LABUAN

Amendments to the Offshore Insurance Act, 1990 ("OIA")
Amendments to the Offshore Companies Act, 1990 ("OCA") - Offshore Companies (Amendment) Regulations 2001
Amendment to the Offshore Banking Act, 1990 - Offshore Banking (Annual Licence Fees) (Amendment) Regulations 2001
Amendments to the Labuan Trust Companies Act, 1990 - Labuan Trust Companies (Amendment) Regulations 2001
Extension of Income Tax Exemption Period
Guidelines for Carrying On Offshore Leasing Business in Labuan
 




1. Amendments to the Offshore Insurance Act, 1990 ("OIA")

The above amendments introduced 2 paragraphs into subsection 7(1) of the OIA to require an applicant for a licence to carry on business of offshore insurance manager, offshore underwriting manager or offshore insurance broker to establish a management office in Labuan. However, an applicant for a licence to carry on business as an offshore insurance broker, has an option to appoint a licensed offshore insurance manager instead of establishing a management office in Labuan.

In addition, Section 15 of the OIA is amended to enable the annual licence fees to be prescribed by regulations made under Section 32 of OIA. The amendment allows greater flexibility in the procedure for the imposition of such fees. In view of the new procedure, the Second Schedule of this Act which set out the annual licence fees is deleted.

The above amendments came into force on 15th August, 2001.

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2. Amendments to the Offshore Companies Act, 1990 ("OCA") - Offshore Companies (Amendment) Regulations 2001

The OCA was amended to allow for electronic lodgement of documents (Sections 9A, 9B and 9C have been introduced to the OCA). In line with the introduction of electronic lodgement of documents, the regulations in the OCA are amended to conform with the electronic lodgement legislation.

The Consent to Act as Director Form (Form 21) has been amended imposing a heavier burden on the resident secretary of the offshore company. The resident secretary is now required to certify that the person signing the form is the proposed director of the offshore company.

The annual return filing fee of RM100 by an offshore company has been waived.

Auditors as approved by the Labuan Offshore Financial Services Authority ("LOFSA") are now required to pay an annual fee of RM1,000 compared to RM200 previously.

The gazette in respect of the above was published on 28th June, 2001.

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3. Amendment to the Offshore Banking Act, 1990 - Offshore Banking (Annual Licence Fees) (Amendment) Regulations 2001

Offshore banks are now required to pay an annual fee of RM80,000 to LOFSA compared to RM60,000 previously.

The above amendment came into operation on 3rd May, 2001.

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4. Amendments to the Labuan Trust Companies Act, 1990 - Labuan Trust Companies (Amendment) Regulations 2001

Trust companies incorporated in Malaysia are now required to pay an annual fee of RM8,000 to LOFSA compared to RM200 previously.

Trust companies incorporated outside Malaysia are now required to pay an annual fee of RM8,000 to LOFSA compared to RM350 previously.

The above amendments came into operation on 3rd May, 2001.

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5. Extension of Income Tax Exemption Period

The Minister of Finance has approved the extension of the exemption period of the following incentives :-
  •  
50% exemption of housing and Labuan Territory allowances received by citizens from exercising an employment in Labuan with the government, a statutory body or an offshore company.
  •  
50% exemption of the gross income of a non-citizen individual from an employment with a Labuan trust company in a managerial capacity.

The above incentives which were given originally for the years of assessment 1998 to 2001 (both years inclusive) have now been extended up to the year of assessment 2005. The extension has yet to be gazetted as law.

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6. Guidelines for Carrying On Offshore Leasing Business in Labuan

LOFSA has issued guidelines for carrying on offshore leasing business in Labuan on 19th March, 2001.

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The Guidelines

Offshore leasing means the business of letting or sub-letting movable 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 or such other business as approved by the Minister of Finance.

The following are eligible to apply to conduct offshore leasing in Labuan :-

a.   Offshore company incorporated or registered under the OCA;
     
b.   Special Purpose Vehicles set up to facilitate leasing transactions, including intercompany transactions.


Amongst others, the applicant company is required to comply with the following operational requirements :-

a.   ensure all transactions are done through Labuan and adequate and proper records and books of accounts are maintained in Labuan
     
b.   maintain capital sufficient to support the company's operations;
     
c.   transact business only in foreign currency and not deal in Malaysian Ringgit except for the purpose of defraying administrative and statutory expenses;
     
d.   submit to LOFSA within three (3) months after the close of each financial year a copy of its audited annual balance sheet and profit and loss account;
     
e.   notify LOFSA of any changes to its constituent documents, shareholdings, management or business plans; and
     
f.   comply with any other requirements issued by LOFSA from time to time.


An annual licence fee of RM40,000 is payable by leasing companies established to conduct leasing transactions with Malaysian residents plus a fee of RM20,000 payable for each subsequent transaction. The transaction fee is not applicable to subsequent transactions conducted with non-residents. For leasing companies which only conduct out-out business, no licence fee is imposed.

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© October 2001