Labuan Shipping Operations and Malaysia International Ship Registry

Malaysia International Ship Registry (“MISR”) is a body for the registering of international ships.  The MISR was introduced to attract individual and foreign shipping companies to register their ships through Labuan IBFC. This would enable placing of Malaysia on the international maritime map and also, further enhance the jurisdiction’s shipping operations.

Kensington Trust Labuan Limited is a licensed trust company in Labuan and is able to assist with the establishment and administration of your Labuan company and also, registration with MISR.

SHIPPING OPERATIONS

Shipping operations include the transportation of passengers or cargo by sea or the letting or charter of ships on a voyage or time charter basis.

Under the Labuan Business Activity Tax Act 1990 (“LBATA”), shipping operations is considered as “Labuan trading activity”. The Labuan company shall pay either 3% of net profits as per audited accounts OR RM20,000/- upon election annually.

REGISTRATION OF INTERNATIONAL SHIPS IN LABUAN

Port of Registry for Malaysia International Ships
Labuan

Eligibility
May register a ship as a Malaysian International Ship if it is owned by a corporation that satisfies the following requirements:

  • Incorporated in Malaysia
    To qualify under LBATA, the shipping company must be incorporated or registered under the Labuan Companies Act 1990.
  • An office established in Malaysia.
  • Ownership :
    Foreigners are allowed to hold 100% equity in line with the government's effort to encourage foreign investments in the country.
  • Paid-up capital of corporate ownership :

The company must have a minimum paid-up capital of 10% of the value of the ship or RM1million, whichever is higher. This shall apply only to the first ship registered by the company.

Appointment of Ship Manager
The owner of a ship shall, before applying for a ship to be registered, appoint a ship manager whom shall be:

  • A Malaysian citizen having his permanent residence in Malaysia; or
  • A company incorporated in Malaysia and having its principal place of business in Malaysia.

ADVANTAGES & KEY BENEFITS OF LABUAN IBFC

  • ZERO withholding tax on payments of dividend and interest to non-residents.
  • No stamp duty on all instruments relating to offshore business activities including share transfer.
  • No import duty / sales tax.
  • No foreign exchange controls.
  • No capital gain tax / inheritance tax.
  • Double Tax Agreements between Malaysia and over 70 countries.
  • 50% tax abatement for expatriate professionals and managers employed under Labuan companies.
  • 100% exemption for director’s fees received by non-citizen directors of Labuan companies.