In: Economics
how the tax system contribute to development of Labuan IBFC?
Labuan IBFC, also known as Labuan International Business and Financial Centre, is a straightforward and simple taxation system which motivates the investors to take benefits of the attractive exemptions on tax offered under the LBATA, 1990. It was established nearly 25 years ago for developing the economic activities in a federal territory in Malaysia, Labuan; and complementing the activities of the domestic financial market in Kuala Lumpur. As per the Section 4(1) of Labuan Business Activity Tax Act 1990 (LBATA), taxation will be charged at 3% a year on the net audited profits of an entity of Labuan who are carrying on the activity on trading. Furthermore, the registered companies in Labuan are provided the flexibility for payment of an annual fixed rate of RM20,000.
The Labuan IBFC provides an appealing low jurisdiction of taxation for the investors. Its flexible and straightforward taxation system indicates that the firms and entities can avail very attractive rates of taxation, easy tax filing process and substantial exemptions. Labuan IBFC continual drive on offering commercial, operational, and economic substance lead to an ideal jurisdiction to cater to the several business requirements of ASEAN and promoted the connectivity of the region's economies.