Transcript Slide 1
Labuan IBFC: Tropical Paradise in the South China Sea
1
WHERE IS LABUAN?
6087 453 858 [email protected]
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2
WHO ARE WE?
EC Trust (Labuan) Bhd
Incorporated under Labuan Companies Act, 1990 on 3 rd 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 6087 453 858 [email protected]
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WHO ARE WE?
PETER SEARLE B.A. LLB (Hons), LLM Managing Director Qualifications:
• 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) 6087 453 858 [email protected]
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4
WHO ARE WE?
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 6087 453 858 [email protected]
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6 6087 453 858 [email protected]
WHY CHOOSE LABUAN IBFC?
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LEGAL FRAMEWORK
English common law tradition with modern legislation Issue no par value shares or fractions of shares 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 Modern company concepts Operate private fund (by notification) Dissolve without court approval and appointment of liquidator Company record not open to public inspection
Stability, certainty, reliability and protection
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8
Labuan Entities LEGAL FRAMEWORK
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DOUBLE TAX AGREEMENTS
• 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.
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10 MALAYSIA : 70 DOUBLE TAX AGREEMENTS
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EXCHANGE CONTROL
Labuan company is
regarded as non-resident
for exchange control purposes.
Labuan company is generally
not subject to any exchange control
requirements.
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TAX BENEFITS Labuan Company Other Activities Labuan Business Activity Trading Non-Trading Income Tax Act 1967 LBATA 1990 3% or MYR20,000 Not taxable
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LABUAN TRADING ACTIVITIES
“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
.
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14
LABUAN NON-TRADING ACTIVITIES
“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. 6087 453 858 [email protected]
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TAX REQUIREMENTS
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. 6087 453 858 [email protected]
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TAX BENEFITS
No indirect taxes No witholding taxes Exempt from stamp duty
Other Tax Benefits
Personal tax exemption Tax free dividends 6087 453 858 [email protected]
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TAX BENEFITS
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 6087 453 858 [email protected]
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TAX BENEFITS
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”)
.
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19
TAX BENEFITS
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.
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20
TAX BENEFITS
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 6087 453 858 [email protected]
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TAX BENEFITS
Tax Rebate
for Malaysians
50% tax exemption on Labuan allowances and housing allowances
of Malaysian citizens working in a Labuan financial institution 6087 453 858 [email protected]
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WHY CHOOSE LABUAN ENTITIES?
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WHY CHOOSE LABUAN ENTITIES Tax Planning Opportunities
outbound investment / international trading international investment leasing activities holding Investment Company
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WHY CHOOSE LABUAN ENTITIES A Hub for Investments and International Trading Singapore Malaysian Co.
Labuan Co. (LC) India China Thailand
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WHY 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]
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WHY CHOOSE LABUAN ENTITIES A Hub for Investments and International Trading
Dividend income received is available for exemption as follows:-
Labuan Co.
Exempt dividend
Malaysian Co.
Exempt dividend
Shareholders
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27
WHY CHOOSE LABUAN ENTITIES A Hub for International Investment
Labuan entities may be used to penetrate into Asian market
Foreign Co.
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Labuan Co. (LC) Singapore Thailand Vietnam Cambodia
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WHY 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]
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WHY CHOOSE LABUAN ENTITIES Flow Chart
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WHY 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]
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WHY CHOOSE LABUAN ENTITIES?
Patent, Royalty and Copyright Holding
Intellectual 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.
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32
Labuan IBFC: New Regulatory Updates
33 Labuan Companies Act 1990 Labuan Business Activity Tax Act 1990 Labuan Financial Services Authority Act 1996 Labuan Financial Services and Securities Act 2010
New Legislation
Labuan Foundations Act 2010 Labuan Trusts Act 1996 Labuan Islamic Financial Services and Securities Act 2010 Labuan Limited Partnerships And Limited Liability Partnership Act 2010 6087 453 858 [email protected]
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34
Labuan Companies Act 1990
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Labuan Companies Act 1990
Issue no par value shares or fractions of shares Restructure or reduce capital (without court approval) Purchase or finance acquisition of own shares Modern company concepts Carry on business with residents Dissolve without court approval and appointment of liquidator Company record not open to public inspection 6087 453 858 [email protected]
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36 6087 453 858 [email protected]
Labuan Business Activity Act 1990
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Labuan Business Activity Act 1990 Shipping Operations in Malaysia Allowed
“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]
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38
Labuan Business Activity Act 1990 Labuan entities elect under Income Tax Act 1967 to re-engage DTA benefits
Benefits in source country
DTA Benefits
1. Business profits exempt 2. Lower withholding tax rates 6087 453 858 [email protected]
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39
Labuan Business Activity Act 1990 Malaysian
Information sharing
Government will not permit fishing expeditions.
No automatic information sharing.
Prima facie case must be made out by the Government making the request.
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Labuan Business Activity Act 1990
Section 17B Advance Ruling enables Labuan entities to seek a ruling of the Director General of IRB on the application of LBATA to Labuan entities.
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41
Labuan Financial Services And Securities Act 2010
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42 Labuan Financial Services and Securities Act 2010
Securities laws Labuan Insurance Exchanges (LFX) Labuan Trust Company Labuan Banking
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43 Labuan Financial Services and Securities Act 2010
Key Features
1. Make invitations to 50 persons approval without the Authority’s 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]
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44 Labuan Financial Services and Securities Act 2010
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…” 6087 453 858 [email protected]
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45
Labuan Foundations Act 2010
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46 Labuan Foundations (LF) Labuan Foundations Act 2010 Capacity of LF Beneficiaries S.50 LF is a body corporate and may sue and be sued in its corporate name Founder of LF S.5(1) A resident or a non - resident Property of LF cannot include Malaysian property except with prior approval from authority or LF is charitable S.6(1) A resident or a non - resident Income derived from Malaysian property falls under ITA 1967 Purpose and Objective S.7(1) The main purpose of LF shall be the management of its property.
Income derived from non Malaysian property falls under LBATA S.7(2) LF may also include other lawful objects Management Founder act as an officer of LF Provide for the appointment of a council to manage LF.
47 Labuan Foundations (LF) Labuan Foundations Act 2010 Benefits
Rights to information :-
Rights of beneficiaries to request for information concerning the property of LF
Unenforceability of a foreign claim
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Confidentiality:-
No information or documents concerning LF may be divulged to a third party unless with court order
Asset protection:-
LF grants asset protection unless the assets are fraudulently disposed to LF.
Distribution of assets :-
Permissible to beneficiary unless the distribution is to defeat the creditor claim.
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48 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.
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49 6087 453 858 [email protected]
Labuan Trust Act 1996
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50 Labuan Trust Act 1996 Default provision : exist perpetuity Flexibility for a fixed term trust to be converted to perpetual or vise versa Labuan Special Trust Purpose trust, charitable trust, promotion of religion, advancement of human rights and fundamental freedom 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.
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51
WHAT ARE YOU WAITING FOR? 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.
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52 EC Trust (Labuan) Bhd.
Wisma EC Trust U0195 Jalan Merdeka 87007 Labuan F.T
Malaysia Tel : +60 87 453 858 Fax: +60 87 453 616 Email: [email protected]
Web: www.ectrustco.com