1. Labuan IBFC: Tropical Paradise in the South China Sea1

2. WHERE IS LABUAN? 1 www.ectrustco.com 6087 453 858 2

3. WHO ARE WE? 2 EC Trust (Labuan) Bhd Providing professional services:
Incorporated under Labuan Companies Act, 1990 on 3rd March 2003
Licensed Trust Company under Labuan Financial Services and Securities Act 2010
Providing professional services:
Incorporation services and formation of Labuan entities
2. In-house customised support services –
Corporate secretarial services
Trusts, holding of shares on trust
Bank account
Legal advice
Accounting
Custodial services

4. WHO ARE WE? 3 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:
Australian Taxation Office Canberra
Senior Taxation Manager, Coopers and Lybrand
Australian barrister
Managing Director and Trust Officer, EC Trust (Labuan)

5. WHO ARE WE? 4 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

6. WHY CHOOSE LABUAN IBFC? 6 www.ectrustco.com 6087 453 858

7. Stability, certainty, reliability and protection7
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)
Modern company concepts
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
Stability, certainty, reliability and protection

8. LEGAL FRAMEWORK Labuan Entities 8 www.ectrustco.com 6087 453 858

9. 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.

10. MALAYSIA : 70 DOUBLE TAX AGREEMENTS10
MALAYSIA : 70 DOUBLE TAX AGREEMENTS 10

11. 11
EXCHANGE CONTROL
Labuan company is regarded as non-resident for exchange control purposes.
Labuan company is generally not subject to any exchange control requirements.

12. Labuan Business Activity12
TAX BENEFITS
Income Tax Act 1967
Other Activities
Labuan Company
Labuan Business Activity
LBATA 1990
3% or MYR20,000
Trading
Non-Trading
Not taxable

13. (Section 2 of Labuan Business Activity Tax Act 1990)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)
________________________________________________________
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.

14. 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.

15. 15
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.

16. Personal tax exemption16
TAX BENEFITS
No indirect taxes
No witholding taxes
Tax free dividends
Other Tax Benefits
Exempt from stamp duty
Personal tax exemption

17. service taxes, excise / import duties17
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

18. No Withholding Taxes TAX BENEFITS18
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”).

19. Exempt from Stamp Duty TAX BENEFITS 19
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.

20. TAX BENEFITS 100% exemption on director fees20
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

21. on Labuan allowances and housing allowances21
TAX BENEFITS
Tax Rebate
for Malaysians
50% tax exemption
on Labuan allowances and housing allowances
of Malaysian citizens working in a
Labuan financial institution

22. WHY CHOOSE LABUAN ENTITIES?22
WHY CHOOSE
LABUAN ENTITIES?

23. Tax Planning Opportunities holding Investment Company23
WHY CHOOSE LABUAN ENTITIES
Tax Planning Opportunities
outbound investment / international trading
international investment
leasing activities
holding Investment Company
A hub for

24. A Hub for Investments and International Trading24
WHY CHOOSE LABUAN ENTITIES
A Hub for Investments and International Trading
Singapore
Malaysian Co.
Labuan Co. (LC)
India
China
Thailand

25. A Hub for International Trading and Investments25
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.

26. Dividend income received is available for exemption as follows:-26
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

27. WHY CHOOSE LABUAN ENTITIES27
WHY CHOOSE LABUAN ENTITIES
A Hub for International Investment
Labuan entities may be used to penetrate into
Asian market
Singapore
Thailand
Foreign Co.
Labuan Co. (LC)
Vietnam
Cambodia

28. A Hub for Leasing Activities28
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

29. WHY CHOOSE LABUAN ENTITIES29
WHY CHOOSE LABUAN ENTITIES
Flow Chart

30. An annual license fee of MYR 40,000 is payable30
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.

31. Patent, Royalty and Copyright Holding31
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.

32. Labuan IBFC: New Regulatory Updates32
Labuan IBFC: New Regulatory Updates 32

33. New Legislation 33 Labuan Companies Act 1990
Labuan Financial Services Authority Act 1996
Labuan Financial Services and Securities Act 2010
Labuan Foundations Act 2010
Labuan Business Activity Tax Act
1990
Labuan Trusts Act
1996
Labuan Islamic Financial Services and Securities Act 2010
Labuan Limited Partnerships And Limited Liability Partnership Act
2010

34. Labuan Companies Act 1990 34 www.ectrustco.com 6087 453 858

35. 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

36. Labuan Business Activity Act 199036
Labuan Business
Activity
Act 1990

37. Labuan Business Activity Act 199037
Labuan Business Activity Act 1990
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
Allowed
“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

38. DTA Benefits Labuan Business Activity Act 199038
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

39. Labuan Business Activity Act 199039
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.

40. Labuan Business Activity Act 199040
Labuan Business Activity Act 1990
Advance Ruling
Advance Ruling enables Labuan entities to seek a ruling of the Director General of IRB on the application of LBATA to Labuan entities.
Section 17B

41. Labuan Financial Services41
Labuan Financial Services
And Securities Act
2010

42. Securities laws Labuan Insurance Exchanges (LFX) Labuan Trust Company42
Labuan Financial Services
and Securities Act 2010
Securities laws
Labuan Insurance
Exchanges (LFX)
Labuan Trust Company
Labuan Banking

43. Key Features Labuan Financial Services and Securities Act 2010 43
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

44. Key Features Labuan Financial Services and Securities Act 2010 44
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…”

45. Labuan Foundations Act 201045
Labuan Foundations
Act 2010

46. Labuan Foundations Act 2010 46 Labuan Foundations (LF) Capacity of LF
Beneficiaries
Management
Founder of LF
Purpose and Objective
S.50
LF is a body corporate and may sue and be sued in its corporate name
Founder act as an officer of LF
S.6(1)
A resident or a non - resident
S.7(1)
The main purpose of LF shall be the management of its property.
S.5(1)
A resident or a non - resident
Provide for the appointment of a council to manage LF.
Income derived from Malaysian property falls under ITA 1967
Property of LF cannot include Malaysian property except with prior approval from authority or LF is charitable
S.7(2)
LF may also include other lawful objects
Income derived from non -Malaysian property falls under LBATA

47. Labuan Foundations Act 2010 47 Labuan Foundations (LF)
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

48. Labuan Foundations Act 2010 48
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.

49. Labuan Trust Act 1996 49 www.ectrustco.com 6087 453 858

50. 50
Labuan Trust
Act 1996
Default provision :
exist perpetuity
Purpose trust, charitable trust, promotion of religion, advancement of human rights and fundamental freedom
Flexibility for a fixed-term trust to be converted to perpetual or vise versa
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.

51. WHAT ARE YOU WAITING FOR?51
WHAT ARE YOU WAITING FOR?
What are you waiting for?
Come to Labuan or visit our website at and join the ranks of
successful companies and individuals
gaining the benefits of Labuan, Malaysia.

52. Thank you 52 Tel : +60 87 453 858 EC Trust (Labuan) Bhd.
Wisma EC Trust
U0195 Jalan Merdeka
87007 Labuan F.T
Malaysia
Tel :
Fax:
Web:
Thank you