Guide to Start Labuan Factoring Business
Looking to start a factoring business in Malaysia? A Labuan company could be the right set-up for you! Read on to find out why Labuan and how to get started with the Guide to Start Labuan Factoring Business! Labuan Factoring Business comes with low tax benefits and Labuan is a fully compliant business center labeled by OECD as one of the “white-list” jurisdiction!
A factoring transaction is one in which a business sells its accounts receivables (e.g. invoices) to a 3rd party commercial finance company, known as a “factoring company”. Invoices are sold at a discount (usually 80% of face value), the business receives cash quickly and the debt is transferred to the factoring company. The factoring company then approaches the client to collect the full amount, earning the difference. Factoring is one of the oldest forms of business financing and an important cash management tool for many businesses.
Setting up a new factoring business to capture Asia business is a wise choice as it will also allow you to benefit from the many offshore advantages. Alternatively, if you are already operating a factoring business, setting up a new Labuan company may also prove to be beneficial.
Benefits of conducting a Labuan Factoring Business company:
- You own the business 100%
- Engage with multiple businesses worldwide in various currencies easily
- Enjoy significant tax benefits – 3% on net profit
- No withholding tax for any dividends paid out of its profits
- Feel reassured by the strict confidentiality legislation offered by Labuan IBFC
You are qualified as long as you meet the minimum eligibility requirements for Labuan Factoring Business:
- A Labuan company incorporated under the Labuan Companies Act 1990
- Factoring company registered under Banking and Financial Institutions Act 1989
- Special Purpose Vehicle (SPV) to facilitate inter-company factoring transactions
- No adverse report from any reliable sources
Structuring the Labuan Factoring Business is key in operating efficiently and in accordance with Labuan FSA guidelines:
Important Documents to Submit for Application for Labuan Factoring Business:
- Three (3) years’ Business Plan with Financial Forecast, AMLAH, KYC frameworks, and Operational Strategies
- The composition of the board of directors and senior management
- Prior written approval by Labuan FSA for the appointment of Directors, Controller or CEO
- Audited Financial Statements for the past 2 years (if applicable)
Regulatory and Operational Requirements after approval of the Labuan Factoring License include:
- To set up an operational office with minimum 2 staffs in Labuan
- All transactions to be done through Labuan and adequate and proper records and books of accounts must be maintained in Labuan
- Permissible to deal with Malaysian Ringgit and foreign currencies
- No transactions with Malaysian residents other than those approved by Central Bank of Malaysia
- Maintain sufficient capital to manage the company’s daily operations
- Appoint an auditor and have accounts audited
- Submit to Labuan FSA audited annual financial statements and other required information including, prudential information, general business conduct and volume and direction of business in Labuan
- Notify Labuan FSA of any amendments to constituent documents, shareholdings, management or business plan
- Yearly license fee payable to Labuan FSA of RM 40,000 or RM 60,000 if without a physical presence in Labuan.
CP TRUST as Your Trust Company
We provide full incorporation company, secretarial services with registered office and back-end support to ease your operations in Labuan as well as the application of the marketing office for your set-up in Kuala Lumpur/Iskandar. In short, we provide assistance from start to finish in helping you set-up your Labuan Factoring Business.
CP TRUST one-stop license application service level for Labuan Factoring License include:
* Consultation of your eligibility and procedures based on your profile
* Profiling, due diligence and guidance on the preparation of documents
* Preparation of Business Plan, Financial Forecast, AMLAH and KYC Frameworks
* Submission and supervision of application process to approval
* Act as your liaison and contact point with Labuan FSA for all correspondences and arrange an interview (if any)
Consult us today! Feel free to call us at +603-2783 9191, email email@example.com or fill in this enquiry form for us to better advise you on Labuan Factoring Business! We are here to “simplify the complexities” to get your factoring business up and running!