LABUAN TAX FOR BANKING BUSINESS
There are many advantages of owing Labuan banks by foreigners and Malaysians alike. Many new opportunities may spring out in new financial products and acquisition of expertise which would not be possible in the Malaysia domestic banking industry. For foreigners, the opportunity to own a banking license 100% without the requirement of Malaysians partners is a huge plus sign! Labuan bank is allowed to deal and operate in both foreign currencies and Malaysian Ringgit, where permitted by Central Bank of Malaysia to deal with Malaysians. Hence this advantage wider access of markets of both international and domestic. [Read: Requirement to apply Labuan Banking License]
Key Tax Profile of Labuan Commercial Bank and Labuan Investment Bank:
* Corporate tax is 3% on net profit
* No withholding tax on dividends, interest, management fee, royalty and technical fees
* Dividends declared from a Labuan Company is exempted from tax for foreigners & Malaysians
* Tax exempt on interests received from foreign currency deposits placed by Malaysians in Labuan Banks
* No import duty, sales tax and service tax for all international dealings
* For Malaysian dealings, 6% GST is applicable for companies with annual revenue exceeded RM500,000
* 0% personal income tax on Directors’ fee receivable by a foreign individual or corporate director
* 50% tax rebate on personal income of foreign professional employment
* 65% tax rebate on personal income of local Malaysians professionals employment
* Malaysians enjoy 50% tax rebate on gross housing and allowances received
* No stamp duty for the execution of all instruments including shares transfer
* No inheritance tax
* Able to access to more than 70 Malaysia’s tax treaty partners
* Tax rebate on zakat payment
* Capital gains arising from the sale of shares in a Labuan company by the shareholders are not taxable
* Permitted to set up Co-Located Office anywhere in Malaysia to deal with Malaysian residents
* Permitted to set up Marketing Office in Kuala Lumpur/Iskandar Johor.
| Type of Compliance | Reporting Party | Due Dates |
|---|---|---|
| Annual Return | Labuan FSA | 1 month before anniversary of incorpn. date |
| Annual Company Fee | Labuan FSA | On and before anniversary of incorpn. date |
| Corporate Tax | Inland Revenue | By 31st March, extendable to 31st May |
| Employer Return - Form E | Inland Revenue | By 31st March |
| Employee Return - Form BE/M for expatriates employment | Inland Revenue | By 30th April |
| Audit Report | Labuan FSA | Within 6 months from date of closure financial account |
| Marketing Office Fee (if any) | Labuan FSA-Fee RM7,500 | By 15th Jan |
| Co-Located Office Fee (if any) | Labuan FSA-RM10,000 | By 15th Jan |
| Banking License Fee | Labuan FSA-Fee RM100,000 | By 15th Jan |
| Statistical and Info Reporting | Labuan FSA | from time to time |
Feel free to email us at contact@labuanbusiness to discover how to apply for a Labuan banking license, we “simplify the complexities” of your investment in the Labuan Jurisdiction! Send us your enquiry to register a Labuan company for your banking business today!