BBS PRO TALK VOL 2
SUBSTANTIVE REQUIREMENTS FOR LABUAN BUSINESS ACTIVITY
Following the Malaysian 2019 Budget, regulations have been issued stipulating the requirements for Labuan business activity which shall take effect on 1 January 2019.
This Alert specifically summarizes the substantive requirements i.e the minimum number of full-time employees
and amount of annual operating expenditure in Labuan.
|No||Labuan entity carrying on a Labuan business activity||Minimum number of full-time employees in Labuan||Minimum amount of annual operating expenditure in Labuan (in RM’000)||Estimated amount in USD (in USD’000)|
|1||Labuan insurer, reinsurer||4||150||37|
|2||Labuan underwriting manager||4||100||25|
|3||Labuan insurance manager||4||100||25|
|4||Labuan insurance broker||4||100||25|
|5||Labuan captive insurer||4||100||25|
|6||Labuan international commodity trading company||3||3,000||750|
|7||Labuan bank, investment bank||3||180||44|
|8||Labuan trust company||3||120||30|
|9||Labuan leasing company||2||100||25|
|10||Labuan credit token company||2||100||25|
|11||Labuan development finance company||2||100||25|
|12||Labuan building credit company||2||100||25|
|13||Labuan factoring company||2||100||25|
|14||Labuan money broker||2||100||25|
|15||Labuan fund manager||2||100||25|
|16||Labuan securities licensee||2||100||25|
|17||Labuan fund administrator||2||100||25|
|18||Labuan company management||2||100||25|
|19||Labuan international financial exchange||2||120||30|
1) Labuan Business Activity (Requirements for Labuan Business Activity) Regulations 2018
2) Translated based on the exchange rate of RM4.08/USD1
3) Amounts are rounded up to the nearest thousands
HOW WOULD THE CHANGES IMPACT YOU
Labuan entities listed in the table above are required to employ the specified adequate numbers of full-time staff and certain amount of annual operating expenditure. Annual operating expenditure includes defraying payments, professional and statutory fees such as salaries, lease rental, service providers’ fees and license fees to Labuan FSA.
Failure to do so, the Labuan entity would not be eligible to enjoy the preferential tax rate of 3% under the Labuan Business Activity Tax Act 1990. Instead, it will be taxed at 24% under the Income Tax Act 1967.
At present, Labuan entities carrying on activities other than those listed in the table above, there is no any substance requirements imposed. We shall keep you updated on any developments.