LOCATION
In the heart
of Southeast Asia lies one of the world's most enchanting lands - Labuan. It
is a veritable treasure trove of diverse cultures and hospitable people,
exotic cuisine, fascinating festivals, quaint villages and modern skylines.
Labuan is an
island that is located approximately 8km off the coast of the state of Sabah
at the mouth of the Brunei Bay. It comprises of one main island and six
smaller ones, thus covering an area of 92 sq. km. It is also centrally
located in the middle of the Asia-Pacific region.
Labuan's
inhabitants are very cosmopolitan. They come from all walks of life and from
various regions around the world, thus creating a diverse and stimulating
society.
GOVERNMENT & LEGAL SYSTEM
TYPE OF LAW:
The Malaysian legal system is based on the English model. Special laws
applicable to the offshore industry in Labuan have been enacted. Arbitration
is permitted. Disputes are heard in camera. Final appeal lies with the
Supreme Court.
PRINCIPAL
CORPORATE LEGISLATION:
On 6th November 1989, the Government of Malaysia declared the
Federal Territory of Labuan as an International Offshore Financial Center.
The following statutes apply:
-
The Offshore Companies Act 1990
-
The Labuan Trust Companies Act 1990
-
The Offshore Banking Act 1990
-
The Offshore Insurance Act 1990
-
The Labuan Offshore Business Activity Tax Act 1990
-
The Labuan Offshore Trusts Act 1996
-
The Labuan Offshore Limited Partnerships Act 1997
-
The Labuan Offshore Security Industry Act 1997
In
addition, the Labuan Offshore Financial Services Authority (LOFSA)
has been established as the sole regulatory body for those statutes.
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POLITICAL STRUCTURE
The Federal
Territory Of Labuan is part of Malaysia and responsibility for its
administration falls directly under the Prime Minister’s Department.
Malaysia is a multi-racial and multi-religious nation consisting of 13
States (11 states in Peninsula Malaya and 2 states in the Borneo Island) and
two Federal Territories (which are the capital, Kuala Lumpur, and Labuan.
Parts of it were formerly under British control, but it obtained
independence on 31 August 1957. On 16th September 1963, Malaysia was formed
with the joining of Sabah, Sarawak and Singapore (Singapore left Malaysia in
1965). Malaysia is a member of the British Commonwealth.
THE ECONOMY
The form of
Government is a Constitutional Monarchy with the King as Head of State. The
Nation is economically strong and politically stable. Labuan has modern
office space and telecommunication facilities. More than 50 of the world’s
top banks have branches in Labuan.
The Island of
Labuan covers an area of approximately 92 sq. km, and has an estimated
population of 50,000.
The official
language is Bahasa Malaysia. However, English is widely spoken and many
documents and publications are available in English.
CURRENCY:
The Malaysian currency is the Ringgit. Apart from certain exceptions,
offshore companies in Labuan are required to carry on business in a foreign
currency.
EXCHANGE
CONTROL:
Labuan Offshore Companies are treated as non-resident for the purposes of
the Exchange Control Act 1953.
BUSINESS ENVIRONMENT
An offshore
company in Labuan can take two forms. Potential offshore investors can
either set up an offshore company or a foreign offshore company, either by
incorporating or registering their companies to participate in the offshore
activities and to enjoy the attractive tax treatment provided under the
Labuan Offshore Business Activity Tax Act 1990.
The company
must also employ the services of a trust company which is incorporated under
the Companies Act 1965 and registered under the Labuan Trust Companies Act
1990 to discharge its statutory obligations
TAXATION
Offshore Companies that are trading pay 3% on net audited profits or the sum
of RM 20,000. Offshore Companies that do not trade do not pay tax.
DOUBLE
TAX AGREEMENTS
Labuan,
being a region of Malaysia, is party to over forty double tax agreements.
The countries include: Albania, Australia, Austria, Bangladesh, Belgium,
Canada, China, Czech Republic, Denmark, Finland, France, Germany, Hungary,
India, Indonesia, Italy, Japan, Korea, Malta, Mauritius, Mongolia,
Netherlands, New Zealand, Norway, Pakistan, Papua New Guinea, Philippines,
Poland, Romania, Saudi Arabia, Soviet Union, Singapore, Sri Lanka, Sudan,
Sweden, Switzerland, Thailand, Turkey, UAE, UK, Vietnam, Yugoslavia and
Zimbabwe.
FINANCIAL
STATEMENT REQUIREMENTS
A
set of accounting records must be kept in Labuan. Non-trading (i.e.
investment and holding companies) and trading companies which elect to pay
tax of RM 20,000 p.a. are not required to file financial statements.
Such companies are exempt from appointing an auditor if they are not a
licensed offshore bank or insurance company, did not invite the public to
subscribe for shares or debentures or to deposit money with or lend money to
the company and the members of the company have resolved that no auditor be
appointed.
A trading company, which pays 3% of audited net profits, is required to
appoint an auditor and file audited financial statements.
There is a filing fee of RM 50 for 'adoption of accounts' and if the
accounts of the Labuan Company has been audited, then there is a filing fee
of RM 50 for the 'lodgement of the said audited accounts'.
Note that a Labuan Company accounts need not be audited unless the company
wishes to pay 3% of the net profit (as per the audited accounts).
TIME
FRAME
The time frame for the incorporation of a Labuan Offshore Company is about 3 - 4 days.
Firstly, you will be required to complete our questionnaire for
incorporation (as attached) and provide letters from two referees (see notes
to questionnaire) for each of the director/shareholder.
Upon receipt of the questionnaire for incorporation we will proceed to
conduct a name search on the availability of the proposed name with the
local authority. This will take about half a day to one day.
The name will be reserved of a period of 3 months effective from the name
approval date.
If the name is available for use, the documents for incorporation will then
be submitted. These are comprised of the following:-
a. Form 21 - Consent to Act as Director Form.
b. Memorandum and Articles of Association
- (our standard objects and articles clause shall apply here).
Once the documents for incorporation have been submitted, the local
authority will normally take about 2 days to issue the certificate of
incorporation.
The above time frame is based on using our agent’s nominees as promoters
for purposes of incorporation of the company. Our agent’s elected nominees
will subsequently resign as director and transfer the shares to your
nominees after the company is duly incorporated.
Should you elect to use your nominees for purposes of incorporation, the
incorporation process would largely be dependent on how soon you return to
us the documents for incorporation.
INFORMATION/DOCUMENTS
REQUIRED FOR INCORPORATION
Please refer
to the Incorporation Questionnaire and its accompanying Notes.
