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Guide To Start A Labuan Leasing Business

Labuan is one of the best jurisdiction if you are interested to start your leasing company. Malaysians too are welcome to start their leasing business in Labuan. In a recent trend, we have seen the growth of Malaysians ownership of such companies. This is due to Labuan leasing company being permissible to deal with local Malaysian entities or individuals. There is also many favorable tax incentives encouraging and regulatory environment for Labuan Leasing company, where innovative leasing structures have been put in place by the Labuan FSA to help businesses reduce their operating costs significantly.

“Labuan leasing” means the business of letting or sub-letting property on hire for the purpose of the use of such property by the hirer, regardless of whether the letting is with or without an option to purchase the property.

The property includes the following:
1. Plant and machinery
2. All types of equipment
3. Chattel – attached or to be attached to the earth
4. Ships – bareboat charters only, excluding transportation of passengers or cargo by sea or the charter of ships on a voyage or time charter basis.

In our Guide To Start A Labuan Leasing Business, we will give you complete information!

Key advantages of Labuan Favourable Tax Structure:

  • Corporate tax – 3% of net profit.
  • No withholding tax on dividends, interest, technical fee and royalty/lease rental
  • No stamp duty on all instruments including share transfer
  • No import duty/sales tax
  • No foreign exchange controls
  • No capital gain tax/inheritance tax
  • Enjoy Malaysia’s Double Tax Agreements with over 70 countries

Labuan leasing can be easily started with the proposed leasing transactions via Labuan companies with residents and non-residents for the licensing application. The Labuan Leasing license application submits to Labuan FSA’s for approval to include the following documents and information:

1. A business plan detailing the operations of the applicant with regard to its Labuan entity and the nature of the leasing transactions, including whether they would be conducted with residents or non-residents;
2. Group corporate shareholding structure;
3. The diagram of the leasing transaction;
4. The composition of its Board of Directors and senior management.

Note: Prior written approval from Labuan FSA must be obtained for any appointment of a director, person in control or Chief Executive Officer, who must be a fit and proper person.

Once Labuan FSA approval-in-principal for the leasing license is obtained, often within 60-90 days, we will proceed to register your Labuan Company and set up your operation office in Labuan with the opening of the bank account to facilitate the paid-up capital.

Guide to Start A Labuan Leasing Business

There are two types of annual Labuan Leasing license fee payable to Labuan FSA:

Annual License fee: USD 20,000 to be paid annually. Subsequent payment of the annual fee will be on or before 15th January of each calendar year

A. Lease transaction with Malaysian resident:
* RM 20,000 is payable to Labuan FSA for each subsequent lease transaction

B. Transactions with non-Malaysian resident / other Labuan company :
* No fee but required to submit each transaction to Labuan FSA

The Operational Requirements of Labuan Leasing Company is as follows:

1. Must maintain bank account(s) preferable in Malaysia to facilitate the leasing operation including lease remittances/lease rental;

2. The lease agreement is duly stamped and endorsed by the Local Authorities, i.e. Collector of Stamp Duties at the Stamp Duty Office, Inland Revenue Board of Malaysia;

3. Transact business only in foreign currency and cannot deal in Malaysian Ringgit except for the purpose of defraying administrative and statutory expenses;

4. To notify Labuan FSA of any changes to its constituent documents and business plan within 30 days of the changes being effected;

5. To obtain approval from Labuan FSA on new appointment or change of its directorship and shareholding;

6. To notify Labuan FSA on the termination/extension of any leasing transaction within 30 days upon the termination/extension;

7. To obtain prior approval from Labuan FSA for any change of lease asset for leasing transactions with Malaysian residents;

8. To ensure all leasing transactions and agreements are done through Labuan, and adequate and proper records and books of accounts are maintained in Labuan;

9. To conduct its business with due diligence and sound principles and comply with the laws and regulations where it services its clients;

10. To ensure all its leased assets are adequately insured;

11. To ensure that the directors and officers responsible for the management of the company are fit and proper persons at all time;

12. To ensure that all leasing transactions with its related party comply with the transfer pricing rules issued by the related party’s relevant authorities;

13. Subsequent leasing transactions with Malaysian residents are subject to Labuan FSA’s prior approval and payment of subsequent transaction fee;

14. Subsequent leasing transactions with non-residents only require notification to Labuan FSA within 30 days after the execution of the lease agreements;

15. All final lease agreement between the lessor and the lessee must be certified, duly stamped and endorsed by the Malaysia Stamp Duty Office to be submitted to the Labuan FSA;

16. To obtain prior approval from Labuan FSA for any change of leased asset for leasing transaction with Malaysian residents;

17. Any change in the lessee will be considered as subsequent leasing transaction and requires prior approval from Labuan FSA for transactions with Malaysian residents and notification for the transaction with non-residents;

18. To appoint an approved external auditor to undertake an audit in respect of its accounts and business operations and submit the audited account to the Supervision and Enforcement Department of Labuan FSA within six (6) months after the close of each financial year;

19. To provide statistics and information as may be required by Labuan FSA in relation to prudential information, general business conduct and volume and direction of the business in Labuan

We provide a one-stop application solution for Labuan Leasing License includes:

  • Consultation of your eligibility and procedures based on your profile
  • Profiling, due diligence and guidance on documents preparation
  • Preparation of Business Plan and Financial Forecast, AMLA and KYC Framework
  • Submission and supervise the application process
  • Act as your liaison and contact point with Labuan FSA for all correspondence and arrange an interview (if any)
  • Track the license approval and attend all queries from Labuan FSA

WHY Our Trust Company for Your LABUAN SET UP?

We are a full-fledged licensed Labuan Trust Company (Trust License No. LT 0034) with a highly experienced team of dedicated professionals handle all license applications. We provide complete “one-stop” solutions in pre-assess, meet, planning, structuring, establishment and corporate service for your Labuan Leasing Business, ensuring you get a bespoke service that meets your leasing business needs as well as onwards operation.

Feel free to contact us +603-2783 9191 (Labuan Division) for an appointment for further information on how to get started on your leasing business in Labuan! Alternatively, please drop us an inquiry form if you are interested to find out more about Labuan Leasing License application on your eligibility. 

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