LOFSA - WHY CHOOSE OFFSHORE?

Protect Wealth. Save Tax. Reduce Operating Costs.

Individuals and corporations go offshore for a number of reasons:

• Save tax
• Protect wealth
• Reduce risk
• Maintain privacy
• To avoid unnecessary regulations or bureaucracy.

Use the information and links set out below to help you find an offshore solution that works for you.

LOFSA - THE LABUAN OFFSHORE COMPANY

A Labuan offshore company shall only carry on business in, from or through Labuan. An offshore company may not carry on business with a resident of Malaysia except as permitted by the Offshore Banking Act 1990 and may not carry on the business of banking or insurance. A Labuan offshore company has the following characteristics

TAXATION

An offshore company may elect to pay either 3% tax on audited net profits or pay a flat rate of RM20,000 per annum which would negate the requirement to appoint an auditor and file audited financial statements.

SHAREHOLDERS

The minimum number of shareholders required is one. Details of shareholders are not available for inspection by the public. No resident of Malaysia, other than a trust company or a domestic or foreign company granted a licence may hold shares in an offshore company.

DIRECTORS

A minimum of one director, either corporate or individual is required. Directors do not have to reside in Labuan. Details do not appear on the public file.

SECRETARY

An offshore company must have at least one resident secretary who must be an officer of a licensed Labuan trust company. Additional secretaries who are not resident in Labuan may be appointed.

ANNUAL REPORTING

An annual return must be lodged annually, not later than 30 days before the anniversary of the date of the company’s incorporation. As dealt with above a Labuan offshore company can dispense with the requirement to file annual audited accounts so long as the members of the company resolve at a general meeting not to appoint an auditor. In this case an offshore company can elect to pay a flat rate of tax of RM20,000 per annum or the same amount as an annual registration fee. If, however, the offshore company intends to take advantage of the 3% tax on audited net profits then accounts must be audited by an approved auditor and filed.

RESTRICTIONS ON NAME AND ACTIVITY

Offshore companies are allowed to have names in a foreign language, provided they use Roman characters and the letter L as part of its name.

LOFSA - DEFINITION OF OFFSHORE COMPANIES

Unlike companies incorporated in an individual's or a corporation's home country, an offshore company incorporated in an offshore centre may offer the owner :

• Low or zero taxation in the country where the company is incorporated.
• A greater degree of privacy.
• Less bureaucracy.
• To reduce costs.

These features make offshore companies ideal structures for safeguarding an individual's privacy, protecting personal wealth, minimizing tax and maximizing a corporation's profit.

Why do tax havens and offshore financial centres offer low or zero tax?

The governments of many countries actively seek international investment and trade to stimulate their own economies. The offshore industry has developed as a result of this straightforward objective.

Many of these countries are known as tax havens. Traditionally, tax havens are free from foreign exchange controls and have introduced specific legislation and corporate structures, designed exclusively for international business and foreign investment. An International Business Company, or an IBC, is the most widely used corporate vehicle in this regard with the widest variety of applications.

LOFSA Labuan 1

Labuan offers a range of financial services including offshore banking, insurance, trust business, fund management, investment holding and investment banking. Fund management activities have been given a boost with the recent introduction of offshore securities legislation.

LOFSA, the Labuan Offshore Financial Services Authority, was established in 1996 as a single regulatory agency or a one-stop agency for the offshore centre. There are 63 offshore banks, nearly 50 insurance and insurance related companies and 20 trust companies, as well as numerous legal and accounting firms.

An offshore company in Labuan can take two forms. Potential offshore investors can either set up an offshore company or a foreign offshore company, either by incorporating or registering their companies to participate in the offshore activities and to enjoy the attractive tax treatment provided under the Labuan Offshore Business Activity Tax Act 1990. The company must also employ the services of a trust company which is incorporated under the Companies Act 1965 and registered under the Labuan Trust Companies Act 1990 to discharge its statutory obligations.

Labuan subdivision teritiry

The territory of Labuan is subdivided into administrative districts:

1. Kampung Tanjung Aru
2. Batu Arang
3. Batu Manikar
4. Bandar Labuan
5. Layang-Layangan
6. Lubok Temiang
7. Rancha-Rancha
8. Kg. Tanjong Kubong
9. Kg. Bukit Kalam
10. Kg. Patau-Patau I & II
11. Kg. Pohon Batu
12. Kiamsam
13. kg. Sungai Bedaun
14. Kg. Sungai Pagar
15. Kg. Sungai Labu

Labuan - Water and Electricity

Present demand rated at 6 million gallons per day (MGD) - 4.2 MGD from Sabah and 2 MGD from Bukit Kuda and Kerupang reservoirs.

122 mw is of which 60 mw is supplied to Sabah. Daily consumption is rated at 39 mw.This means Labuan has an excess capacity of 23 mw.

Labuan -Conviniences

Registered automobiles (Year 1999) - 23,638
Hotel Rooms (Year 2001) - 959