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Why Dubai

Why Dubai

One of the LOWEST TAX RATES in the world, embracing 0% Corporate Tax in the UAE

The United Arab Emirates (UAE) stands as a global beacon of business innovation and prosperity. In the heart of this thriving economic landscape, the UAE offers an array of incentives and advantages to both local and international companies. At the core of this allure is the UAE’s corporate tax policy, a game-changer that propels businesses towards uncharted heights.

Tax Exemptions for Companies in Dubai vs Malaysia

Why Dubai-Tax Exemption.jpg
Tax
Rate
Conditions
Value-Added Tax (VAT)
While the UAE champions business freedom, it maintains a balanced approach with a 5% VAT rate, obliging businesses with revenue exceeding AED 375,000 Yet, the UAE’s commitment to global trade is evident as exports of goods remain untaxed, fostering an environment ripe for international commerce.
5%
0%
Businesses with revenue > AED 375,000 (USD 102,000)
Export of goods
Value-Added Tax (VAT)
In the UAE, the benefits extend beyond corporate tax. Dividends, capital gains, intragroup transactions, and reorganizations all enjoy a tax rate of 0%, fostering an ecosystem where business can flourish without restraint.
0%
Dividend and Capital gain, as well as intragroup transaction and reorganisations.
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Featured Ideas & Insights

Servicing Singapore from Outsourcing Office in Malaysia

Servicing Singapore from Outsourcing Office in Malaysia

Servicing Singapore from Outsourcing Office in Malaysia

Let us be your partner to manage your work from Malaysia home employees, from payroll, leave records, utilities supply, fully furnished outsourcing office, compliances to law and regulations.
Servicing Singapore from Outsourcing Office in Malaysia
Work from Malaysia Home
Work from Outsourcing Office (WFOO) in Malaysia
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Featured Ideas & Insights

Why Singapore?

Why Singapore?

Singapore is a strategic base to implement your growth strategies and to manage and integrate your operations for the region and beyond. Being one of the lowest income tax rate countries, Singapore has further announced a full and partial tax exemption for the newly incorporated company for the first 3 years consecutively.

1) One of the LOWEST TAX RATES in the world
其中一个享有世界上最低税率的国家之一

With effect from 2010, Singapore corporate income tax rate has further reduced from 18% to 17%, being one of the lowest tax rates in the world. Singapore Government has declared a new start-up tax exemption for newly incorporated and partial tax exemption for existing companies:

自2010年起,新加坡企业所得税率已经进一步调整从18%下降至17%进而成为其中一个享有世界上最低税率的国家之一。新加坡政府已宣布新成 立和现有的公司都享有新创公司税务豁免计划和部分课税的优惠:
Tax Exemptions for Newly Start-up Companies in Singapore
新加坡新成立公司的课税优惠
why singapore-01

4.25% tax on first S$100K chargeable income
应课税收入在首10万新元课税仅4.25%

For a newly incorporated company (1), the corporate income tax rate is 4.25% on the first S$100k of chargeable income for the first 3 years of assessment consecutively.

对于一个新成立的公司(1),首3年凡应课税收入在首10万新元的企业,其所得税税率为4.25%。

8.50% tax on chargeable income of above S$100K up to S$200K
应课税收入介于10万新元以上至20万新元之间, 其课税仅8.50%

The newly incorporated companies are continued to enjoy for the partial tax exemption which effectively translates to about 8.50% tax rate on chargeable income of above S$100,000 up to S$200,000 per annum. The chargeable income above S$200,000 will be charged at the normal headline corporate tax rate of 17%.

该新成立公司将继续享有应课税收入介于10万新元以上至20万新元之间, 其课税仅8.50%的部分免税优惠。凡应课税收入在20万新元以上将收取17% 的正常公司税率。
Tax Exemptions for Existing Companies in Singapore
新加坡现有的公司的课税优惠
why singapore
The 4th years of assessment and onwards, the companies pay only 4.25% tax on their first S$10,000 of chargeable Income and 8.50% for the next S$190,000. The chargeable income above S$200,000 will be charged at the normal headline corporate tax rate of 17%.

第4年起, 现有公司应课税收入的首1万新元仅需支付4.25%的所得税及接下来的19万新元的应课税收入需支付8.50%的所得税。应课税收入在20万 新元以上将收取17%的正常公司税率。

2) Engage in TRIANGULAR or TETRAGONAL trade 事三角或四方贸易

The companies engaged in international transactions among two or more countries, for instance, the companies purchase goods from e.g. China, and then sell them to e.g. America or trade domestically, Malaysia. This is when the companies need a lower tax trading company (2) to act as the intermediary to issue invoice and packing list in order to strengthen their competitive power in the international or local market.

在国际贸易中从事两个或两个以上国家的贸易公司,例如,公司从中国购买商品,然后出售给美国或马来西亚。这公司正需要一个较低的税率的贸 易公司(2)作为中介发出发票和装箱单,以加强其国际或本地市场上的竞争力。

3) Government Incentives 政府的激励措施

Overview of government incentives 政府奖励概述

Depending on your company’s business plans, you may consider various tax incentives and grants as follows:
您可根据贵公司的业务计划,考虑以下各种税务奖励和援助金:
Internationalisation 国际化
Incentives available 可用奖励
Benefits 利益
International Headquarters (IHQ) Award
国际总部(IHQ)奖励
Concessionary corporate tax rates of 5% or 10% for companies that commit to anchor substantive HQ activities in Singapore to manage, coordinate and control regional business operations. The award is accompanied with the award of Development and Expansion Incentive governed by Singapore Economic Development Board (EDB).

致力于新加坡发展实质性总部活动公司以管理、协调和控管区域性运营业务的公司可 享有5%或10% 的优惠公司税率, 此奖励附属于发展与扩展奖励(DEI),并由新加坡 经济发展局(EDB)审核。
Mergers & Acquisitions (M&A) Scheme
合并与收购 (M&A)计划
The acquiring company is entitled to the following benefits:
收购公司将获得以下好处:

  • 25% of M&A allowance (capped at S$10 million) of the total acquisition value capped at S$40 million per YA.
    享有相当于 25% 总收购价值的合并与收购津贴(限于 1 千万新币之内),符合此 项奖励的总收购价值则限于每评税年度(YA)4 千万新币之内。
  • Double Tax Deduction (DTD) on the transaction cost capped at S$100,000 incurred during the share acquisition process.
    股权收购的交易成本可享有双重扣税(DTD),上限为 10 万新币。
Double Tax Deduction (DTD) for Internationalisation Scheme
国际化计划双重扣税(DTD)
Enjoy up to 200% tax deduction on qualifying expenditure incurred on market expansion and investment development activities.

每评税年度公司在市场扩张和投资发展活动方面所花费的合格开支,可享有最多 200%扣税。

The qualifying expenditures include:

每评税年度公司在市场扩张和投资发 符合扣税条件的开支包括:

  • Qualifying salary expenses incurred for employees posted overseas in an overseas entity
    员工海外公干的合格工资费用
  • Overseas business development trips and missions
    海外业务拓展及执行任务
  • Overseas investment study trips and missions
    海外投资考察及执行任务
  • Overseas trade fairs
    海外商展
  • Local trade fairs approved by Enterprise Singapore or STB
    新加坡企业发展局(Enterprise Singapore)或新加坡旅游局 (STB)批准的国 内商展
Market Readiness Assistance (MRA) grant
市场备入(MRA)援助金
Funding support of 50% of eligible costs, capped at S$100,000 per company per new market by Enterprise Singapore. The eligible costs for marketing activities including overseas market set-up, business development and market promotion.

新加坡企业发展局(Enterprise Singapore)将为合格成本提供50%资金援助,援助 额数的上限为每个新市场100,000新币。 营销活动的合格费用包括海外市场设置、业 务发展以及市场推广。
Trading 贸易
Incentives Available 可用奖励
Benefits 利益
Global Trader Programme
全球贸易商计划
A concessionary corporate tax rate of 5% or 10% for a renewable 3 or 5-year period on qualifying trading income granted by Enterprise Singapore, which includes income from physical trading, brokering of physical trades, derivative trading income, and income from structured commodity financing activities, treasury activities and advisory services in relation to mergers and acquisitions.

凡符合条件的实物交易收入、衍生品交易收入、结构性商品收入及与并购有关的融资 活动、 财 务 活 动 和 咨 询 服 务 , 皆 可 享 有 由 新 加 坡 企 业 发展局( Enterprise Singapore)所管理的全球贸易商计划内的5%或10%的优惠公司税率,并可续期3年或5 年。

Manufacturing and Services 制造与服务

Incentives Available 可用奖励
Benefits 利益
Pioneer Incentive
新兴奖励
Tax exemption on income from qualifying activities for a period of not exceeding 15 years, administered by Economic and Development Board (EDB).

合格活动收入将享有高达15年的免税优惠。此奖励由新加坡经济发展局(EDB)管理 及审核。
Development & Expansion Incentive (DEI)
发展与扩张奖励(DEI)
Reduced tax rate of 5% or 10% on incremental income from qualifying activities, limited to 5 years. The incentive is governed by Economic and Development Board (EDB).

合格活动的增量收入于五年内只需付5% 或10%的优惠公司税率。此奖励由新加坡经济 发展局(EDB)管理及审核。
Investment Allowance (IA)
投资津贴(IA)
Allowance of up to 100% (on top of normal capital allowance) on approved fixed capital expenditure. This incentive is administered by Economic and Development Board (EDB).

除了一般的资本减免以外,部分被批准的固定资本开支可享有额外高达100%的津贴。 此奖励由新加坡经济发展局(EDB)管理及审核。
Integrated Investment Allowance (IIA)
综合投资津贴(IIA)
Additional allowance on fixed capital expenditure incurred on qualifying productive equipment placed with an overseas company for an approved project. This scheme is administered by Economic and Development Board (EDB).

为海外公司的批准项目设置合格生产设备方面所花费的固定资本开支,可享有额外津 贴。此津贴由新加坡经济发展局(EDB)管理及审核。
Land Intensification Allowance (LIA)
土地集约化津贴 (LIA)
Initial allowance of 25% and annual allowance of 5% on qualifying capital expenditure incurred for the construction or renovation/extension of a qualifying building or structure. Annual allowances of 5% are granted until total allowance amounts to 100% of qualifying capital expenditure. Approvals for the incentive will be granted by the Economic Development Board (EDB).

在建造或装修/扩建合格建筑物或结构方面所花费的合格支出,可享有25%初始津贴及 5% 年度津贴。 有关5% 年度津贴将继续发放,直到津贴总额相等于100%合格资本开 支。此津贴由新加坡经济发展局(EDB)管理及审核。
Automation Support Package(under Enterprise Singapore)
自动化支援配套(由新加坡企业发展局管辖)


  • Capability Development Grant (CDG)
    企业发展援助金(CDG)
  • Investment Allowance (IA)
    投资津贴 (IA)
  • Enhanced SME Equipment Loan
    增强中小企业设备贷款
Grant support up to 70% of qualifying project costs such as equipment, training and consultancy.

合格项目成本,例如设备,培训和咨询费用将享有高达70%的补助津贴。

Qualifying projects may be eligible for an IA of 100% on the amount of approved capital expenditure, net of grants. The approved capital expenditure is capped at S$10 million per project.

合格项目的被批准资本开支可能符合条件享有100% 投资津贴,扣除全体一切援助 金。 批准资本开支的限额为每个项目1000万新币。

Under Enterprise Financing Scheme (EFS), qualifying SMEs may receive up to 70% government’s risk-share with participating financial institutions for qualifying projects. SMEs can apply for fixed asset loans of up to S$30 million.

根据企业融资计划(EFS),政府将通过参与的金融机构为中小企业合格项目承担高 达70%的风险份额。 中小企业可以申请高达3000万新币的设备和工厂贷款。
Financial and Treasury 金融与财政部
Incentives Available 可用奖励
Benefits 利益
Finance & Treasury Centre (FTC) Incentive
金融与财政部中心(FTC)奖励
Enjoy concessionary corporate tax rate of 8% for five years on income derived from qualifying services/ activities as well as withholding tax exemption on interest payments on loans from banks and approved network companies for FTC activities. This incentive is administered by Economic and Development Board (EDB).

来自合格服务/活动的收入可享有为期五年的8% (已降低)公司税。偿还给银行及受 承认网络公司(供FTC活动用途)贷款的利息付款可豁免预扣税. 此奖励由新加坡经济 发展局(EDB)管理及审核。
Financial Sector Incentive (FSI)
金融领域奖励(FSI)
Concessionary tax rate of 10% or 13.5% for licensed financial institutions, from large universal banks, fund managers to capital market players. This incentive is governed by Monetary Authority of Singapore (MAS).

合格的金融机构包括大型通用银行、基金经理及资本市场参与者皆可享有,10%或 13.5%的优惠税率。此奖励由新加坡金融管理局(MAS)管辖。
Research and Development (R&D) and intellectual property (IP) management 研究与开发(R&D)和知识产权(IP)管理
Incentives Available 可用奖励
Benefits 利益
Research Incentive Scheme for Companies (RISC)
公司研究奖励计划 (RISC)
Co-funding to encourage and assist businesses companies in Singapore to conduct or expand their research and development (R&D) activities in science and technology. This scheme is administered by Economic and Development Board (EDB).

属共同资助性质,旨于鼓励和协助企业在进行或扩展其在科学技术领域的研发活动。
此计划由新加坡经济发展局(EDB)管理及审核。

Supportable project costs include expenditure in the following:
所资助的计划成本包括以下开支:

  • Manpower cost (up to 50% support)
    人力成本(资助高达 50%)
  • Equipment, materials, consumables and software (up to 30% support)
    设备、材料、耗材和软件(资助高达 30%)
  • Singapore-based professional services (up to 30% support)
    新加坡专业服务(资助高达 30%)
  • IPRs, e.g. licensing, royalties, technology acquisition (up to 30% support)
    知识产权,例如 许可证、特许权使用费、技术收购(资助高达 30%)
Intellectual Property Development Incentive (IDI)
知识产权发展奖励(IDI)
Reduced tax rate of 5% or 10% on a percentage of qualifying IP income for an initial period of not exceeding 10 years, and may be further extended for a period or periods not exceeding ten years each. This incentive is administered by Economic and Development Board (EDB).

合格知识产权收入将可享有不超过10年的5%或10%优惠税率,并可持续申请单次延长 不超过10年的奖励期限。此奖励由新加坡经济发展局(EDB)管理及审核。
Approved Foreign Loan Incentive (AFL)
许可外国贷款奖励 (AFL)
Reduced or nil withholding tax rate on interest payments on loans with minimum amount of S$20 million taken to purchase productive equipment. This incentive is administered by Economic and Development Board (EDB).

偿还(供购买生产设备用途)价值至少2000万新币贷款的利息付款可享有最低0%的预 扣税。此奖励由新加坡经济发展局(EDB)管理及审核。
Approved royalties incentive (ARI)
许可特许权使用费奖励(ARI)
Reduced or nil withholding tax rate on approved royalties, fees or contributions to research and development costs made to a non-tax resident.. This incentive is administered by Economic and Development Board (EDB).

许可特许权使用费或支付给非税务居民的研发成本可享有已降低或零预扣税。此奖励 由新加坡经济发展局(EDB)管理及审核。
Writing-down allowances for IP acquisition (S19B)
收购知识产权的减值税津贴 (S19B)
Automatic 5/10/15-year writing-down allowances on capital expenditure incurred for IPR acquisitions with legal and economic ownership. EDB’s approval is required if only economic ownership of IP rights is acquired.

如果收购知识产权的法律和经济所有权,可自动获得5/10/15年的资产减值税。 但如 果只收购知识产权的经济所有权,则需要EDB的批准。
Maritime, shipping and logistics 海运、船务和物流
Incentives Available 可用奖励
Benefits 利益
Maritime Sector Incentive (MSI) – Singapore Registry of Ships (MSI-SRS) and Approved International Shipping (MSI-AIS)
海运部门奖励(MSI) – 新加坡船舶注册管理机构 (MSI-SRS)和批准的国际航运(MSI-AIS)
Tax exemption on qualifying shipping income from operating Singapore and foreign- flagged ships, provision of specified ship management services, and income from foreign exchange and risk management activities which are carried out in connection with or incidental to the operations of ships for either a 10-year renewable period; or a 5-year non-renewable period, with the option of graduating to the 10-year renewable award at the end of the 5-year period. This incentive is administered by Maritime and Port Authority of Singapore (MPA).

经营新加坡和外国船舶的合格运输收入、提供指定的船舶管理服务,以及与为期5年 (不可更新但可选择转换为10年可更新奖励)或10年(可更新)船舶经营有关的外汇和 风险管理活动收入,均属免税。此奖励由新加坡海事与港务管理局(MPA)管辖。
MSI – Shipping Related Support Services (MSI-SSS) Award
MSI – 航运相关支持服务(MSI-SSS)奖励
Concessionary tax rate of 10% on the incremental income derived from carrying out approved shipping-related support services for a 5-year renewable period. This incentive is administered by Maritime and Port Authority of Singapore (MPA).

从提供以下符合条件的批准航运相关支持服务中获得的增加收入,可享有10%优惠税 率,为期5年可续期。此奖励由新加坡海事与港务管理局(MPA)管辖。

  • Ship broking;
    船舶经纪;
  • Forward freight agreement (FFA) trading;
    远期货运协议(FFA)交易;
  • Ship management;
    船务管理;
  • Ship agency;
    船务代理;
  • Freight forwarding and logistics services; and
    报关和物流服务;及
  • Corporate services rendered to qualifying approved related parties who are carrying on business of shipping – related activities.
    提供服务给从事与船务有关的合格和被批准的公司。
MSI – Maritime Leasing (MSI-ML) Award
MSI – 海运租赁(MSI-ML)奖励
Concessionary tax rate of 10% for up to 5 years on qualifying leasing or management income. This incentive is administered by Maritime and Port Authority of Singapore (MPA). This incentive is administered by Maritime and Port Authority of Singapore (MPA).

合格的租赁或管理收入可享有长达5年的10%税收优惠。此奖励由新加坡海事与港务管 理局(MPA)管辖。
Maritime Innovation & Technology (MINT) Fund
海事创新与科技(MINT)基金
To promotes and encourages upstream research, product and solution development relevant to the maritime industry in Singapore. This incentive is administered by Maritime and Port Authority of Singapore (MPA).

旨于促进和鼓励与新加坡海运业相关的上游研究、产品和解决方案开发。此奖励由新 加坡海事与港务管理局(MPA)管辖。

Grant of up to 70% of the total qualifying project costs (inclusive of input GST), comprising of manpower and equipment either engaged or acquired for the purposes of the project, and other operating expenditure incurred for the purposes of the project.

联合资助高达70%项目总成本,包括人力、设备、和其他与项目有关的费用。

4) TAX EXEMPTION ON DIVIDEND DECLARED FROM SINGAPORE 豁免新加坡股息税

Dividend declared out of the profit derived from Singapore Company and received in Malaysia is exempted from tax(3).

在马来西亚收到新加坡公司利润发出来的股息是免课税(3)的。

5) TAX TREATIES 税收协定

Singapore has entered into Double Taxation Agreement (“DTA”) with 88 countries. Please refer to APPENDIX I.

新加坡已与 88 个国家签订了双重课税协定(“ DTA”)。请参考附录一。

6) AUDIT EXEMPTION of a Singapore Company 豁免新加坡公司审计

A company incorporated on or after 1 July 2015, if a private company that fulfils at least two of the following three quantitative criteria in each of the immediate past two financial years is exempted from audit (4) : (a) Total annual revenue of not more than SGD 10 million; (b) Total assets of not more than SGD 10 million; (c) Number of employee of not more than 50.

凡公司会计年度从2015年7月1日开始经营的私营公司,其过去两个会计年度满足至少以下两个条件将允许豁免审计(4) :(一)其总年收入不超过 新元 1 千万;(二)其总资产不超过新元 1 千万;(三)其雇员的数量不超过50个。
1. a) It is incorporated in Singapore and a tax resident of Singapore for that Year of Assessment. b) It has no more than 20 shareholders throughout the basis period relating to that Year of Assessment and all its shareholders are individuals throughout the basis period relating to that Year of Assessment; or there is at least one individual shareholder with a minimum of 10% shareholding. c) Its principal activity is not related to (i) investment holding, or (ii) property developer for sales, investment, or both.

2. To consider a company as resident in Singapore, the control and management of the business must be exercised in Singapore. Though the term “control and management” is not clearly defined by authorities, a generally accepted consensus is that it refers to the policy level decision making at the level of Board of Directors and not the day-to-day decision making and operations.

3. Section 127 (1) – Exemptions from tax. Any income specified in Part 1 of Schedule 6 shall be exempt from tax. Part 1 Schedule 6, para 28 (1), Income of any person, other than a resident company carrying on the business of banking, insurance or sea or air transport, for the basis year of assessment derived from sources outside Malaysia and received in Malaysia Part 1 schedule 6, para 28(1), exempt income of any person derive from sources outside Malaysia and received in Malaysia (See also exception).

4. Existing safeguards will however be retained, such as requiring all companies to keep proper accounting records, and empowering shareholders with at least 5% voting rights to require a company to prepare audited accounts.
Categories
Featured Ideas & Insights

Why Labuan?

Why Labuan?

TAX BENEFITS

1. Corporate Tax 3%

A. The Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulation 2021 has been gazetted on 22 November 2021 and are deemed to have come into operation on 1 January 2019, a Labuan company carrying on a Labuan business activity is only subject to tax at the rate of 3% of net profit PROVIDED that it has fulfilled the requirement of the number of full time employees and an amount of annual operating expenditure as specified in the Schedule below:

Labuan Company Carrying on a Labuan Business Activity

Minimum Number of Full Time Employees in Labuan

Minimum Amount of Annual Operating Expenditure in Labuan (RM)

Labuan Insurer, Labuan reinsurer, Labuan takaful operator or Labuan retakaful operator

3

200,000

Labuan underwriting manager or Labuan underwriting takaful manage

4

100,000

Labuan insurance manager or Labuan takaful manager

4
100,000

Labuan insurance broker or Labuan takaful broker

2

100,000

Labuan captive insurer or Labuan captive takaful –
  1. Labuan first party captive insurer or Labuan first party captive takaful; or
  2. Labuan third party captive insurer or Labuan third party captive takaful.
2
2

100,000

100,000

Labuan bank, Labuan investment bank, Labuan Islamic bank or Labuan Islamic investment bank

3

200,000

Labuan trust company

3

120,000

Labuan leasing company or Labuan Islamic leasing company

  1. 10 or less related Labuan leasing companies or Labuan Islamic leasing companies;
2 per group
100,000 for each Labuan leasing company or Labuan Islamic leasing companies;
  1. 11 to 20 related Labuan leasing companies or Labuan Islamic leasing companies;
3 per group
100,000 for each Labuan leasing company or Labuan Islamic leasing companies;
  1. 21 to 30 related leasing companies or Labuan Islamic leasing companies;

4 per group

100,000 for each Labuan leasing company or Labuan Islamic leasing companies;
  1. More than 30 related Labuan leasing companies or Labuan Islamic leasing companies
Increase of 1 employee for every additional 10 related companies or Labuan Islamic leasing companies;
100,000 for each Labuan leasing company or Labuan Islamic leasing companies;

Labuan credit token company or Labuan Islamic credit token company

2

100,000

Labuan development finance company or Labuan Islamic development finance company

2

100,000

Labuan building credit company or Labuan Islamic factoring company

2

100,000

Labuan factoring company or Labuan Islamic factoring company

2

100,000

Labuan money broker or Labuan Islamic factoring company

2

100,000

Labuan fund manager

2

100,000

Labuan securities license or Labuan Islamic securities license

2

100,000

Labuan fund administrator

2

100,000

Labuan company management

Provision of treasury processing services and such other services as defined in Section 129 of the Labuan Financial Services and Securities Act 2010.

2

100,000

Labuan International Financial Exchange

2

120,000

Self-regulatory organisation or Islamic self-regulation organisation

2

120,000
Labuan entity that carries on any one or more of the following business activity:
  1. Administrative services
    • Services pertaining to employee management, payroll management, property management, human resource management, financial planning, contract or subcontract management, facilities management or proposal management.*
  2. Accounting services
    • Services pertaining to recording, analysing, summarizing or classifying financial, commercial and business transactions and information of a person or business.*
  3. Legal services
    • conveyancing services ;*
    • legal advisory services ;*
    • litigation or legal representation services in any proceedings before any court, tribunal or other authority ;or *
    • legal dispute resolution services including alternative dispute resolution. *
  4. Backroom processing services
    • services relating to settlements of receivables and payables, clearance, record maintenance, regulatory compliance or information technology (IT) related services which are usually performed by administration and support personnel who do not deal directly with client. *
  5. Payroll services
    • services relating to:- processing, calculation, payment and deduction of remuneration, benefits, tax and statutory payment ; or
    • issuance of payslip and tax statement *
  6. Talent management services;
    • services relating to the provision of human resource services to attract, onboard, develop, motivate, and retain employees.*
  7. Agency services ;
    • services relating to the provision of specific services on behalf of another group, business, or person pursuant to an agency agreement between the agent and its client.*
  8. Insolvency related services;
    • services related to administering company liquidations or winding up or personal bankruptcy.*
  9. Management services other than Labuan company management under item 17
    • organization and coordination of activities of a business in order to provide services to the clients and usually consist of organizing, supervising, monitoring, planning, controlling and directing business’s resources such as human, financial and technology*
*As per Frequently-Asked Questions (FAQ) on Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2021 [P.U. (A) 423/2021] issued by Labuan Financial Services Authority (LOFSA) dated 14 December 2021.*
2

50,000

Labuan entity that undertakes investment holding activities other than pure equity holding activities
1

20,000

Labuan entity that undertakes pure equity holding activities
Exempted under the Labuan Business Activity Tax (Exemption) Order 2020 [P.U (A) 177/2020]

20,000

B. Management And Control Requirement For Labuan Entity That Undertakes Pure Equity Holding Activities

Regulation 3, The Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulation 2021 which is deemed to have come into operation on 1 January 2021, requires the above mentioned company to comply with the following:

  1. meeting of the board of directors is convened in Labuan at least once a year;
  2. the registered office of the Labuan entity shall be situated in Labuan;
  3. the secretary of the Labuan entity appointed under the Labuan Companies Act 1990 shall be resident in Labuan; and
  4. the accounting and business records including the minutes of meeting of the Labuan entity’s board of directors shall be kept in Labuan.

C. Income derived from intellectual property rights is subject to tax at the rate of 17% or 24% under Income Tax Acts 1967(“ITA”) .

With effect from 1 Jan 2019, under Income Tax (Deductions Not Allowed for Payment Made to Labuan Company by Resident) Rules 2018 (Amendment) 2020, the following type of payments made to a Labuan Entity by a company resident in Malaysia are not entitled to a tax deduction:

Type of payment

Amount not allowed for deduction

Interest payment

25%

Lease rental

25%

Other payments

97%

2) 0% ON SERVICE TAX AND 6 % ON IMPORTED SERVICE

No service tax shall be charged on any taxable service provided within or between Special Areas and Designated Areas unless on the taxable services prescribed in the Service Tax (Imposition of Tax for Taxable Service in Respect of Designated Areas and Special Areas) Order 2018.

3) 0% ON WITHHOLDING TAX

There is no withholding tax on dividends paid by a Labuan Company in respect of dividends distributed out of income derived from Labuan business activities or income exempt from income tax. Interest, royalties, lease rental, technical fee and management fees paid to a non-resident are not subject to withholding tax.

4) 0% ON STAMP DUTY

This may include but not limited to transfer of share, etc.

5) 100% EXEMPTION OF DIRECTOR’S FEE RECEIVED BY NON-CITIZENS INDIVIDUAL

6) DOUBLE TAXATION AGREEMENT (DTA) WITH MORE THAN 70 COUNTRIES

Labuan Company enjoys the benefits of more double taxation treaties than any other offshore company as it almost enjoys same full double taxation benefit as Malaysia company except for fourteen (14) of those 78 countries, and it can enjoy full treaty benefit even with those fourteen (14) countries by incorporating a Malaysian domestic subsidiary company.

Malaysia has entered into Double Taxation Agreements with various countries as follows:-
Double Taxation Agreements
^ Limited Agreements
# Income Tax Exemption Order
@ Synthesized text
Currently, Labuan has been specifically excluded from Double Taxation Agreement with the countries as follows:-

7) LIBERAL LABUAN EXCHANGE CONTROL ENVIRONMENT – FREE FLOW OF FUNDS

8) INVESTMENT PROTECTION AGREEMENT (IGA) WITH MORE THAN 60 COUNTRIES

9) THE CONFIDENTIALITY OF COMPANY, SHAREHOLDER AND DIRECTORS’ INFORMATION IS ENSURED

10) LABUAN COMPANY VS BVI COMPANY

Labuan Company

BVI Company

Labuan is low-tax jurisdiction country.

BVI is tax-free jurisdiction country.

Certain home country may impose the income tax law on incomes deriving from offshore, if they have not been taxed offshore, particularly, when they are remitted back, this may appy to BVI Co but not Labuan Co as it pays minimum tax.

Labuan Co enjoys more than 70 countries’ double tax treaties (DTAs).

BVI enjoys only 2 countries’ (Japan and Switzerland) double tax treaties (DTAs), and these treaties are not used in practise.

Dividend declared from Labuan Co to Malaysia is free of tax.

Dividend declared from BVI co may subject to income tax.

Note: If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.

No withholding tax on interest payment.

BVI has applied the European Union (EU) Savings Directive since 1 July 2005. A withholding tax (initially 15%, rising to 20% from 1 July 2008) has been applied to interest payments to natural persons resident within the EU.

Labuan has its registered auditor under its jurisdiction. The income tax payable is allowed to base on the audited profit, the source of income is cleared for reinvestment or dividend purpose, once it is paid.

BVI has no registered auditor under its jurisdiction.

ILLUSTRATIONS ON LABUAN COMPANY STRUCTURE

1) Labuan Leasing Company or Labuan Islamic Leasing Company

Suitable Industries
  • Vessel, aircraft, shipping, oil & gas, high value assets co.
Tax Advantages
  • Income tax is only 3% of net profit
  • Dividend income received by Labuan Co is exempted from tax.
  • No withholding tax on dividend declared And lease rental made by Malaysian subsidiaries or 3rd Party Malaysian Co.(2)
(1) A licence fee of RM60,000 (USD15,000) per year is only applicable in respect of leasing arrangements with Malaysian residents; no licence fee is payable if the Labuan Company is only carrying out leasing activities with non-Malaysian residents.

(2) If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.

2) Investment Holding Company

Suitable Industries :

  • Investment holding or offshore investment.

Tax Advantages

  • Dividend income received by Malaysian Parent Co(1)  or Labuan Co is exempted from tax.
  • No withholding tax on dividend declared by Labuan Co to either Malaysian or Foreign Parent Co.
  • No withholding tax on interest charged by Malaysian or Foreign Parent Co to Labuan Co.
  • No Capital Gain Tax and stamp duty for the transfer of shares in Labuan Co, e.g. dispose the investment in Foreign Manufacturing Co by selling Labuan Co.
  • Enjoys double tax treaties with more than 70 countries via a Labuan Co.
(1) If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.

3) Captive Insurance

Suitable Industries :

  • Captive Insurance

Tax Advantages

Income tax is only 3% of net profit

  • Dividend income received by Malaysian Parent Co(1) is exempted from tax.
  • No withholding tax on dividend declared by Labuan Captive Insurance Co.
  • Enjoys double tax treaties with more than 70 countries via a Labuan Co.
(1) If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.

4) Offshore Financing

Suitable Industries :

  • Fund managers

Tax Advantages

  • Income from investment is exempted from tax for Labuan Co.
  • Dividend from Labuan Co is exempted from tax.
  • No withholding tax either on dividend declared by or interest charged from Labuan Co to Labuan Funds.
  • Distribution from Labuan Funds to investors is not subject to withholding tax.
  • Enjoys double tax treaties with more than 70 countries via a Labuan Co.

Other Advantages

  • Lower cost of funds.
  • Liberal Labuan exchange control environment.
  • Debt instruments of Labuan Co may be listed.
Investment Funds 投资基金
Islamic Financing 伊斯兰融资
Categories
Featured Ideas & Insights

Malaysia Principal Hub Incentive

MALAYSIA PRINCIPAL HUB TAX INCENTIVE

Principal Hub is a locally incorporated company that uses Malaysia as a base for conducting its regional or global businesses and operations to manage, control, and support its key functions including management of risks, decision making, strategic business activities, trading, finance, management and human resource.

1. Overview Of The Incentive

An approved Principal Hub company is eligible to enjoy the following concessionary corporate income tax rates on income derived from qualifying activities:
Category
Concessionary Corporate Income Tax Rate
Blocks (Years)

Tier 2

Tier 3
A. New Company
Tier 1 : 0%
Tier 2 : 5%
5 (+5)
Trading and services income derived from qualifying activities
Refer to Appendix A
B. Existing Company (Approved OHQ/IPC/RDC with or without incentive)
10% on the total statutory income
5
Trading and services income derived from qualifying activities
Refer to Appendix B
C. Existing companies (Existing Manufacturing / Services Companies)
10% on the total statutory income
5
Trading and services income derived from qualifying activities
Refer to Appendix C
Royalties and other income derived from Intellectual Property Rights (IPRs) will be excluded from this incentive.

2. Minimum Requirements

  • Local incorporation under the Companies Act 2016 and resident in Malaysia.
  • No local equity/ownership condition.
  • Paid-up capital of more than RM2.5 million.
  • Minimum annual sales of RM500 million (Additional requirement for companies applying for tax exemption on trading income).
  • Serve and control a minimum number of network companies1.
1 Network companies defined as related companies or an entity within a same group including subsidiary, branches and joint venture; or non-related companies have contractual agreement with applicant or applicant’s ultimate company in regards with applicant’s business and supply chain for at least 3 years.

3. List Of Qualifying Services

Strategic Services
Business Services
Shared Services
a. Regional P&L/Business Unit Management
b. Strategic Business Planning and Corporate Development
c. Corporate Finance Advisory Services
d. Brand Management
e. IP Management
f. Senior-level Talent Acquisition and Management
a. Bid and Tender Management
b. Treasury and Fund Management
c. Research, Development & Innovation1
d. Project Management
e. Sales and Marketing
f. Business Development
g. Technical Support and Consultancy
h. Information Management and Processing
i. Economic/ Investment Research Analysis
j. Strategic Sourcing, Procurement and Distribution
k. Logistics Services
a. Corporate Training and Human Resource Management
b. Finance & Accounting (Transactions, Internal Audit)

4. Requirement

  • To hire higher and diverse set of managerial/technical/professional skills such as management, analytics, communication, problem-solving and proficiency in information technology with a minimum salary of RM5,000 and RM25,000 respectively.
  • To provide structured internship and training programs approved by Talent Corporation Malaysia for Malaysians.

5. Facilities Accorded To Principal Hub

  • Customs duty exemption when bringing raw materials, components, or finished products into free industrial zones, licensed manufacturing warehouse, free commercial zones and bonded warehouses for production or re-packing, cargo consolidation and integration before distribution to its final consumers for goods-based companies.
  • No local equity/ownership requirements.
  • Expatriate post based on requirements of business plan subject to current policy of expatriate.
  • Allowed to acquire foreign professional services when locally-owned services are not available.
  • Freedom to acquire fixed assets for the purpose of carrying out operations.
  • Foreign Exchange Administration flexibilities.

Eligibility Criteria For Principal Hub 2.0

Category - I. New Company - Manufacturing/Services Company*

2-tier Incentive
Tier 2

Tier 1

Blocks
5
+5
5

+5

Tax rate
5%
+5
5%
5%
High Value Jobs with monthly salary of at least RM5,000.00

High Value Jobs
Jobs that require higher and more diverse set of managerial/ technical/ professional skills such as management, analytics, communication, problem-solving, and proficiency in information technology
30
** PH Base Commitme nt + 20%
50
** PH Base Commitment + 20%
At least 50% of the high value jobs must be filled up by Malaysians
** PH Base Commitme nt + 20%

Including key positions
– Monthly salary of at least RM25,000.00
4
** PH Base Commitme nt + 20%
5
Annual Operating Expenditure
RM5 mil
** PH Base Commitme nt + 30%
RM10 mil
** PH Base Commitme nt + 30%
Qualifying Services
Regional P&L/Business Unit Management, Strategic Business Planning & Corporate Development + 2
Minimum Serving/Business Control of No. of Network Companies
10
(Including 3 Related Companies)
10
(Including 3 Related Companies)
15
(Including 4 Related Companies)
15
(Including 4 Related Companies)

Use of Local Ancillary Services

Local Financial Institution Services (including finance and treasury), logistics, legal and arbitration services, finance and treasury services)
Trading of Goods Annual Sales Turnover
(Additional requirement for companies applying for tax exemption on trading income)
RM500 million
  • PH company upon its approval must comply with the stipulated conditions during the exemption period.
  • Where in any year of assessment of the exempted period, the PH company fails to comply with the stipulated conditions, the PH company may not enjoy the exemption on statutory income for that year of assessment.
** PH Base Commitment: To use commitment from end of Year 5 (Block 1).

Concessionary Tax Rate of 10%

Category - II. Existing Companies approved IPC, RDC, OHQ with or without incentive*

Criteria
Details
High Value Jobs with monthly salary of at least RM5,000.00

High Value Jobs
Jobs that require higher and more diverse set of managerial/ technical/ professional skills such as management, analytics, communication, problem- solving, and proficiency in information technology

At least 50% of the high value jobs must be filled up by Malaysians

Including 5 key positions
– Monthly salary of at least RM25,000.00
Approved without incentive:
Existing number of high value jobs + 30%

Approved with incentive:
Total 60 high value jobs or existing number of high value jobs + 20%, whichever is higher
Annual Operating Expenditure
Approved without incentive:
RM10 million or average operating expenditure for the past 3 years + 30% whichever is higher

Approved with incentive:
Annual operating expenditure of RM13 million or average operating expenditure for the past 3 years + 20% whichever is higher
Qualifying Services
Approved without incentive:
Regional P&L/ Business Unit Management, Strategic Business Planning & Corporate Development + 2

Approved with incentive:
Regional P&L/ Business Unit Management, Strategic Business Planning & Corporate Development + 3
Minimum Serving/Business Control of No. of Network Companies
Approved without incentive:
10 (Including 4 Related Companies)

Approved with incentive:
15 (Including 5 Related Companies)
Use of local Ancillary Services
Local Financial Institution Services (including finance and treasury), logistics, legal and arbitration services, finance and treasury services)
Trading of Goods Annual Sales Turnover
(Additional requirement for companies applying for tax exemption on trading income)
Average sales turnover for the past 3 years or RM500 million whichever is higher
Structured Internship Programmes/ equivalent Training Schemes introduced by the Government
Approved without incentive:
Conduct Structured Internship Programmes / equivalent Training Schemes to training at least one (1) graduate every year

Approved with incentive:
Conduct Structured Internship Programmes / equivalent Training Schemes to train at least two (2) graduates every year
Structured Training Programmes
Approved without incentive:
At least three (3) local workers to undergo structured training programs for upgrading skills in related fields during incentive period.

Approved with incentive: At least 20% of local workforce from the entire workforce to undergo structured training programs for upgrading of skills in related qualifying services during incentive period.
  • PH company upon its approval must comply with the stipulated conditions during the exemption period.
  • Where in any year of assessment of the exempted period, the PH company fails to comply with the stipulated conditions, the PH company may not enjoy the exemption on statutory income for that year of assessment.

Concessionary Tax Rate of 10%

Category - III. Existing Manufacturing/Services Company*

Blocks
5
High Value Jobs with monthly salary of at least RM5,000.00

High Value Jobs
Jobs that require higher and more diverse set of managerial/ technical/ professional skills such as management, analytics, communication, problem- solving, and proficiency in information technology

At least 50% of the high value jobs must be filled up by Malaysians

Including 5 key positions
– Monthly salary of at least RM25,000.00
Total 30 high value jobs or existing number of high value jobs + 30%, whichever is higher
Annual Operating Expenditure
Annual operating expenditure of RM10 million or average operating expenditure for the past 3 years + 30% whichever is higher
Qualifying Services
Regional P&L/Business Unit Management, Strategic Business Planning & Corporate Development + 2
Minimum Serving/Business Control of No. of Network Companies
10 (Including 5 Related Companies)
Use of local Ancillary Services
Local Financial Institution Services (including finance and treasury), logistics, legal and arbitration services, finance and treasury services)

Trading of Goods Annual Sales Turnover
(Additional requirement for companies applying for
tax exemption on trading income)

Average sales turnover for the past 3 years or
RM500 million whichever is higher.

Trading of Goods Annual Sales Turnover
(Additional requirement for companies applying for tax exemption on trading income)

Structured Internship Programmes / equivalent
Training Schemes introduced by the Government

Structured Training Programmes
Average sales turnover for the past 3 years or RM500 million whichever is higher.
Approved with incentive:
Conduct Structured Internship Programmes/ equivalent Training Schemes to train at least one (1) graduate every year.
At least 10% of local workforce from the entire workforce to undergo structured training programs for upgrading of skills in related qualifying services during incentive period
  • PH company upon its approval must comply with the stipulated conditions during the exemption period.
  • Where in any year of assessment of the exempted period, the PH company fails to comply with the conditions on annual business spending, annual high value jobs and annual value of sales, the PH company may not enjoy the exemption on statutory income for that year of assessment.
Categories
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MSC Malaysia Status Service Tax Incentive

MSC Malaysia Status Service Incentive

MSC Malaysia Status Service Incentive

MSC Malaysia (formerly known as Multimedia Super Corridor) is a Special Economic Zone and high- technology business district in central-southern Selangor, Malaysia. MSC Malaysia Services Incentive has been approved by the Government of Malaysia in Year 2019. Qualifying companies which have been awarded the MSC Malaysia Status and met the required conditions for income tax exemptions, are exempted from paying the income tax during the tax holiday period.

1. Overview Of The Incentive

  1. Company may choose to enjoy Tier 1 or Tier 2 category which allows 100% tax exemption. Alternatively, there is Tier 3 category which allows 70% income tax exemption on statutory income derived from approved MSC Malaysia promoted activities.
  2. For Tier 1 and Tier 2, the incentive period is limited to five (5) years and renewable for another five (5) years period.
  3. The income tax exemption is granted on statuary income derived from the approved MSC Malaysia promoted activities and shall exclude any royalty or other income derived from an intellectual property right (‘IPR’).
  4. If the commencement date of the exemption period is 1 July 2021, companies are required to comply with the conditions in Appendix A starting from the said commencement date.
  5. If the commencement date of the exemption period is 1 January 2019 or date of first invoice, whichever is later, companies are required to comply with the conditions in Appendix B starting from the said commencement date.

2. Assessment Criteria

To be eligible to apply for the MSC Malaysia Status and the Services Incentive, Companies are required to meet the following criteria:-

  1. A company incorporated under the Companies Act 2016 and resident in Malaysia;
  2. Carry out one or more of the MSC Malaysia promoted activities and has not issued any invoice for such proposed activities in Malaysia on the date of application;
  3. Company which has issued an invoice (i.e on the date of application) may be eligible if it has at least 60% Malaysian equity ownership and has issued its first invoice for such proposed activities in Malaysia not more than 12 months prior to the date of application.
  4. The MSC Malaysia promoted activities refer to:-
    • Big data analytics (BDA);
    • Artificial intelligence (AI);
    • Financial technology (FinTech);
    • Internet of things (IOT);
    • Cybersecurity (technology/software/design and support);
    • Data centre and cloud (technology/software/design and support);
    • Blockchain;
    • Creative media technology;
    • Sharing economy platform;
    • User interface and user experience (UI/UX);
    • Integrated circuit (IC) design and embedded software;
    • 3D printing (technology/software/design and support);
    • Robotics (technology/software/design)
    • Autonomous (technology/software/design and support);
    • Systems/network architecture design and support; or
    • Global business services or knowledge process outsourcing excluding non-technical and/or low value call center; data entry; and recruitment process outsourcing.
  5. The promoted activities exclude Trading, Manufacturing and Provision of telecommunication services.

Appendix A

Conditions

Tier 1

Tier 2

Tier 3
Location of approved MSC Malaysia and undertakes the approved MSC Malaysia qualifying activities in Malaysia
Designated Premises within MSC Malaysia Cybercities or Cybercentres
Other Commercial Premises within MSC Malaysia Cybercities or Cybercentres
Not subjected to location requirement
Minimum KPI Numbers
A. Full time employees (comprising Knowledge Workers) with monthly base salary
(i) 50 full time employees with monthly base salary of RM5k; OR

(ii) 30 full time employees with monthly base salary of RM10k

Data Centre: 5 full time employees with monthly base salary of RM5k.
(i) 30full time employees with monthly base salary of RM5k; OR

(ii) 20 full time employees with monthly base data centre: 5 full time employees with salary of RM8k
B. Annual operating expenditure and investment in fixed asset
RM 3.5 million
Data Centre: RM10 million
RM1 million
C. Percentage (%) of Malaysian Knowledge Workers (for the full time employees
70%
50%

Appendix B

Conditions

Tier 1

Tier 2

Tier 3
Location of approved MSC Malaysia and undertakes the approved MSC Malaysia qualifying activities in Malaysia
Designated Premises within MSC Malaysia Cybercities or Cybercentres
Other Commercial Premises within MSC Malaysia Cybercities or Cybercentres

Not subjected to
location requirement

Minimum KPI Numbers
(to be complied in Year 1 and Year 2 of the exemption period)
A. Full time employees (comprising Knowledge Workers) with monthly base salary
2 full time employees with monthly base salary of RM5k
B. Annual operating expenditure
RM50k
Minimum KPI Numbers
(To be complied with from Year 3 onwards until expiry of exemption period)
C. Full time employees (comprising Knowledge Workers) with monthly base salary
(i) 50 full time employees with monthly base salary of RM5k; OR

(ii) 30 full time employees with monthly base salary of RM10k

Data Centre: 5 full time employees with monthly base salary of RM5k
(i) 30 full time employees with monthly base salary of RM5k; OR

(ii) 20 full time employees with monthly base data centre: 5 full time employees with salary of RM8k
D. Annual operating expenditure and investment in fixed asset
RM 3.5 million

Data Centre: RM10 million
RM1 million
E. Percentage (%) of Malaysian Knowledge Workers (for the full time employees in (D) above)
70%
50%
Categories
Featured Ideas & Insights

Labuan GIFT Programme for International Commodity Trading

Labuan GIFT Programme for International Commodity Trading

Background

The Global Incentives for Trading (GIFT) Programme is tax incentives to encourage the traders to use Malaysia as an international base for specified types of commodities to be conducted on in, from or through Labuan, Malaysia.
Global Incentives For Trading (GIFT) Programme
Eligibility Entities
  1. Labuan Entities licensed as a Labuan International Commodity Trading Company (LITC).
  2. Traditional commodities such as petroleum and petroleum-related products. The specified trading of physical products and related derivative are as follows:-
    • Petroleum and petroleum-related products (including liquefied natural gas (LNG);
    • Mineral;
    • Agricultural products;
    • Refined raw materials;
    • Chemicals;
    • Base minerals; and
    • Coal.
Incentive Commitment
  1. Minimum annual turnover of USD 50 million;
  2. Substantial Activity Requirements for Labuan International Commodity Trading Company (LITC) under the GIFT Programme :-
Labuan Entities Annual operating expenditures
Labuan International Commodity Trading Company.

  1. 5 or less related LITC companies.
  2. Every incremental of 5 related LITC companies.
RM3,000,000 (USD 750,000) per entity in Malaysia (including minimum of RM100,000 (USD 25,000) in Labuan).

RM3,000,000 (USD 750,000) per entity in Malaysia (including minimum of RM100,000 (USD 25,000) in Labuan).

Local business spending including:
  • Freight charges
  • Bank charges
  • Commissions
  • Depreciations
  • Entertainment
  • Insurance costs
  • Professional fees
  • Rental of office space
  • Skills development fund
  • Telecommunications
  • Transport and travel
  • Utilities
  • Warehousing and storage fees
  • Manpower costs
  • Office maintenance
Labuan Entities Minimum number of full time employees in Labuan
Labuan International Commodity Trading Company.

  1. 5 or less related LITC companies.
  2. Every incremental of 5 related LITC companies.



2 staff per group.

Increase of 1 employee for every additional 5 LITC companies.

c. To employ at least three (3) professional traders who are tax residents of Malaysia.

Operational Requirements

LITC to have the following functions (but not limited to) in Malaysia:
  1. Strategic management;
  2. Banking;
  3. Finance and treasury management;
  4. Risk management;
  5. Market research and product portfolio development;
  6. Logistics management;
  7. Global procurement;
  8. Marketing and sales planning.
Location for consideration
Operating and/or marketing office can be based anywhere in Malaysia.
Incentives
  1. 3% on audited chargeable profits;
  2. 100% tax exemption on director fees paid to a non-Malaysian director;
  3. 50% tax exemption on gross employment income of non-Malaysian professional, managerial including traders with LITC;
  4. Tax exemption on dividends received by or paid from the LITC;
  5. Tax exemption on royalties received from the LITC;
  6. Tax exemption on interest received by residents or non-residents from the LITC;
  7. Stamp duty exemption on all instruments for Labuan business activities, M&A of Labuan entities and transfer of shares;
  8. No sales tax and service tax;
  9. The non-deductability rules under P.U (A) 375/2018 dated 31st December 2018 is not applicable to transactions between LITC and Malaysian resident (subject to fulfillment of the tax substantial activity requirements).

Setting up LITC Company

  1. Apply licence with Labuan FSA*
  2. Approval from Labuan FSA* obtained
  3. Incorporation of LITC
  4. Commence business

Comparision Between Labuan Gift Programme Vs Singapore Global Trader (GTP) Programme

GIFT (MALAYSIA)
GTP (SINGAPORE)
Incentives
3% on audited net profit. No renewal is required, provided that the Substances Regulations for LITC are met.
Reduced corporate rate of 5% – 10% on qualifying trading income for renewable period three (3) to five (5) years.
Qualifying commodities and products:-
  1. Petroleum and petroleum related products, including liquefied natural gas (LNG);
  2. Mineral;
  3. Agricultural products;
  4. Refined raw materials;
  5. Chemicals;
  6. Base minerals; and
  7. Coal.
  1. Electronic and electrical products;
  2. Consumer products;
  3. Building and Industrial materials;
  4. Industrials products;
  5. Energy commodities and products;
  6. Agricultural commodities and bulk edible products;
  7. Minerals;
  8. Machinery components

Physical trade that qualify under GTP:
  1. Trans-Shipment Trade;
  2. Offshore Trade;
  3. Re-Export Trade (only the non- value added portion of the trades qualify).
Business transactions
Allowed to have transactions with Malaysians for petroleum and petroleum-related products.
Transactions are only those with offshore parties or other GTP companies.
Operation cost
Lower cost of operation, wages and rental.
High cost of operation, wages and rental.
Location
All States in Malaysia, including Iskandar Malaysia
Singapore

Requirements

  1. Minimum annual turnover of USD50 million;
  2. Annual operating expenditures of RM3 million (USD 750,000) payable to Malaysian residents in Ringgit Malaysia;
  3. Minimum 3 professional traders who are tax residents in Malaysia.
  1. Minimum annual turnover of USD100 million;
  2. Minimum local expenditure of SGD $3million (USD 2.3million); and
  3. Minimum 3 trading professional employed which involved in one of the following sectors: risk management, procurement/sourcing or sales and marketing.
Who can apply
Any person who intend to establish a Labuan entity to undertake international commodity trading business.
Well-established players engaged in international physical trading on principal basis and have substantial operations in Singapore and meet stringent quantitative criteria, including employment and local expenditure.
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Why Labuan Foundation is Best Choice in Asia as Private Wealth Management Vehicle?

Why Labuan Foundation is Best Choice in Asia as Private Wealth Management Vehicle?

Labuan Foundation is probably one of the Best Choices in Asia as your wealth management vehicle. While there are 21 jurisdictions worldwide which have Foundation Acts to govern wealth management activities, Labuan which is governed by the Labuan Foundation Act 2010, remains the ONLY jurisdiction in Asia. As such, your assets are protected under its own jurisdiction from the local or foreign claims and cannot be liquidated forcefully.

 

Labuan Foundation has other Silent Features as private wealth management vehicle as below:

Labuan Company Carrying on a Labuan Business Activity
  • A corporate body with a separate legal entity
  • Provided by the Labuan Foundations Act 2010
  • Established to manage its own property for any lawful purpose, be it for charitable or non-charitable purposes
Structure (Example)
labuan structure

Control

Founder has extensive control.

Confidentiality

End beneficiaries is anonymous.

Capital Transfer

No capital requirements. Minimum endowment of USD1.00 as an initial asset at time of establishment.

Nationality

No requirement for founder/councillor.

Appeal Against Transfer By Creditors

Only within the first two years of registration.

Appeal Against Inheritance Provisions

No appeal possible because of foreign laws.

Foreign Claim Or Judgment

Unenforceable

Rights And Powers Of A Founder

Enshrined via the charters.

Holding Of Malaysian Assets For Non-charitable Foundations

May hold with Labuan FSA’s approval.

Involvement Of Corporate Body

Allowed to be appointed as :

  • Founder
  • Council (Can be natural person or a corporation)
  • Officer (Can be natural person or a corporation)
  • Beneficiary

Duration

Fixed or perpetual.

Dissolution

Assets returned to designated party.

Ownership Of Foundation’s Asset

Beneficiary has no legal or beneficiary ownership over the foundation’s asset.

Taxation On Income

Under Income Tax Act 1967 if include Malaysian property.
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Malaysia Halal Park Opportunities

MALAYSIA HALAL PARK OPPORTUNITIES

MALAYSIA HALAL PARK OPPORTUNITIES

In a bid to make Malaysia a strong competitor in the Global Halal Market, all companies that operate within the scope of the market will be given a complete exemption from income tax for a duration of 10 years or 100% income tax exemption on capital expenditure for a duration of 5 years plus an exemption on import duty on plant & equipment and raw materials and double deduction on specific expenses.

HALMAS

HALMAS, it is a symbol of excellence reserved for parks that perform remarkably in terms of the standard of Halal products that they produce, their level of integrity as well as safety.

Several perks, in the form of incentives are tied to this mark of notable performance. Operators, industry players and logistics service providers will enjoy these benefits, to serve as a motivating factor for new and existing players in the Halal industry.

HALAL INCENTIVES

a) Halal Park Operators

In a bid to enhance the quality of Halal parks and make them more fascinating, certain incentives are recommended, they include:
  1. Total exemption from income tax for a duration of 10 years, or 100% income tax exemption on capital expenditure for a duration of 5 years.
  2. Exclusion from payments that pertain to import duties on equipment, components, and machinery that are utilized in the Cold Room Operations in compliance with existing policies.

b) Halal Industry Players (Manufacturers)

In a bid to reinforce the competitive prowess of Malaysia in the Global Halal Market, specifically in aspects of inward and outward investment into the country, it is suggested that certain incentives be provided for companies that operate within the Halal Park.
  1. Total exemption from income tax for a duration of 10 years, or 100% income tax exemption on capital expenditure for a duration of 5 years.
  2. Exclusion from payments that pertain to import duties on raw materials that are utilized for the development and production of halal promoted products.
  3. Double deduction on expenses that results from obtaining international quality standards including HACCP, GMP, Codex Alimentarius (food standard guidelines of FAO & WHO), Sanitation Standard Operating Procedure and regulations for compliance for export markets such as Food Traceability from farm to fork.

c) Halal Logistic Service Providers

In a bid to improve Halal Industry and Halal supply chain in Malaysia, recommended incentives that also covers logistic operators include:
  1. Total exemption from income tax for a duration of 10 years, or 100% income tax exemption on capital expenditure for a duration of 5 years.
  2. Exclusion from payments that pertain to import duties on equipment, components, and machinery that are utilized in the Cold Room Operations in compliance with existing policies.

HALMAS ELIGIBILITY CRITERIA

The following qualifications are required from applicants, they must be;

  1. Have an active part in the Halal industry
    1. Food & Beverages
    2. Cosmetics & Personal Care
    3. Halal Ingredients
    4. Phamaceutical
    5. Modest Fashion
    6. Medical Tourism
    7. Medical Devisces & Applicances
    8. Muslim Friendly Hospitality
    9. Logistics Services
    10. Islamic Finances
    11. Vaccine
  2. High value knowledge workers with at least 15% of the entire workforce, with a minimum of 2 Halal Compliance Officers inclusive.
  3. Currently taking part in recent business activities pertaining to Halal, which must comprise of a new legal entity in Malaysia.
  4. Property within the bounds of the specified area.

LIST OF 14 HALMAS – ACCREDITED HALAL PARKS

List of halal parks with HALMAS status:-
  • PERDA Halal Park PERDA
  • Penang International Halal Park
  • Selangor Halal Hub
  • PKFZ National Halal Park
  • Techpark @ Enstek
  • Pedas Halal Park
  • Melaka Halal Park
  • Pasir Mas Halal Park
  • Gambang Halal Park
  • Sedenak Industrial Park
  • ECER Pasir Mas Halal Park
  • ECER Gambang Halal Park
  • POIC Tanjung Langsat
  • Iskandar Business Park
Categories
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Investing In The Northern Corridor Economic Region (NCER), Malaysia

Investing In The Northern Corridor Economic Region (NCER), MALAYSIA

MAJOR DEVELOPMENT IN NCER

Major-Development-in-NCER

The Northern Corridor Economic Region (NCER) is a development plan encompassing the four Northern States of Malaysia namely Perlis, Kedah, Perak and Penang. The priority sectors in NCER are manufacturing, agriculture and bio-industries and services which include the sub-sectors of tourism, global business services and logistics & connectivity.

The objectives of the NCER initiative include:

a) To stimulate economic growth to address the imbalances and increase inclusively;

b) To achieve balance growth in the manufacturing, agriculture, bio-industries and services sectors;

c) To enhance talents to meet the growing needs of the region;

d) Increase private sector investments and finance initiatives.

The advantages include:

a) Located within the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT);

b) NCER has hosted many multinational companies and local companies with approximately RM47.7 billion of investment in the year 2009 – 2016;

c) Year 2020, RM50 million for high impact strategic projects has been allocated to Chuping Valley Industrial Area in Perlis;

d) NCER plays a predominant role in agriculture in the NCER;

e) NCER is renowned for its rich natural and heritage attraction.

MAJOR PROJECTS DEVELOPMENT IN NCER

perlis inland port

Perlis Inland Port

An inland port to capitalize on the border trade from southern Thailand.

  • 94bil GNI per year by 2025
  • 4,056 job creation
Chuping Valley Industrial Area(CVIA)

Chuping Valley Industrial Area (CVIA)

An on-going industrial park development to transform Perlis into an industrialised state.

  • 5bil investment by 2025
  • 12,674  job creation
Kota Perdana SBEZ(KPSBEZ)

Kota Perdana SBEZ(KPSBEZ)

A mixed development comprising industrial park, logistics hub & commercial zones.

  • RM50bil total GDVby 2030
  • 21,050 job creation
Kedah Science & Technology Park (KSTP)

Kedah Science & Technology Park (KSTP)

A new industrial park that focuses on science and technology clusters located at the border region.

  • 9bil total GDV by 2030
  • 23,244 job creation
Kedah Rubber City (KRC)

Kedah Rubber City (KRC)

Project that will focus on downstream rubber activities by creating a complete rubber.

  • 7bil investment by 2030
  • 14,471 job creation

MAIN ELIGIBILITY CRITERIA FOR NCER TAX INCENTIVE PACKAGES

a) A company incorporated in Malaysia under the Companies Act 1965 or Company Act 2016;

b) The company must be undertaking a qualifying project or activity in NCER;

c) For Foreign Direct Investment (FDI), the company must submit its application to Northern Corridor Implementation Authority (NCIA) before commencing operation/production (including trial production);

d) For Domestic Direct Investment (DDI), the incentive application submitted to NCER must not more than twelve (12) months from production services of the proposed project. The company must be owned by 60% Malaysian Resident and must hold equity in 5 years within the incentive period;

e) Company is required to source minimum 50% of raw material/ components/ services produced in Malaysia. Employment of full time employee in compliance with current national policy;

f) Applicable to application received by NCIA from 17 August 2017 until 31 December 2025.

TAX INCENTIVES IN NCER

Sector
Promoted Activities
NCER Incentives

A. Manufacturing

1. Electrical & Electronic
2. Machinery & Equipment

a. Green Technology (product)

b. Medical Devices (products)

c. Automotive (products)

d.  Additive Manufacturing (products)

e. Aerospace (products)

Kedah & Perlis

1. Income tax exemption of 100% of statutory income for 10 years (5 + 5); OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

3. A 50% reduction of stamp duty on instruments of transfer or lease of land.
Perak & Penang

4. Income tax exemption of 70% of statutory income for 10 years (5 + 5); OR

5. An allowance of 70% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

B. Agriculture & Bio-Industries

a. Sustainable Agriculture

b. Processing of Agriculture Produce

c. Superfruit/ Superfood (Upstream)

d. Superfruit/ Superfood (Downstream)

e. Green Technology Services

f. Halal Industry Seed Research & Development

Kedah, Perlis, Perak & Penang

1. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.

2. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components not produced locally and used directly in production activities.
C. Service

1. Tourism
2. Logistic
1. Tourism:
a. Medical Tourism
b. Hotel Business
c. Tourism Projects
d. Business Tourism

2. Logistics:
a. Warehousing
b. Freight Forwarding
c. Transportation
Kedah and Perlis only

1. Income tax exemption of 100% of statutory income for 10 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years; AND

3. A 50% reduction of stamp duty on instruments of transfer or lease of land.
Perak and Penang Only

1. Income tax exemption of 70% of statutory income for 10 years (5+5); OR

2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.

3. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components not produced locally and used directly in production activities for Kedah, Perak, Perlis and Penang.

D. Medical Science and Science & Technology

Contract R&D
Research, development and inspection works for customers.
Kedah and Perlis only

1. Income tax exemption of 100% of statutory income for 10 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
Perak and Penang only

1. Income tax exemption of 70% of statutory income  for 10 years (5 + 5); OR

2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.

In-House R&D
Research & development undertaken by Malaysian company for their own business.

Kedah, Perak, Perlis and Penang

1. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

2. Unutilised allowances are allowed to be carried forward to the following year until fully utilised.

R&D Company
Research on science or  technology including Industry 4.0 for the production/ improvement of materials, equipment, products or processes.

Kedah, Perak, Perlis and Penang

1. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

2. Unutilised allowances are allowed to be carried forward to the following year until fully utilised.
E. Agriculture

Seed R&D Centre
Investor

Kedah and Perlis only

1. Income tax exemption of 100% of statutory income for 10 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
Perak and Penang only

1. Income tax exemption of 70% of statutory income  for 10 years (5 + 5); OR

2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.

Seed R&D Centre
Operator

Kedah and Perlis only

1. Income tax exemption of 100% of statutory income for 10 years (5 + 5); OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.

4. Industrial Building Allowance for 10 years on building used for Seeds R&D Centre operating in Kedah Science & Technology Park (KSTP).

5. Tax deduction for 5 years on cost incurred to acquire property rights with condition that the Seed R&D Centre is at least 51% Malaysian owned.

Approved Agriculture Project

Kedah, Perlis, Perak and Penang

1. Income tax exemption of 100% of statutory income for 10 years on new project undertaken; OR

2. Income tax exemption of 100% of statutory income for 5 years on expansion project approved by Jawatankuasa Penilaian Insentif Sektor Pertanian (JPISP).

3. Tax deduction for investor company carrying on an Approved Agriculture Project by JPISP.
F. Support Industry

Education

a. Private Institution of Higher Learning

b. Technical & Vocational Education and Training (TVET)

c. International/ Private Schools

Kedah and Perlis only

1. Income tax exemption of 70% of statutory income for a period of limited 5 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 70% of the statutory income.

3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.
G. Special Incentive
1. Selama
2. Perak Tengah
3. Kuala Kangsar
4. Badan Datuk
5. Seberang Prai Utara
6. Seberang Prai Selatan
7. Seberang Prai Tengah
8. Barat Daya Pulau Pinang
Perak and Penang only

1. Income tax exemption of 100% of statutory income for a period of 15 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within certain period, will be set-off against up to 70% of the statutory income.
H. Kedah Science & Technology Park (KSTP)

1. KSTP Park Manager

Income tax exemption of 100% of statutory income for 5 years. This approval applies only to the first industrial park manager at KSTP.
2. R&D & Manufacturing activities (Operators)

a. Manufacturing activities in agro-science;
b. Advanced material
c. Information & Communication Technology;
d. Biotechnology;
e. Component R & D;
f. Halal science;
g. Green Technology
1. Income tax exemption of 100% of statutory income for 15 years (5+5+5); OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years (5+5). This allowance will be set-off against up to 70% of the statutory income.

3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.

4. A 50% stamp duty reduction on transfer or lease of land/building.

5. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components which are not produced locally and used directly in production activities.

6. This approval is subject to product/service provision from qualifying activity. This approval does not apply to income derived from intellectual property services.
3. Developer
Commercial property development only
Income tax exemption of 70% of statutory income for 5 years.

4. KSTP Global Research Centre (GRC)

Income tax exemption of 100% of statutory income for 15 years (5+5+5).

5. Education
a. IHL and TVET
1. Income tax exemption of 100% of statutory income for 5 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
I. Chuping Valley Industrial Area (CVIA)
1. Developer
Commercial property development only

1. Income tax exemption of 70% of statutory income for 5 years for the following income:

a. Disposal of all or part of right or land/building located at CVIA; OR

b. Rental of all or part or the land/buildings located at CVIA.

 

2. Stamp duty exemption on transfer or lease of land only.

2. CVIA Park Manager

Income tax exemption of 100% of statutory income for 5 years.

3. Waste-To-Resources Facilities Provider

1. Income tax exemption of 100% of statutory income for 15 years; OR

2. An allowance of 100% allowance on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income. Unutilised allowances are allowed to be carried forward to the following years until fully utilized.

3. A 50% stamp duty reduction on transfer or lease of land/ building.

4. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components which are not produced locally and used directly in production activities.
4. Education

a. Institution of Higher Learning (IHL); and
b. Technical and Vocational Education and Training (TVET).
1. Income tax exemption of 100% of statutory income for 5 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 70% of the statutory income. Unutilised allowances are allowed to be carried forward to the following years until fully utilized.
5. Companies That Undertake Qualifying Activities (Operators)

a. Green Manufacturing;
b. Halal industry;
c. Machinery and equipment;
d. Specialised machinery and equipment;
e. Green Energy Generation
1. Income tax exemption of 100% of statutory income for 15 years (5+5+5); OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years (5+5). This allowance will be set-off against up to 70% of the statutory income.Unutilisedallowances are allowed to be carried forward to the following years until fully utilized.

3. A 50% stamp duty reduction on transfer or lease of land/ building.
J. Kedah Rubber City (KRC)

1.  Manufacturer

1. Income tax exemption of 100% of statutory income derived from Rubber City qualifying activities for 10 years commencing from first year the company generates statutory income; AND

2. Income tax reduction of 50% for 5 years after expiry of the first 10 years; OR

3. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be offset against up to 100% of statutory income for each assessment year.

4. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.

5. Tax deduction for pre-operating expenses incurred within 4 years before the commencement date of qualifying activity and such expenses shall be deemed to be incurred on the commencement date.
2. Education, Training and R&D Supplier
1. Income tax exemption of 100% of statutory income derived from Rubber City qualifying activities for 10 years of commencing from first year the company generates statutory income; OR

2.An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be offset against up to 100% of statutory income for each assessment year.

3.Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.

4. Tax deduction for pre-operating expenses incurred within 4 years before the commencement date of qualifying activity and such expenses shall be deemed to be incurred on the commencement date.

3. Main Developer and Residential and Commercial Developer

1. Income tax exemption of 100% of statutory income derived from Rubber City qualifying activities for 10 years commencing from first year the company generates statutory income; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be offset against up to 100% of statutory income for each assessment year.

3. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.
4. Catalytic Anchor Tenants
1. Income tax exemption of 100% of statutory income derived from Rubber City qualifying activities for 10 years of commencing from first year the company generates statutory income; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 100% of the statutory income for each assessment year.

3. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.

4. Tax deduction for pre-operating expenses incurred within 4 years before the commencement date of qualifying activity and such expenses shall be deemed to be incurred on the commencement date.