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!

Labuan factoring is defined as the business of acquiring debts to any person or institution at a discount. 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:

  1. A Labuan company incorporated under the Labuan Companies Act 1990
  2. Factoring company registered under the Banking and Financial Institutions Act 1989
  3. Special Purpose Vehicle (SPV) to facilitate inter-company factoring transactions
  4. No adverse report from any reliable sources
  5. 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:

  1. Three (3) years’ Business Plan with Financial Forecast, AMLA, KYC frameworks, and Operational Strategies
  2. The composition of the board of directors and senior management
  3. Prior written approval by Labuan FSA for the appointment of Directors, Controller or CEO
  4. Audited Financial Statements for the past 2 years (if applicable)

Regulatory and Operational Requirements after approval of the Labuan Factoring License include:

  1. To set up an operational office with a minimum of 2 staffs in Labuan and annual spending of RM100,000
  2. All transactions to be done through Labuan and adequate and proper records and books of accounts must be maintained in Labuan
  3. Permissible to deal with Malaysian Ringgit and foreign currencies
  4. No transactions with Malaysian residents other than those approved by Central Bank of Malaysia
  5. Maintain sufficient capital to manage the company’s daily operations
  6. Appoint an auditor and have accounts audited
  7. Submit to Labuan FSA audited annual financial statements and other required information including, prudential information, general business conduct and volume and direction of the business in Labuan
  8. Notify Labuan FSA of any amendments to constituent documents, shareholdings, management or business plan
  9. Yearly license fee payable to Labuan FSA is USD 13,000 if without a physical presence in Labuan.

 

TRICOR TRUSTCO provides a one-stop application solution for Labuan Factoring License includes:

  • Consultation of your eligibility and procedures based on your profile
  • Profiling, due diligence and guidance on documents preparation
  • Preparation of Business Plan and Financial Forecast, AMLA and KYC Framework
  • Submission and supervise the application process
  • Act as your liaison and contact point with Labuan FSA for all correspondence and arrange an interview (if any)
  • Track the license approval and attend all queries from Labuan FSA

WHY TRICOR TRUSTCO for Your LABUAN SET UP?

We are a full-fledged licensed Labuan Trust Company (Trust License No. LT 0034) with a highly experienced team of dedicated professionals handle all license applications. We provide complete “one-stop” solutions in pre-assess, meet, planning, structuring, establishment and corporate service for your Labuan Factoring Business, ensuring you get a bespoke service that meets your factoring business needs as well as onwards operation.

Contact us today! Feel free to call us at +603-2783 9191 (Labuan Division) or send us an inquiry form to better advise you on Labuan Factoring Business! TRICOR’s One Labuan Platform easy to elevate your Labuan operation efficiently!

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