Transcript Slide 1

Labuan IBFC:
Tropical Paradise
in the South China Sea
WHERE IS LABUAN?
1
6087 453 858
[email protected]
www.ectrustco.com
2
WHO ARE WE?
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
6087 453 858
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3
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
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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
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6
WHY CHOOSE
LABUAN IBFC?
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7
LEGAL FRAMEWORK
Issue no par value shares or fractions of shares
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
Modern company
concepts
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
Stability, certainty, reliability and protection
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8
LEGAL FRAMEWORK
Labuan Entities
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9
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.
not subject to any
exchange control requirements.
Labuan company is generally
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12
TAX BENEFITS
Income Tax Act
1967
Other Activities
Labuan
Company
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Labuan
Business
Activity
Trading
LBATA 1990
3% or
MYR20,000
Non-Trading
Not taxable
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13
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)
________________________________________________________
3%
Tax charged at the rate of
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.
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15
TAX REQUIREMENTS
chargeable profits of Labuan entity carrying on
Labuan trading activity will be taken from net profits
as reflected in the audited accounts.
The
No audited accounts need to be
submitted with tax return if elect to pay MYR 20,000.
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16
TAX BENEFITS
No indirect
No
taxes
witholding
taxes
Other Tax Benefits
Exempt
from stamp
duty
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Tax free
dividends
Personal tax
exemption
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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
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18
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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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
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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
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22
WHY CHOOSE
LABUAN ENTITIES?
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23
WHY CHOOSE LABUAN ENTITIES
Tax Planning Opportunities
outbound investment / international trading
international investment
leasing activities
holding Investment Company
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24
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.
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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.
Labuan Co. (LC)
Singapore
Thailand
Vietnam
Cambodia
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28
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
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29
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.
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31
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
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New Legislation
Labuan
Companies
Act
1990
Labuan
Financial
Services
Authority Act
1996
Labuan
Business
Activity Tax
Act
1990
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Labuan
Financial
Services and
Securities Act
2010
Labuan Trusts
Act
1996
Labuan
Foundations
Act 2010
Labuan
Islamic
Financial
Services and
Securities Act
2010
Labuan
Limited
Partnerships
And Limited
Liability
Partnership
Act
2010
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34
Labuan Companies
Act 1990
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35
Labuan Companies Act 1990
Issue no par value shares or fractions of shares
Restructure or reduce capital (without court
approval)
Modern company
concepts
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
6087 453 858
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36
Labuan Business
Activity
Act 1990
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37
Labuan Business Activity Act 1990
Shipping Operations in Malaysia
“Labuan trading activity” includes banking,
insurance, trading, management, licensing,
Allowed
shipping operations or any
other activity which is not a Labuan nontrading 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
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38
Labuan Business Activity Act 1990
Labuan entities elect under
Income Tax Act 1967 to re-engage DTA benefits
DTA Benefits
Benefits in source country
1. Business profits exempt
2. Lower withholding tax
rates
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39
Labuan Business Activity Act 1990
Information sharing
Malaysian
Government will not
permit fishing
expeditions.
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No automatic information
sharing.
Prima facie case must be
made out by the
Government making the
request.
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40
Labuan Business Activity Act 1990
Section 17B
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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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Labuan Financial Services
and Securities Act 2010
42
Securities laws
Labuan Insurance
Exchanges (LFX)
Labuan Trust Company
Labuan Banking
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Labuan Financial Services
and Securities Act 2010
43
Key Features
1. Make invitations to 50
approval
persons 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
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Labuan Financial Services
and Securities Act 2010
44
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…”
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45
Labuan Foundations
Act 2010
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46
Labuan Foundations (LF)
Capacity of LF
Beneficiaries
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
Management
Purpose and
Objective
Founder of LF
S.50
LF is a body
corporate and
may sue and be
sued in its
corporate name
Labuan Foundations
Act 2010
S.6(1)
A resident or a
non - resident
Income derived
from Malaysian
property falls
under ITA 1967
Income derived
from non Malaysian
property falls
under LBATA
S.7(1)
The main
purpose of LF
shall be the
management of
its property.
S.7(2)
LF may also
include other
lawful objects
Founder act as
an officer of LF
Provide for the
appointment of
a council to
manage LF.
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Labuan Foundations (LF)
Labuan Foundations
Act 2010
Benefits
Rights to
information :Rights of
beneficiaries to
request for
information
concerning the
property of LF
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.
Unenforceability
of a foreign claim
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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.
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49
Labuan Trust Act
1996
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Labuan Trust
Act 1996
Default provision :
exist perpetuity
Flexibility for a fixedterm trust to be
converted to perpetual
or vise versa
Purpose trust, charitable trust,
promotion of religion,
advancement of human rights and
fundamental freedom
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
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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.
6087 453 858
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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
Thank you