Malaysia Companies Tapping Into Labuan to Raise Funds
Malaysia local (Sdn. Bhd.) companies are allowed to set up Labuan company as “special purpose vehicle (SPV)” to raise foreign currency funds by issuing notes, debentures, warrant, other debt or securities instruments. However, the SPV structure requires approval from Central Bank of Malaysia to obtain foreign borrowings.
4 main benefits of Structured Financing and Bond Issuance concepts through Labuan company:
- The funds raised by SPV can be loaned to the Malaysian companies and there will be no withholding tax for interest repayment by the Malaysia companies, under section 109 of Income Tax Act
- Debit instruments of a Labuan company can be listed on Labuan Finance Exchange for marketability
- Labuan company is not subjected to any exchange control as opposed to local Malaysia Sdn Bhd company
- No withholding tax is imposed on Labuan company when making payment of interests, royalties, fees for service or other gains under Section 4(f) of Income Tax Act 1967 to Malaysia companies.
Feel free to contact us to find out more to advise you on how to use Labuan right structure to raise funds. Send us your enquiry form today!
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