Labuan IBFC Targets Indonesian Businesses
The Labuan International Business and Financial Centre is attempting to encourage more Indonesian companies to register in the jurisdiction to take advantage of its low-tax regime and trading and investment links with key economies in the Asia-Pacific region.
The Labuan IBFC held the Jakarta chapter of its ASEAN (Association of South East Asian Nations) roadshow on August 4, 2015, attended by leading international companies and insurance institutions. The event focused on the benefits, cost, and ease of incorporating a Labuan company, including a captive insurance company, to manage multi-jurisdiction business interests and mitigate corporate risk.
Commenting on its latest promotional drive, Danial Mah Abdullah, Interim Chief Executive Officer at Labuan LIBFC, said: “As ASEAN grows in economic might, the increase in wealth in the region is outpacing the rest of the world. Capitalizing on this growth, Indonesian companies are looking for efficient and legitimate ways to expand into ASEAN. Labuan IBFC is well-positioned to fulfill this need, given its proximity to strategic Asian markets, sound regulatory oversight, and simple and competitive tax system.”
Under the Labuan Offshore Business Activity Tax Act 1990 (as amended in 2004), chargeable profits derived by an offshore company from an offshore trading activity are subject to tax at a rate of three percent. Alternatively, an offshore company that carries on an offshore trading activity may, within three months from the commencement of any calendar year, elect to be subject to tax instead of MYR20,000 (USD5,400) for that year of assessment. An offshore company that carries on an offshore non-trading activity is exempt from income tax altogether.
The Labuan Financial Services Authority’s Annual Report for 2014 revealed 12.3 percent growth in new company registrations in 2014 compared with the previous year.
The Labuan IBFC is now home to 11,630 companies, 57 international banks, 209 insurance companies, 359 leasing companies, 130 foundations, and nine fund management companies. Seven-out-of-ten of the companies registered in Labuan IBFC originate from Asia, with 57 percent from Southeast Asia, mainly Indonesia, Malaysia, Singapore, and Thailand.
