Labuan Woos Shipowners with Tax Savings But…

Malaysia has been pushing forward on plans to attract shipowners to Labuan but experts say many corporations and SMEs in the shipping business remain unaware of the significant tax benefits offered to encourage more shipping leasing activities in the island. Speaking at a seminar co-organised by OCBC Bank (Malaysia) Berhad and Equity Trust (Labuan) Limited recently, Ms Sue Yong, managing director of Equity Trust, said the favourable tax regime and regulatory environment in Labuan has helped both foreign and Malaysian-based companies to lower their operating costs through innovative leasing structures.

Ms Yong pointed out that leasing through the Labuan International Business & Financial Centre (“Labuan IBFC”) involves enormous tax benefits – taxation at 3% of net audited profit or a flat tax of RM20,000 (USD 6,226) instead of the usual 25%. In addition to the tax benefit, offshore companies registered in Labuan need not pay withholding tax or stamp duty on offshore transactions with the exception of companies that are engaging in the business of transporting passengers or cargoes by sea or the chartering of ships on a voyage or time charter basis.

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