Labuan’s Tax Regime Supports Eligible Businesses With Many Incentives - Lim
LABUAN, Nov 16 (Bernama) -- The issue of extending three per cent tax benefits to all business sectors in Labuan does not arise, as various incentives are already in place under existing tax laws, said Deputy Finance Minister Lim Hui Ying.
Lim said under the Investment Promotion Act 1986 and the Income Tax Act 1967, the government offers diverse tax incentives for qualifying industries nationwide, including manufacturing and service activities in Labuan.
“Some promoted activities enjoy full income tax exemptions, which exceed the preferential three per cent tax rate available under Labuan’s tax regime,” she said at a press conference after officiating the MADANI Financial Carnival at Financial Park Complex here today.
She said Labuan’s tax framework, established in 1990, was designed to foster its development as an International Financial Centre (IFC).
“Under this regime, Labuan trading companies can choose to pay a preferential tax rate of three per cent on net audited profits or opt for a flat tax rate of RM20,000.
“In 2019, the regime underwent enhancements to ensure only activities meeting international standards for an IFC qualify for the three per cent preferential rate,” she said.
Additionally, Lim said substantial activity requirements were introduced, such as maintaining a physical presence in Labuan, having an adequate number of employees and expenditures, and incurring annual operating expenses in Labuan.
“These substance requirements aim to create job opportunities and boost Labuan’s economic development,” Lim said.
When asked whether a portion of fiscal contributions from industry players in the Labuan financial sector could be directed to enhance Labuan’s economy, she explained that all states contribute to the national gross domestic product, and the government focuses on the overall revenue generated from all states across Malaysia.
-- BERNAMA