco.com
Thank you
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