Labuan Offshore Companies Act of 1990

The Labuan Offshore Company Act was enacted in 1990 by the Malaysian government to help facilitate the creation of an offshore financial district and free-trading zone in the country's Federal Territory of Labuan. The Act allows the establishment and registration of offshore and foreign companies in Labuan, and promotes economic development by providing companies with low tax rates and fewer controls.

Significance

• Labuan is the main island, in a series of six, which comprise Malaysia's Federal Territory of Labuan. The island is located between the Malaysian state of Sabah and the island of Borneo.

Tax Benefits

• The Labuan Offshore Company Act provides various tax privileges for offshore companies in the region. Profits derived from offshore trading in Labuan are taxed a nominal 3 percent, while companies that engage in non-trading commercial activities are exempt from paying any income tax at all. Dividends and royalties received by offshore companies are also exempt from taxation in Malaysia.

Features

• The Act ensures that the beneficial ownership of offshore companies in Labuan do not have to be disclosed. However, all businesses and organizations must maintain one registered office and agent in Labuan. Offshore companies are allowed to have names in foreign languages, provided the Latin alphabet is used.

Labuan FSA

• The Labuan Financial Services Authority is the financial regulatory body in the region, which, according to its website, works to "spearhead and coordinate efforts to promote and develop Labuan as an International Business & Financial Centre (IBFC)."