Labuan Business Activity

What Why you should consider managing and planning for your wealth, succession planning and charitable foundations in Labuan

Tax Incentives

The following income is exempted from income tax:

  • Dividends received from Labuan entities
  • Distributions received from Labuan trusts and foundations (including both Islamic) by the beneficiaries
  • Distributions of profits by Labuan partnerships (including Islamic partnerships)
  • Interest received by residents*, non-residents* or another Labuan entity from a Labuan entity.
  • Royalties and fees for services, advices or assistance specified in Section 4A (i) and (ii) of the Malaysia Income Tax Act 1967 (ITA), received by a non-resident or another Labuan entity from a Labuan entity.
  • Other gains or profits under Section 4(f) of ITA received by a non-resident from a Labuan entity

No withholding tax is imposed:

  • on payments to non-residents for  interest, royalties, fees for services, advice or assistance, or other gains or profits under Section 4(f) of ITA by a Labuan entity
  • on payments to non-residents for use of moveable properties by a Labuan licensed leasing company.

  Labuan entity carrying on a Labuan business activity Minimum number of full time employees in Labuan Minimum amount of annual operating expenditure in Labuan (RM)
1. Labuan insurer, Labuan reinsurer, Labuan takaful operator or Labuan retakaful operator 4 150,000
2. Labuan underwriting manager or Labuan underwriting takaful manager 4 100,000
3. Labuan insurance manager or Labuan takaful manager 4 100,000
4. Labuan insurance broker or Labuan takaful broker 4 100,000
5. Labuan captive insurer or Labuan captive takaful 4 100,000
6. Labuan International Commodity Trading Company 3 3,000,000
7. Labuan bank, Labuan investment bank, Labuan Islamic bank or Labuan Islamic investment bank 3 180,000
8. Labuan trust company 3 120,000
9. Labuan leasing company or Labuan Islamic leasing company 2 100,000
10. Labuan credit token company or Labuan Islamic credit token company 2 100,000
11. Labuan development finance company or Labuan Islamic development finance company 2 100,000
12. Labuan building credit company or Labuan Islamic building credit company 2 100,000
13. Labuan factoring company or Labuan Islamic factoring company 2 100,000
14. Labuan money broker or Labuan Islamic money broker 2 100,000
15. Labuan fund manager 2 100,000
16. Labuan securities licensee or Labuan Islamic securities licensee 2 100,000
17. Labuan fund administrator 2 100,000
18. Labuan company management 2 100,000
19. Labuan International Financial Exchange 2 120,000
20. Self-regulatory organisation or Islamic self-regulation organisation 2 120,000
21. Holding Company 2 50,000

Do you need further clarification?

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