AN UPDATE arising from the successful resolution of Judicial Review applications
Labuan companies carrying on business activities, whether licensed or non-licensed, are regulated under the Labuan Companies Act 1990 and the Labuan Financial Services and Securities Act 2010 where applicable. Whereas the tax and the economic substance requirements for each type of Labuan business activity are covered under the Labuan Business Activity Tax Act 1990 (“LBATA”).
Permitted Labuan business activities are categorised and defined in the table provided below showing the minimum economic substance requirements (“ESR”) to comply under the LBATA in order to benefit from the preferential tax rates of 0%-3%.
"Labuan business activity' is defined as a Labuan trading or a Labuan non-trading activity carried on in, from or through Labuan.
Labuan entity that undertakes 'Labuan business activity' other than Labuan business activities specified under the codes below DOES NOT REQUIRE TO COMPLY WITH ESR.
Please note that a business activity that earns royalty and other income derived from intellectual property rights (IP rights) will be assessed and taxed under the domestic Income Tax Act 1967.
Note: Business activities under codes 1 to 20 require licensing from Labuan FSA.
