1. What is Labuan company management business?
Company management business provides treasury processing services and such other services as maybe permitted by Labuan Financial Services Authority (Labuan FSA).
In line with Shariah related services, the company management can also provide Islamic advisory services and backroom processing functions. Labuan company management that provides Islamic company management services must engage a Shariah Advisory Panel to advise on its operations.
2. About eligible to apply
・A Labuan company incorporated under the Labuan Companies Act 1990 to be run by personnel with the necessary expertise and skills; or
・A firm engaging in company management activities licensed by the regulatory authority in the country of origin (if applicable); or
・A firm that is successful in undertaking similar activities in other financial centres with proven performance record, consistent returns on equity and returns on assets; or
・A trust company licensed under the Labuan Financial Services and Securities Act 2010.
|arranging intra-group financing/ factoring.|
|managing cash & liquidity positions.|
|providing in-house investment/ finance advisory services.|
|back-room and middle office services.|
|act as authorized representatives for support services.|
3. About the requirements to operate
・Maintain an operational office in Labuan and all dealing must be done through Labuan. Can apply to setup marketing office anywhere in Malaysia (outside Labuan island), subject to Labuan FSA’s approval.
・Appoint an approved Labuan auditor to carry out annual audit of its account and submit the audited financial statements to Labuan FSA within six (6) months after closing of financial year end.
・Comply with substantial activity requirements in Labuan as prescribed under the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018 (Substance Regulation).
・Obtain prior approval from Labuan FSA for any outsourcing service and changes of the company name, business plan and company structure, including share capital, shareholding and board of directors.
・Notify to Labuan FSA within 14 days on any changes of its consituent documents, place of business, resignation of director or principle officer, or any other significant event.
・Pay annual license fee of USD1,500 to Labuan FSA, on or before 15th January in each calendar year.
4. About the taxation
Effect from 1st January 2019, Economic Substance Requirement (ESR) shall apply to all Labuan incorporated entities to have an adequate number of full-time employees in Labuan and to incur an adequate amount of annual operating expenditure in Labuan.
The tax rate is 3% of audited net profit provided that the Labuan incorporated entity complied with ESR throughout its basis period (accounting period). Failing which, the Labuan incorporated entity shall be charged a tax rate of 24% for that year of assessment.
5. About the economic substance requirement (ESR) for a Labuan Company Management
To be eligible to taxed under the Labuan tax regime at 3% audited net profit, a Labuan Company Management is required to meet the ESR of having:
1) Minimum two (2) full-time employees in Labuan; and
2) Minimum annual operating expenditure of RM100,000 in Labuan.
for the basis period of a year of assessment.
|ECONOMIC SUBSTANCE REQUIREMENT (ESR)|
6. About the application requirement
・ Provide a business plan covering the areas of:
|1. Business objectives|
|2. Types of services or business activities (brief explanation on the activities to be conducted by the trust company)|
|3. Business operational plan|
|4. Target market|
|5. Marketing strategy|
|6. Manpower planning|
|7. Company organisation chart|
|8. Shareholding structure, including multilayer equity structure of the company indicating the shareholding percentage of each beneficial owner (if applicable).|
|9. Three (3) years financial projections covering expected revenue, expenses, assets, and liabilities.|
・Provide Risk Management and Internal Control Policy.
・Applicable for SHAREHOLDER only: Networth statement proof / latest three (3) months bank statements to show sufficient paid up capital evidence (to be certified by issued bank).
ADVANTAGES OF LABUAN
[NOTE: A few countries have excluded Labuan]