Labuan A New Popular Jurisdiction

According to Financial Service Authority (FSA) Labuan achieved a record – International Business and Financial Centre (IBFC) has successfully incorporated more than 10,000 companies during the third quarter of this year.

Labuan is a federal territory off the coast of Borneo in East Malaysia. It is made up of the homonymous Labuan Island and six smaller islands with legal system based on common law. Due to political stability, business-friendly laws and regulations, low administrative and operating costs and confidentiality nowadays Labuan is known as an attractive offshore financial centre offering international financial and business services since 1990.

It is an offshore support hub for oil and gas activities in the region. Being a part of Malaysia, Labuan allows to benefit from Malaysian sovereignty, i.e. tax benefits for foreigners. Offering low and no-tax corporate structures for Asian and foreign businesses it attracts investments to the region and facilitates cross-border trade.

In Labuan FSA grants licenses to conduct financial services in or from the Labuan IFC. The licenses include banking, Islamic financial services, insurance and insurance related business.

Unlike places in the Caribbean where many banks could raise some cause for concern, Labuan is a serious financial centre with a wide range of familiar banks (Bank of America, JP Morgan, BNP Paribas etc). Indeed nearly every sophisticated banking institution in the world now has a branch in Labuan.

Moreover, Labuan trust companies that are approved by the FSA are licensed to provide trusts, secretarial and fiduciary services.

Another benefit of Labuan companies is low tax rates. Holding companies are free from tax on all earnings sourced outside of Malaysia if they hold fixed assets or collect dividends, royalties, or other passive incomes.