Section 86 of Labuan Financial Services and Securities Act 2010 (LFSSA), Labuan financial business includes leasing business.
Leasing business 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, including charters of ships,
and for the purpose of this definition, “property” includes any plant, machinery, equipment or other chattel attached or to be attached to the earth
and “charters of ships” means bareboat charters only and does not include the transportation of passengers or cargo by sea or the charter of ships on a voyage or time charter;
In terms of leasing, Labuan had an interesting structure. In many other countries, leasing was only subjected to ships and aircraft but in Labuan, leasing was also open for other types of heavy equipment (including offshore oil and gas structures).
The leasing sector was primarily driven by leasing transactions in the oil and gas, shipping, aviation and telecommunications activities.
An application should meet the following minimum eligibility criteria:-
o A Labuan company incorporated or registered under the Labuan Companies Act 1990
o A Special Purpose Vehicle (SPV) set up to facilitate leasing transactions, including inter-company transactions.
An approved Labuan leasing company is required to:-
o Maintain bank account(s) under its name preferably in Labuan IBFC and Malaysia to facilitate the leasing operation including lease remittances/lease rental;
o Ensure that the lease agreement is duly stamped and endorsed by the Collector of Stamp Duties, at the Stamp Duty Office, Inland Revenue Board of Malaysia;
o Transact business only in foreign currency and not dealing in Malaysian Ringgit except for the purpose of defraying administrative and statutory expenses or as permitted under Exchange Control Act 1953;
o Notify Labuan FSA of any changes to its constituent documents and business plan within 30 days of the changes being effected;
o Obtain an approval from Labuan FSA on new appointment or change on its directorship and shareholding;
o Notify Labuan FSA on the termination/extension of any leasing transaction within 30 days upon the termination/extension;
o Ensure all leasing transactions and agreements are done through Labuan and adequate and proper records and books of accounts be maintained in Labuan;
o Conduct its business with due diligence and sound principles and comply with the laws and regulations where it services its clients.
o Ensure all its leased assets are adequately insured;
o Ensure that the directors and officers responsible for the management of the company are fit and proper persons pursuant to section 4 of LFSSA and the Guidelines on Fit and Proper Person issued by Labuan FSA;
o Ensure that all leasing transactions with its related party comply with the transfer pricing rules issued by the related party’s relevant authorities; and
o Comply with any other requirements to be issued by Labuan FSA from time to time.
Subsequent leasing transactions with Malaysian residents are subject to Labuan FSA’s prior approval and payment of subsequent transaction fee.
Related Guidelines / Circulars
Guidelines on the Establishment and Operations of Labuan Leasing Business
Clarification Note for Guidelines on the Establishment and Operations of Labuan Leasing Business As at 10 October 2013
Statistical Submission on Leasing Companies in Labuan IBFC
All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year
Type of Fee
Lease to Malaysian Resident
Lease to Non-Malaysian Resident
Each Subsequent Leasing Transaction
RM 20,000 (One off)
Read more :
Information (Simplified Chinese)
OCBC Media Release : Leasing Through Labuan Brings Attractive Tax Savings for Shipping Industry
The Global Incentives for Trading (GIFT) programme was launched in collaboration with the Malaysia Petroleum Resources Corporation, aims at positioning Malaysia as a regional trading and storage hub for oil and gas. Under the programme, a set of incentives were offered through the establishment of the Labuan International Trading Commodity Company (LITC) including incentives for traders and trading houses to use Malaysia as their international trading base. The LITC was structured by taking cognizance from the views and demands of the market.
The Labuan international commodity trading business is the trading of physical and related derivative instruments of petroleum and petroleum-related products including liquefied natural gas (LNG), agricultural products, refined raw materials, chemicals; and base minerals
in any currency other than Ringgit under the GIFT programme. Trading under the GIFT programme is defined as the buying, selling and/or brokering of the specified commodities.
Any qualified person intending to undertake Labuan international commodity trading business under the GIFT programme may apply to Labuan FSA for a licence to carry out such business activities under the GIFT. The qualifying criteria are:
- Generate a minimum annual total revenue of USD100 million;
- Spent minimum of RM3 million in annual local expenditure billed to Malaysia entity; and
- Employ a minimum of three professional traders.
The applicant must:
- Establish a Labuan company incorporated and registered under Labuan Companies Act 1990.
- Must have sufficient capital / working funds to commensurate or in accordance with its operations and activities;
- Must clearly indicate on its letterhead, stationery and other documents including signage containing its name that it is licensed as a "Labuan International Commodity Trading Company" under Labuan Financial Services and Securities Act 2010, together with its licence number;
- Must maintain its registered office in Labuan, which is the office of the Labuan trust company but is allowed to establish its operational office(s) and operate anywhere in Malaysia;
- Must ensure that the business is conducted with proper corporate governance and risk management framework is in place; and
- Comply with other requirements of the Labuan laws and regulation.
Related Guidelines / Circulars
Guidelines on the Establishment of Labuan International Commodity Trading Company under the Global Incentives for Trading Programme
Read more :
Global Incentives for Trading (GIFT) Fact Sheet
Global Incentives for Trading (GIFT) Fact Sheet (Simplified Chinese)