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Trust Companies and Ancillary Services
  • 1. What are the registration and operational requirements for a trust company?
    The applicant for a Labuan trust company licence shall:
    • register itself as a trust company and must be a company incorporated or registered under the Labuan Companies Act 1990 (LCA). The name of the company shall include the word “Trust”, “Trustee” or other such words as approved by the Registrar 
    • provide a business plan covering types of products and services to be offered, target market, management team, manpower planning and three years’ financial projections 
    • have a capital or working funds of at least RM150,000 or its equivalent in any foreign currency 
    • have a professional indemnity insurance of not less than RM1 million or its equivalent in any foreign currency 
    • ensure the directors and officers designated as trust officers are fit and proper persons responsible for the management of the Labuan trust company in Labuan 
    • provide a letter of guarantee or undertaking to Labuan FSA for the liability of the Labuan trust company 
    • appoint at least two approved trust officers, one of whom is domiciled in Labuan. The trust officers are employees of the trust company who have been approved by Labuan FSA as trust officers.
  • 2. Are there any specific requirements relating to trust officers?
    Yes. A trust officer should be:
    • an advocate and solicitor or a person who possesses a degree in law 
    • a member of the Malaysian Institute of Accountants or any other association of accountants approved by Labuan FSA 
    • an associate/fellow of any association of bankers, insurers, company secretaries or similar bodies 
    • a person who has had uninterrupted service of not less than 10 years in any public service or statutory body; or 
    • any other person comparable to the above.
  • 3. What is a Labuan managed trust company?
    A managed trust company (MTC) is a trust company registered under the Labuan Companies Act 1990 (LCA), and is managed by a fully-operational trust company in Labuan.
    The MTC is set up by a parent company to provide offshore trust services to its clients, while being managed by a third party (a locally-licensed trust company). This allows the parent company to extend its product offerings to its clients without having to set up or maintain a presence in Labuan, thus avoiding the substantial expense and fixed costs of establishing, resourcing and equipping a new office.
    In addition, the MTC would enjoy access provided by the managing company to specialists and experienced professionals who have existing relationships with local regulators, thus allowing the parent company to establish an offshore presence while maintaining its high standard of service.
  • 4. What is a Labuan private trust company?
    A Labuan private trust company is a Labuan company or foreign Labuan company registered to undertake the services of a trust company for the purpose of a private trust(s) created by a settlor or individuals connected to the settlor described in the trust instrument creating the private trust.
  • 5. How is the income of a Labuan company licensed as a trust company taxed?
    The income is taxed in a similar manner as other Labuan entities under the Labuan Business Activity Tax Act 1990 (LBATA). The rate of tax imposed is 3% of audited net profits or fixed tax of RM20,000, as elected.
  • 6. What is the governing legislation for Labuan trust companies?
    Labuan trust companies are governed by the following Labuan laws:
    • Labuan Financial Services and Securities Act 2010 
    • Labuan Islamic Financial Services and Securities Act 2010 
    • Labuan Companies Act 1990 
    • Labuan Business Activity Tax Act 1990.
  • 7. What are the fees payable by Labuan trust companies in Labuan IBFC?
    The fees payable are illustrated in the table below:
    Fees
    Amount
    Processing Fee
    RM1,000
    USD350
    Annual Fee
    Amount
    Trust Company
    RM15,000
    USD5,000
    Managed Trust Company
    RM15,000
    USD5,000
    Labuan Private Trust Company
    RM5,000
    USD1,500
    All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year.
  • 8. Goods and Services Tax (GST) - Trust Company
    REGISTRATION
    1. A Labuan Company undertaken one or two unexpected transactions with residents. Does the company still have to register for GST?
    Registration is mandatory if the transactions are
    • Taxable supply; 
    • Made by a taxable person whose turnover exceeds RM500,000 per year; 
    • In the course of furtherance of business; and 
    • In Malaysia.
    2. A Labuan company procure goods/services from Indonesia and subsequently sell to Singapore. However, only the invoice was billed to the Labuan company in Labuan which is then reissued to the Singapore company. Does the Labuan Company need to register if the minimum threshold is reached?
    The supply of goods and services is out of scope and not subject to GST.
    GST TREATMENT
    3. What is the GST treatment on the following instances:
    • Goods or services provided by Labuan companies in Labuan to Malaysian entities located in Labuan or other parts of Malaysia 
    • Goods or services provided by Labuan companies in Malaysia such as KL etc to other Labuan companies 
    • Supplies of goods or services by a Labuan company in Labuan to Malaysian entities located in Labuan is considered as dealing within DA. Hence, it is not subject to GST. However, supplies of goods and services from DA to PCA is subject to GST at standard rated. 
    • Labuan companies in Malaysia (PCA) supply goods and services to Labuan companies in:-
    Location
    Goods
    Services
    World
    Zero rated
    Zero rated
    Malaysia
    Standard rate
    Standard rate
    DA
    Zero rated
    Standard rate
    4. If a Malaysian client (who owns a Labuan Company but he is residing in KL) requests a trust company to prepare a Board resolution to open a bank account in KL, would such services to the Labuan Company (which is registered in Labuan and within the "designated area") be subjected to GST.
    The registered address of the Labuan Company is in Labuan. Hence, it is not subject to GST as the services are provided within DA.
    5. A contractor does all the fabrication work in Labuan and sell the goods to an oil and gas related company in Labuan. But the goods was to be dispatched to oil rig sites at the sea of Sabah coastal areas or Brunei bay, is the sales subject to GST?
    Goods supplied within DA is not subject to GST except supply of petrol, diesel, and Liquefied petroleum gas as per the Goods and Services Tax (imposition of tax for supplied in respect of designated areas) Order 2014. Goods supply from DA to PCA will be subjected to GST. If the supply of goods is from DA to the world, it will be zero-rated.
    6. If the Labuan company (DA) supplies to a rig just outside of the Labuan waters (e.g. food), is these subject to GST?
    Yes, it is subject to GST as the dealing is undertaken outside of DA.
    7. A Labuan company undertaking offshore supplies. In this instance, does the DA GST guide include the water covering the Brunei base?
    The definition of Labuan refers to the island of Labuan and its independent islands namely, Rusukan Besar, Rusukan Kecil, Keraman, Burong, Papan and Daat. Brunei base is not part of DA.
    8. A Labuan company supplying goods to ships in a Labuan port. Is this subject to GST?
    No, since it is within DA.
    9. Since any supply made within or between DA is not subject to GST, what is the GST treatment if the Labuan Company (place of supply in Labuan) has a marketing office in KL?
    The marketing office is purely for client facilitation including meeting of clients only. It is not considered as a fixed establishment since it is not an agency or branch. Hence, it is not subject to GST.
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