Set up a Trust in Labuan
Updated on Monday 20th March 2017
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Foreign investors can open a company in Malaysia by setting up a trust in Labuan, which is a special region of the country that provides numerous tax advantages to businesses registered here. The main institution which regulates this type of entity is the Labuan Financial Services Authority (LFSA) and investors who want to operate on this market have to respect its rules regarding the incorporation or taxation. Our team of company formation agents in Malaysia can offer assistance on the legal aspects related to the registration of a trust in Labuan.
Investors can set up a Labuan trust under the regulations of the Labuan Trusts Act 1996 and the Labuan Special Trusts and Labuan Foundations 2010. Those who are interested in company formation in Malaysia should know that the local legislation also recognizes the Islamic trust, under the regulations of the Labuan Islamic Special Trust.
More information on the Labuan trusts is available in the presentation below:
Registration of a trust in Labuan
In order to open a trust in Labuan, Malaysia, the investors will have to draw a trust deed, which is the main statutory document of the entity. Our team of company formation representatives in Malaysia can offer more details on the provisions of the document, but it is important to know that it establishes the rights and obligations of the trustee and the settlor (the person who establishes the trust).
The trustee can be represented by a natural person or a legal entity which has received the right to manage assets in the name of a certain beneficiary. In Labuan, a trust can have any number of trustees, as long as one of them is represented by a Labuan trust company.
Financial aspect regarding the Labuan trust
Businessmen who are interested in the procedure of company registration in Malaysia under the form of a trust must know that the Labuan legislation does not require investors to participate with a specific capital.
If the trust is involved in trading activities, it will be imposed with an audit tax at the rate of 3% or RM 20,000. The investors can opt to pay the 3% tax rate when performing the audit, or they can choose to pay an annual sum established at RM 20,000 without performing the audit. Moreover, if the company's management will choose to pay the RM 20,000, the trust will not be required to file the financial statements.
We invite businessmen to contact our team of company formation consultants in Malaysia for more details related to the Labuan trust and the taxation system available in this case.