What is Labuan?
- Labuan is an island located off the Borneo coast and is a Federal Territory under the administration of the Federal Government of Malaysia.
- Labuan has established an International Business and Financial Centre (Labuan IBFC). Labuan’s business focus is on five core areas: offshore holding companies, captive insurance, Shariah-compliant Islamic Finance structures, public and private funds and wealth management.
- Common law legal system is the a law system of Malaysia and Labuan.
- Malay is the national language, English is widely accepted.
- National currency is the Malaysian Ringgit (MYR).
- Labuan Financial Services Authority (Labuan FSA) is the statutory body responsible for the development and administration of Labuan IBFC.
Labuan, officially the Federal Territory of Labuan, is a mid-shore jurisdiction of the Federation of Malaysia. Its legislation is renovated to provide the best environment for international business and financial services.
To represent its identity as international financial centre, Labuan F.T. rebranded its financial centre as Labuan International Business and Financial Centre (IBFC).
Backed by Malaysia government, Labuan IBFC offers flexible legal structures and attractive tax system to international trading and financial services. Hence, Labuan IBFC has separate business and financial regulations to that of domestic Malaysia.
For example, Labuan companies and domestic Malaysia companies are different types of business entity, Labuan companies are subject to 3% corporate tax rate or a flat payment of RM20,000 while Malaysia companies are subject to 24%. However, Labuan companies are not allow to engage in business transactions in Malaysian Ringgit except in collection of fee and commission, so non-Malaysia business can leverage Labuan companies for international tax efficiency planning.