The formation of a regulatory authority has been key to Labuan’s success as a tax haven. Established in February 1996, LOFSA sought to promote and spearhead tax haven Labuan’s efforts in building its offshore services sector. The plan of tax haven Labuan has been to create an integrated offshore financial center while implementing a legislative framework which favors the continued growth of international business services in Labuan as a tax haven.
Tax haven Labuan is the main island of the Malaysian Federal Territory of Labuan. The country has a diverse background consisting of Brunei Malay, ethnic Chinese, ethnic Indian, and Kedayan. In 1800 tax haven Labuan was included in the Brunei Sultanate and was recorded as a port for ships which sought refuge from pirate attacks and storms. In 1942, tax haven Labuan was invaded by Japan which ruled for four years until the arrival of the Allied forces represented by a convoy of 100 ships which launched an attack along with the Australian Division and lead to Japan’s surrender of tax haven Labuan.
In 1963 tax haven Labuan gained its independence and became joined Malaysia. In 1990 tax haven Labuan obtained its status as an international offshore financial center and in 1984 was declared a federal territory. Labuan is mainly identified as an international financial business centre (IFBC) and free zone, a status which it acquired as a result of the large range of international financial services offered. Tax haven Labuan’s IBFC is the only one of its kind in Malaysia, having incorporated over 6,500 offshore companies and granted licenses to several hundreds of financial institutions among which are some of the world’s leading banking institutions. As a tax haven, Labuan has concentrated on developing its offshore services in the areas of captive insurance, public and private funds wealth management, Shariah-compliant Islamic Finance structures and holding companies.
Tax haven Labuan is a business friendly and easily accessible location for offshore companies and investors internationally. Once the necessary licensing and approval have been obtained from the relevant authorities of tax haven Labuan, investors are exposed to diverse business opportunities in retail business, construction, tourism and oil and gas exploration, which is encouraged by the Government of Malaysia.
Tax haven Labuan’s offshore legislative framework has been carefully designed to adequately regulate the conduct of offshore activities, provision of offshore services and licensing of offshore entities. From its inception in 1990, tax haven Labuan’s international financial business centre was regulated by a number of legislations that were put in place to ensure that international financial activities within Labuan remained up to international rules and policies. Some of these laws are listed below, and are overseen by LOFSA, tax haven Labuan’s main financial services regulatory institution.
Tax haven Labuan is an IBFC (International Business and Financial Center). As an IBFC tax haven Labuan seeks to strengthen the economic contribution made by financial services to Malaysia’s GNP, complement the development of local financial businesses in Kuala Lumpur so that the country may emerge as a regional player and stimulate general economic activity domestically and on neighboring islands. Offshore financial services in tax haven Labuan include:
The Labuan Offshore Financial Services Authority (LOFSA) was created in February 1996 as a single regulatory agency for Labuan as a tax haven and international business financial centre.
LOFSA’s duties include:
LOFSA is made up of representatives from various professionals from the Government and private sector, each of whom serves a term of 3 years and is appointed by the Minister of Finance.
Tax haven Labuan’s Offshore Financial Services Authority is internationally recognized by the Asia/Pacific Group on Money Laundering (APG), International Association of Insurance Supervisors (IAIS), Islamic Financial Services Board (IFSB) and International Organisation Securities Commissions (IOSCO).
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