In line with the Government's efforts to enhance Labuan as an international offshore financial centre, it is proposed that the definition of "offshore business activity" be expanded. The expanded definition will include activities in the following situations :

  1. an offshore company carrying on an offshore banking business, such activity may be carried on with residents and where permitted under the Offshore Bank Act 1990, the transaction may be carried on in Malaysian currency;

  2. an offshore company carrying on an offshore insurance business, such activity may be carried on with residents and, where permitted under the Offshore Insurance Act 1990, the transaction may be carried on in Malaysian currency;

  3. an offshore company holding investments in a domestic company, such holding may be in Malaysian currency;

  4. an offshore company carrying on a money-broking business, such activity may be carried on with residents where permitted under the Offshore Companies Act 1990;

  5. an offshore company carrying on an offshore leasing business, such activity may be carried on with residents where permitted under the Offshore Companies Act 1990;

  6. such activity with residents of Malaysia or such transactions conducted in Malaysian currency as may be approved by the Minister of Finance.

Consequently, income of offshore companies from the above would come within the scope of the Labuan Offshore Business Activity Tax Act, 1990 and not the Income Tax Act, 1967.

The above amendment will have effect from year of assessment 1999.

   



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