Guide to Start A Labuan Leasing Business
Labuan is one of the best jurisdiction if you are interested to start your leasing company. Malaysians too are welcome to start their leasing business in Labuan. In recent trend, we have seen the growth of Malaysians ownership of such companies this due to Labuan leasing company is permissible to deal with local Malaysians entity or individual. There are also many favorable tax and regulatory environment for Labuan Leasing company where innovative leasing structures have been put in place by the Labuan FSA that help businesses significantly reduce their operating costs.
“Labuan leasing” means the business of letting or sub-letting property on hire for the purpose of the use of such property by the hirer, regardless whether the letting is with or without an option to purchase the property.
The property includes the following:
1. Plant and machineries
2. All types of equipments
3. Chattel – attached or to be attached to the earth
4. Ships – bareboat charters only, exclude transportation of passengers or cargo by sea or the charter of ships on a voyage or time charter.
Key advantages of Labuan Favourable Tax Structure:
* Corporate tax – 3% of net profit or RM20,000/- upon election
* No withholding tax on dividend, interest, technical fee and royalty/lease rental
* No stamp duty on all instruments including share transfer
* No import duty/sales tax
* No foreign exchange controls
* No capital gain tax / inheritance tax
* Enjoy Malaysia’s Double Tax Agreements of over 70 countries
* 50% tax rebate for expatriate professionals and managers employed
* 100% exemption for director’s fees for non-citizen directors
Labuan leasing can easily get started with the proposed leasing transactions via Labuan companies with resident and non-residents for the licensing application. The Labuan Leasing license application submit to Labuan FSA’s for approval include the following:
1. A business plan detailing the operations of the applicant with regard to its Labuan entity and the nature of the leasing transactions, including whether they would be conducted with residents or non-residents;
2. Group corporate shareholding structure;
3. The diagram of leasing transaction;
4. The composition of its Board of Directors and senior management.
5. Payment of License application fee of RM1,000
Note: Prior written approval from Labuan FSA must be obtained for any appointment of director, person in control or Chief Executive Officer, who must be a fit and proper person.
Once Labuan FSA approval-in-principal for the leasing license obtain, often within 60-90 days, we will proceed to register your Labuan Company.
There are two types of annual Labuan Leasing licence fee payable to Labuan FSA is as follows:
A. Lease transaction with Malaysian resident:
* RM60,000/- annually
* RM20,000/- One off (Each subsequent lease transaction)
B. Transaction with Non-Malaysian resident / other Labuan company :
* Nil (but still have to submit application to Labuan FSA for each transaction)
Subsequent payment of annual licence fees to Labuan FSA will be on or before 15th January of each calendar year.
The Operational Requirements of Labuan Leasing Company will be as follows:
1. Must maintain bank account(s) preferable in Malaysia to facilitate the leasing operation including lease remittances/lease rental;
2. Lease agreement is duly stamped and endorsed by the Local Authorities; Collector of Stamp Duties at the Stamp Duty Office, Inland Revenue Board of Malaysia;
3. Transact business only in foreign currency and not dealing in Malaysian Ringgit except for the purpose of defraying administrative and statutory expenses;
4. To notify Labuan FSA of any changes to its constituent documents and business plan within 30 days of the changes being effected;
5. To obtain an approval from Labuan FSA on new appointment or change on its directorship and shareholding;
6. To notify Labuan FSA on the termination / extension of any leasing transaction within 30 days upon the termination/extension;
7. To obtain prior approval from Labuan FSA for any change of lease asset for leasing transaction with Malaysian residents;
8. To ensure all leasing transactions and agreements are done through Labuan and adequate and proper records and books of accounts be maintained in Labuan;
9. To conduct its business with due diligence and sound principles and comply with the laws and regulations where it services its clients;
10. To ensure all its leased assets are adequately insured;
11. To ensure that the directors and officers responsible for the management of the company are fit and proper persons at all time;
12. To ensure that all leasing transactions with its related party comply with the transfer pricing rules issued by the related party’s relevant authorities;
13. Subsequent leasing transactions with Malaysian residents are subject to Labuan FSA’s prior approval and payment of subsequent transaction fee;
14. Subsequent leasing transactions with non-residents only require notification to Labuan FSA within 30 days after the execution of the lease agreements.
15. All final lease agreement between the lessor and the lessee must be certified, duly stamped and endorsed by the Malaysia Stamp Duty Office to be submitted to the Labuan FSA;
16. To obtain prior approval from Labuan FSA for any change of leased asset for leasing transaction with Malaysian residents;
17. Any change in the lessee will be considered as subsequent leasing transaction and requires prior approval from Labuan FSA for transaction with Malaysian residents and notification for transaction with non-residents.
18. To appoint an approved external auditor to undertake an audit in respect of its accounts and business operations and submit the audited account to the Supervision and Enforcement Department of Labuan FSA within six (6) months after the close of each financial year.
19. To provide statistics and information as may be required by Labuan FSA in relation to prudential information, general business conduct and volume and direction of business in Labuan.
CP Trust Labuan Leasing License Application Services
Our one-stop license application service level for Labuan Leasing License include as follows:
* Consultation of your eligibility and procedures based on your profile
* Profiling, due diligence and guidance documentation preparation
* Preparation of Business Plan and Financial Forecast
* Submission and supervision of applicant process approval
* Act as your liaison and contact point with Labuan FSA for all correspondence and arrange interview (if any)
Feel free to contact us +603-2161 0354 or email firstname.lastname@example.org for further information on how to get started your leasing business in Malaysia! We “simplify the complexities” of your investment in Labuan.