Labuan Tax for Mutual Funds Business

Labuan is one of the best jurisdictions to use for fund raising through mutual funds, as it is ideal for investors and business owners looking for an efficient and low tax regime. There is no need to apply license to operate a Labuan Mutual Fund, yet it is regulated by Labuan Financial Services Act. To register, the submission of Memorandum of Information to the Labuan FSA Authority for approval is required. As of 2016, there is approx. USD 13 billion fund size which has been approved by Labuan FSA of which 99% are Labuan private mutual funds

Labuan Mutual Fund can meet your needs for:

  • Professional Management through skilled asset selection
  • Diversification with your range of asset classes
  • Affordability with relatively low dollar amount for fund subscription
  • Liquidity through share transfer/redemption

[Read: The difference between Labuan Public Mutual Fund and Labuan Private Mutual Fund]

Labuan Tax for Mutual Funds Business

Labuan Mutual Fund can be set up with different vehicles to meet your objectives. It can be a Labuan company, a partnership (LLP), a protected cell company or a foundation. It is possible for the Labuan Mutual Fund to be listed in the world renowned stock exchanges in Hong Kong, Singapore or Australia.

Key characteristics of Labuan Mutual Fund:

  • collects and pools funds for the purpose of collective investment with the aim of spreading investment risks and
  • issues interests in a mutual fund which entitles the holder to redeem his investments that is agreed upon by the parties and receives an amount computed by reference to the value of a proportionate interest in the whole or part of the net assets of the aforesaid types of entities, as the case may be.

Labuan mutual fund can also be structured to include an umbrella fund whose interests are split into a number of different classes of funds or subfunds and whose participants are entitled to exchange rights in one part for rights in another.

Labuan Tax for Mutual Funds Business
Key Tax Profile of Labuan Mutual Fund:

  • Labuan Funds can enjoy lowcorperate tax of 3% on net profit based on audited report or pay flat tax rate of RM20,000
  • Able to access to more than 70 Malaysia’s treaty partners for Double Taxation Agreements
  • No withholding tax on distributions from Labuan Fund to Investors
  • No withholding tax exemptions on payments made to non-residents for dividends and interest
  • No stamp duty on all instruments relating to Labuan business activities, including share transfer
  • No import duty/sales tax
  • No foreign exchange controls
  • No capital gain tax/inheritance taxSnapshot of compliance of Labuan Mutual Fund
 
Type of ComplianceReporting PartyDue Dates
Annual ReturnLabuan FSA/CP Trust1 month before anniversary of incorpn. date
Annual Company FeeLabuan FSAOn and before anniversary of incorpn. date
Corporate Tax Inland RevenueBy 31st March, extendable to 31st May
Employer Return - Form EInland RevenueBy 31st March
Audit ReportLabuan FSABy 30th June
Marketing Office Fee (if any)Labuan FSA-Fee RM15,000By 15th Jan

Contact us to find out more on how to set up a Labuan Mutual Fund to meet your objectives in fund raising! Email us the enquiry form today! We “simplify”the complexities” of your Labuan investment.

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