Labuan Tax for Private Foundation

Labuan Tax for Private Foundation

Labuan Private Foundation is rapidly gaining popularity amongst the high-net-worth individuals in Asia for wealth succession. Its flexibility with high degree of confidentiality protects high-net-worth clients and their assets. As a Founder, you can include beneficiaries to your Labuan Private Foundation as follows:

  • Individuals, corporate entities,charities and are those who have vested interest in assets of the foundation;
  • May be residents or non-residents of Malaysia

Labuan Private Foundation is a combination of a company and trustee with its own separate legal identity.It is regulated by the Labuan Foundations Act 2001 that provides the Founder with total protection on his assets from the risks and gives him the peace of mind to secure the future of his family and business. Labuan Private Foundation may be established to manage its own properties and assets for charitable or non-charitable purposes,for the following activities:

  • Wealth management
  • Wealth protection
  • Inter-generation wealth succession
  • Making grants
  • Prevention and relief of poverty
  • Advancement of religion, profession or education
  • Advancement of health including the prevention and relief of sickness, disease or of human suffering
  • Social and community advancement including the care, support and protection of the aged, people with a disability, children and young people
  • Advancement of culture, arts and heritage.

Key Tax Profile of Labuan Private Foundation:

* For International revenues, corporate tax will be 3% on net profit or pay flat fee of RM20,000 
* For local Malaysian revenues, corporate tax will be 24%
* For Investment Holding, the corporate tax will be 0%
* No withholding tax on interest, management fee, royalty fee and technical fee
* No tax on distribution of gains to the beneficiaries
* 0% tax rebate on Directors’ fee for foreign individual or corporate director
* 50% tax rebate on personal income of professional expatriate employment
* No stamp duty payable for the execution of the charter and Articles of Association and Other instrament
* Able to access to more than 70 tax treaty partners
* No foreign exchange control using Labuan offshore banks
* No tax on interest earned for deposits placement in Labuan offshore banks
* Tax exempted on Zakat payment

[Read: Complete Procedure To Set Labuan Private Foundation]
[Read: FAQ on Labuan Private Foundation]

Snapshot of Compliance of Labuan Private Foundation

Type of ComplianceReporting PartyDue Dates
Annual Foundation FeeLabuan FSAOn or before anniversary of Incorporation
Annual Financial ReportLabuan FSA/CP TrustBy 30th Sept
Corporate Tax Inland RevenueBy 31st March, extendable to 31st May
Employer Return - Form EInland RevenueBy 31st March

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