Protected Cell Companies (PCC) provide an alternative solution to standard corporate structures. As one of the innovative business structures on offer in Labuan IBFC, PCC may be structured to further enhance the insurance and mutual funds industries, particularly in optimising for maximum protection and benefit and also, flexibility in managing risk portfolios. They can also be used as an efficient tax planning tool, besides serving as an effective asset protection tool.
SCOPE OF SERVICES OF LABUAN PCC
APPLICATION TO SET UP LABUAN PCC WITH LABUAN
- An applicant may establish a Labuan PCC by incorporating a Labuan PCC or converting an existing Labuan company into a Labuan PCC.
Kensington Trust Labuan Limited is a licensed trust company in Labuan and may assist you with establishment and administration of your Labuan PCC.
- A Labuan PCC must seek prior approval of Labuan FSA for establishment of its cell(s).
STRUCTURE OF LABUAN PCC
- Labuan PCC is a single legal person and may establish one or more cells for the purpose of segregating and protecting cell assets.
- The creation of a cell by a Labuan PCC does not create a legal person separate from the Labuan PCC.
- The name of a Labuan PCC shall include the expressions “Protected Cell Company” or “PCC”.
- Each cell of a Labuan PCC shall have its own distinct name or designation.
- Registered office in Labuan and minimum one (1) resident secretary.
REPORTING REQUIREMENTS OF LABUAN PCC
- Appoint an approved auditor.
- Submit audited consolidated financial statement of the Labuan PCC and its cell(s) within 6 months after the close of each financial year.
- Prepare separate set of financial statements for each cell and shall be made available for inspection or examination by Labuan FSA.
TAXATION ON LABUAN PCC
Labuan PCC is taxed under Labuan Business Activity Tax Act 1990 (LBATA) as a taxable Labuan entity.
This means that the taxable person in a PCC is NOT each cell established under the PCC but the PCC itself. This translates to a 3% tax on audited net profits of the PCC or upon election, a maximum tax liability of MYR20,000 for the PCC regardless of the number of cells or their profits in the cells within the said PCC.
If the PCC carry on Labuan non-trading activities, the company as a whole is exempt from tax in Labuan.
Other benefits –
- No withholding tax
- No capital gains tax
- No stamp duty on offshore instruments.
A Labuan PCC is required to pay the following annual fees with Labuan FSA upon approval and thereafter, on an annual basis on or before 15 January each year -
- Captive Insurance/Takaful
1) On the general assets (Core) : RM30,000
2) On each individual cell: RM10,000
- Mutual Funds & Islamic Mutual Funds
1) On the general assets of the Labuan PCC: RM5,000
2) On each individual cell: RM2,000