Labuan – Income Tax (Exemption) Order 2025 (P.U (A) 59)

The Income Tax (Exemption) Order 2025 made on 24 January 2025 (“the Order”) provides exemption from income tax on certain payments relating to specific Labuan persons.

Below are the pertinent points of the Order:.

 

1. Effective Date

The Order has effect from the year of assessment 2023 to the year of assessment 2027.

 

2. Revocation

The Order shall revoked the Income Tax (Exemption) (No. 22) Order 2007 (P.U. (A) 437/2007).

 

3. Scope of Exemption

  • Dividends received by a Labuan company
  • Dividends received by any person from a Labuan company which are paid, credited or distributed out of income derived from a Labuan business activity or income exempted from tax
  • Interest received by a non-resident person from a Labuan company other than interest accruing to a business carried on by a non-resident person in Malaysia if that non-resident person is licensed to carry on a business under the Financial Services Act 2013 [Act 758] or the Islamic Financial Services Act 2013 [Act 759]
  • Interest received by a Labuan company from another Labuan company
  • Interest received by a resident person other than a licensed person to carry on a business under the Financial Services Act 2013 or the Islamic Financial Services Act 2013 from a Labuan company
  • Royalties received by a non-resident person from a Labuan company
  • Royalties received by a Labuan company from another Labuan company
  • Distributions received a beneficiary from a Labuan trust or Labuan Islamic trust
  • Distributions of profit after tax paid, credited or distributed to a partner of a Labuan limited partnership, a Labuan limited liability partnership, a Labuan Islamic limited partnership or a Labuan Islamic limited liability partnership by the Labuan limited partnership, Labuan limited liability partnership, Labuan Islamic limited partnership or Labuan Islamic limited liability partnership
  • Distributions of profit after tax received by a member of a Labuan foundation or a Labuan Islamic foundation from the Labuan foundation or Labuan Islamic foundation
  • Amount received by a non-resident person in consideration of services, advice or assistance as specified in paragraphs 4A (i) and (ii) of the Income Tax Act 1967** from a Labuan Company
  • Amounts received by a Labuan company in consideration of services, advice, or assistance as specified in paragraphs 4A (i) and (ii) of the Income Tax Act 1967** from another Labuan company.

 

**4A(i) amounts paid in consideration of services rendered by the person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any plant, machinery or other apparatus purchased from, such persons; (ii) amounts paid in consideration of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme.

 

For more information, please refer to Income Tax (Exemption) Order 2025