This document provides a structured overview of the general statutory responsibilities applicable to all Labuan entities, including annual returns, financial reporting, AML/CFT compliance, tax identification, employment obligations and a comparison of taxation responsibilities.
Part A: What is a Labuan Entity?
A Labuan entity includes any of the following:
- A Labuan company incorporated under the Companies Act 1990
- A Labuan foundation established under the Labuan Foundations Act 2010
- A Labuan Islamic foundation under the Labuan Islamic Financial Services and Securities Act 2010
- A Labuan limited partnership or limited liability partnership under the respective Act of 2010
- A Labuan trust as defined in the Labuan Trusts Act 1996
- A Malaysian bank licensee or Islamic bank licensee as defined in the respective Acts
- Any Labuan financial institution as defined in the Labuan Financial Services Authority Act 1996
- Any person declared by the Minister to be a Labuan entity under subsection 2B(2)
Part B: General Responsibilities
| Responsibility | Requirement |
|---|---|
| Annual Return / Annual Solvency Declaration | Yes |
| Audited Financial Statement | Business Activity Code 1 to 20 and 23: Yes. Code 21 and 22: No (requires Management Account). Dormant: No (requires Management Account). |
| Board of Directors' Meeting in Labuan | Business Activity Code 22 |
| Annual Fee | All Labuan Entities |
| Annual Licence Fee | All regulated Business Activities under LFSSA |
| Internal Audit Report | All regulated Business Activities under LFSSA |
| Other Reporting | As specified in LFSSA, its regulations and guidelines |
| Comply with AML/CFT Requirements | Yes |
Part C: Other Obligations
| Obligation | Requirement |
|---|---|
| Register TIN | Yes |
| Submit CP204 | No |
| Register E Number | Yes |
| Submit Form E (annually) | Yes |
| Prepare Form EA / CP22 / CP22A | Yes (if have staff) |
| Register with EPF, SOCSO and EIS | Malaysian staff: Yes. Foreign staff: No. |
| Submit Monthly Return to EPF, SOCSO and EIS | Malaysian staff: Yes. Foreign staff: No. |
| Register with HRD | Yes, if meet the threshold set by HRD |
| Submit Monthly Return to HRD | Yes, if meet the threshold set by HRD |
| Impose WHT for Non-resident | Lodge Tax under ITA: Yes. Lodge Tax under LBATA: No. |
| Impose 2% WHT for Agents / Dealers / Distributors | Lodge Tax under ITA: Yes. Lodge Tax under LBATA: To be confirmed by the IRB. |
| Prepare CP58 and Submit CP107D | Lodge Tax under ITA: Yes. Lodge Tax under LBATA: To be confirmed by the IRB. |
Part D: Comparison of Taxation Responsibilities
Comparison between domestic companies, Labuan entities under ITA and Labuan entities under LBATA:
| Taxation Responsibility | Domestic Entity (ITA) | Labuan Entity (ITA) | Labuan Entity (LBATA) |
|---|---|---|---|
| Type of TIN | C Number | C Number | LE Number |
| Tax Return | Form C | Form C | Form LE1, LE4 (Code 1-20, 23), LE5 (Code 21, 22) |
| Comply with ESR | No | No | Yes |
| Tax Rate | 17% to 24% | 17% to 24% | 3% (trading) | 0% (non-trading), comply with ESR |
| Income from IP Rights | Taxed under ITA 1967 | Taxed under ITA 1967 | Taxed under ITA 1967 |
| CP204 | Yes | Yes | No |
| Form E | Yes | Yes | Yes |
| Form EA / CP22 / CP22A | Yes | Yes | Yes |
| CP58 and CP107D | Yes | Yes | Presumably Yes |
| SST | Yes | Yes | No |
| Stamp Duty | Yes | Yes | No |
| Withholding Tax to Non-resident | Yes | Yes | No |
* For further details, please refer to Tax Framework in Labuan IBFC: New Development.
Part E: Abbreviations
| Abbreviation | Full Name |
|---|---|
| EA | Employees Return |
| EIS | Employees Insurance System |
| EPF | Employees Provident Fund |
| ESR | Economic Substance Requirements |
| HRD | Human Resource Department |
| IP | Intellectual Properties |
| IRB | Inland Revenue Board of Malaysia |
| ITA | Income Tax Act 1967 |
| LBATA | Labuan Business Activity Tax Act 1990 |
| LFSSA | Labuan Financial Services and Securities Act 2010 |
| SOCSO | Social Security Organisation |
| SST | Sales and Service Tax |
| TIN | Tax Identification Number |
| WHT | Withholding Tax |
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