Tax
Labuan Business Activity Tax
Labuan entities must meet substance requirements — minimum full time employees and annual operating expenditure in Labuan — to qualify for the Labuan tax framework. The lists below follow the activities prescribed under P.U. (A) 423/2021.
List of Labuan business activities
Labuan Trading Activity
A Labuan entity carrying on a Labuan trading activity is taxed at 3% of audited net profits, provided the prescribed substance requirements are satisfied.
- 1
Labuan insurer, Labuan reinsurer, Labuan takaful operator or Labuan retakaful operator
FTE3OPEX (RM)200,000 - 2
Labuan underwriting manager or Labuan underwriting takaful manager
FTE4OPEX (RM)100,000 - 3
Labuan insurance manager or Labuan takaful manager
FTE4OPEX (RM)100,000 - 4
Labuan insurance broker or Labuan takaful broker
FTE2OPEX (RM)100,000 - 5(a)
Labuan first party captive insurer or Labuan first party captive takaful
FTE2OPEX (RM)100,000 - 5(b)
Labuan third party captive insurer or Labuan third party captive takaful
FTE3OPEX (RM)100,000 - 6
Labuan International Commodity Trading Company (with not more than five related companies carrying on the qualifying activity)
FTENot less than three (3) FTE, including at least two (2) FTE in its business operational office in Labuan, in a group of companiesOPEX (RM)Annual OPEX of at least RM3,000,000 in Malaysia, of which at least RM100,000 is incurred in Labuan for each company - 7
Labuan bank, Labuan investment bank, Labuan Islamic bank or Labuan Islamic investment bank
FTE3OPEX (RM)200,000 - 8
Labuan trust company
FTE3OPEX (RM)120,000 - 9
Labuan leasing company or Labuan Islamic leasing company
- a) not more than 10 related Labuan leasing companies — 2 FTE for each group of companies
- b) 11 to 20 related companies — 3 FTE for each group of companies
- c) 21 to 30 related companies — 4 FTE for each group of companies
- d) more than 30 related companies — 1 additional employee for each group of companies for every increase of 10 related leasing companies
FTE2 – 4+ for each group of companies (see breakdown)OPEX (RM)100,000 for each Labuan leasing company or Labuan Islamic leasing company - 10
Labuan credit token company or Labuan Islamic credit token company
FTE2OPEX (RM)100,000 - 11
Labuan development finance company or Labuan Islamic development finance company
FTE2OPEX (RM)100,000 - 12
Labuan building credit company or Labuan Islamic building credit company
FTE2OPEX (RM)100,000 - 13
Labuan factoring company or Labuan Islamic factoring company
FTE2OPEX (RM)100,000 - 14
Labuan money broker or Labuan Islamic money broker
FTE2OPEX (RM)100,000 - 15
Labuan fund manager
FTE2OPEX (RM)100,000 - 16
Labuan securities licensee or Labuan Islamic securities licensee
FTE2OPEX (RM)100,000 - 17
Labuan fund administrator
FTE2OPEX (RM)100,000 - 18
Labuan company management
FTE2OPEX (RM)100,000 - 19
Labuan International Financial Exchange
FTE2OPEX (RM)120,000 - 20
Self-regulatory organisation or Islamic self-regulatory organisation
FTE2OPEX (RM)120,000 - 21
Labuan entity that carries on any one or more of the following business activities
- a) administrative services
- b) accounting services
- c) legal services
- d) backroom processing services
- e) payroll services
- f) talent management services
- g) agency services
- h) insolvency related services
- i) management services other than Labuan company management under item 18
FTE2OPEX (RM)50,000
List of Labuan business activities
Labuan Non-Trading Activity
Non-trading activities cover the holding of investments in securities, stocks, shares, loans, deposits or any other properties by a Labuan entity on its own behalf.
- 1
Labuan entity that undertakes investment holding activities other than pure equity holding activities (non-pure equity holdings)
- Companies that hold a variety of assets and earn different types of income — e.g. interest, rents and royalties
- Receive non-dividend income from the holding of investments such as bonds, sukuk, debts, instruments, properties and securities
FTE1OPEX (RM)20,000 - 2
Labuan entity that undertakes pure equity holding activities
- Receiving interest income arising from (a) placement of dividend monies, or (b) proceeds from disposal of shares
- Companies that hold equity participation and earn only dividends and capital gains
FTEExempted under the Labuan Business Activity Tax (Exemption) Order 2020 [P.U. (A) 177/2020]OPEX (RM)20,000
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