Labuan IBFC’s insurance industry continues its vibrant growth in the past few years. Comprising not just reinsurers and direct insurers, Labuan IBFC also provides unique underwriting vehicles in the form of captives. Aside from conventional (re)insurance services, Labuan IBFC also offers Islamic (re)insurance, also known as (re)takaful, for those seeking Shariah-compliant protection. Other insurance-related businesses such as Insurance brokers, underwriting managers as well as insurance managers complete the supply chain by offering the needed services within the sector.
Below are insurance products available in Labuan IBFC to meet sophisticated clientele needs and expectations.
LABUAN INSURANCE BUSINESS
A Labuan insurance business is defined as an insurance business that is transacted in foreign currency and includes general, life, reinsurance, Labuan takaful and retakaful windows and captive insurance.
- Labuan General Insurance Business
- Labuan Life Insurance Business
- Labuan Reinsurance Business
- Labuan Takaful and Retakaful Windows
- Labuan Captive Business
LABUAN INSURANCE-RELATED BUSINESS
Applicant for a Labuan insurance-related licence may carry on business as a Labuan insurance broker, Labuan insurance manager or Labuan underwriting manager. The activities of the Labuan insurance-related business are governed by the Labuan Financial Services and Securities Act 2010.
- Labuan Insurance Broker
- Labuan Insurance Manager
- Labuan Underwriting Manager
LABUAN GENERAL TAKAFUL BUSINESS
A Labuan general takaful business is defined as a takaful business that is not a family takaful business, but includes a takaful business relating to mutual financial aid and assistance to participants for losses arising from perils such as accidents, fires, floods and burglaries.
- Labuan Family Takaful Business
- Labuan Retakaful Business
APPLICATION FOR LICENCES
Application for a licence to carry out Labuan Insurance and Insurance-related activities can be made to the Director General of Labuan FSA.
Kensington Trust Labuan Limited is a licensed trust company in Labuan and is able to assist you with license application, establishment and administration of your Labuan company or branch.
LABUAN IBFC TAXATION SYSTEM
- Labuan Business Activity Tax Act 1990 (“LBATA”) governs the imposition, assessment and collection of tax on a Labuan business activity carried on in, from or through Labuan.
- Labuan entities that carry on a non-Labuan business activity are subject to the provisions of the Malaysian Income Tax Act, 1967 (ITA).
- “Labuan business activity” means:
- a Labuan trading or a Labuan non-trading activity carried on in, from or through Labuan,
- excluding any activity which is an offence under any written law.
- “Labuan trading activity” includes banking, insurance, trading, management, licensing, shipping operations or any other activity which is not a Labuan non-trading activity. The Labuan entity shall pay 3% of net profits as per audited accounts.
- “Labuan non-trading activity” means an activity relating to the holding of investments in securities, stock, shares, loans, deposits or any other properties by a Labuan entity on its own behalf. Such activity is not subject to tax under LBATA.
- Labuan companies carrying on both Labuan trading and non-trading activities will be deemed to be carrying on Labuan trading activities. Hence, it will have the same tax treatment as those undertaking Labuan trading activity mentioned above.
- Substance requirements under Labuan Business Activity Tax Regulations 2018:
- To benefit under LBATA, the following Labuan Insurance entities will need to have four (4) minimum full time employees in Labuan and an annual operating expenditure in Labuan of RM150,000:-
> Labuan insurer, Labuan reinsurer, Labuan takaful operator or Labuan retakaful operator
- To benefit under LBATA, the following Labuan Insurance entities will need to have four (4) minimum full time employees in Labuan and an annual operating expenditure in Labuan of RM100,000:-
> Labuan underwriting manager or Labuan underwriting takaful manager
> Labuan insurance manager or Labuan takaful manager
> Labuan insurance broker or Labuan takaful broker
> Labuan captive insurer or Labuan captive takaful
DEALINGS WITH RESIDENT
All Labuan entities are allowed to conduct transactions with residents of Malaysia in Ringgit Malaysia. “Resident” here means:
- in relation to a natural person, a citizen or permanent resident of Malaysia; or
- in relation to any other person, a person who has established a place of business, and is operating in Malaysia.
- and includes person who is declared to be a resident pursuant to s.43 of the Malaysian Exchange Control Act 1953.
The amount of deductions allowed in respect of payments made by Residents to Labuan entities are as follows:-
|> Interest expense||67% deductible|
|> Lease rental||67% deductible|
|> General reinsurance premiums||100% deductible|
|> Other type of payments||3% deductible|
ANNUAL LICENCE FEE
All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year:-
|Type of Licence|
Licence Fee (RM)