Blog
The New Labuan Tax Regime: Towards the Advancement
Dec 20, 2017
Labuan, the official federal territory of Malaysia, is considered as a reasonably good place for the international business. However, it still needs to improve action standards with the BEPS Action 5. It is the latest standard of the OECD that should be followed by members of the BEPS Inclusive Framework.
Adapting tax legislation to the new rules is supposed to start at the earlier convenience since the regime is aligned with these standards and is recognized as a respected international tax practice.
The Malaysian Central Bank and its leaders are very concerned about the future of Labuan. The plan for the nearest future is to fight harmful tax competition, adjust taxation rules to be more transparent, change tax incentives for taxpayers and make other adjustments.
Labuan feels the urge to improve now, since this tax regime was created in 1990, things have changed and the Governor of the Central Bank of Malaysia mentioned this at the Labuan Industry Annual Dinner. He is aware that now international taxation practices have to grow gradually to correlate with the OECD requirements. Nowadays, respectful offshore jurisdictions are not outlaw or above the law and never try to avoid taxation, do not exploit gaps in the legislation, don’t focus only on gaining profits but also to remain a safe harbor for business.
Statement of the Central Bank Governor means that Labuan will implement latest BEPS requirements very soon. Government authorities will have to increase transparency and create stricter rules for the financial service providers. Furthermore, all above mentioned is a minimum requirement to comply with the OECD rules.
Is your business located in Labuan? Are you thinking on moving company to this Malaysian territory? There is a need to rationalize your company’s activity now. In other words, your business will need the financial and service audit as well as the income from the financial property.
Offshorelicense Ltd constantly controls international standards of doing business as well as implementation of all these standards by different jurisdictions. Prospectively, we see a new growth possibility in Labuan jurisdiction and we will analyze the best balance for your business.