CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Labuan Gives Tax Incentives For Oil And Gas Trading

Labuan Gives Tax Incentives For Oil And Gas Trading

by Mary Swire, Tax-News.com, Hong Kong

02 November 2011


At the launch of the Global Incentives for Trading (GIFT) programme and the newly-formed Labuan International Trading Commodity Company (LITC), the Director-General of Labuan Financial Services Authority (FSA) Encik Ahmad Hizzad Baharuddin announced that a range of incentives have been initiated to attract oil and gas traders to Malaysia.

The new scheme will be operated by the LITC out of Labuan International Business and Financial Centre (IBFC), and is intended to diversify further the products and services of Malaysian’s financial services sector.

Ahmad Hizzad said that, over the years, the oil, gas and energy sector has contributed significantly to the growth of the country and now accounts for about 20% of the Malaysia’s gross national product. The government has earmarked the sector as one of the country’s key economic growth areas.

In addition, he pointed out that, “while Malaysia has thriving up-stream activities in the oil and gas sector, more activities could be initiated at the various levels in the business value chain, particularly in the trading of petroleum and its related products. … This offers a huge potential for Malaysia to tap into the oil trading market, as it would not only generate revenue for the country, but would also increase the pool of expertise and talent, and improve the transfer of technology.”

At this initial stage, one of the main objectives of the GIFT programme, Ahmad Hizzad disclosed, is to attract major international oil trading companies, such that they would consider locating part of their operations in Malaysia. In attracting these international companies, the programme offers a set of incentives through the establishment of the LITC.

The key incentives offered through the LICT under the GIFT programme include a flat corporate tax rate of 3% of chargeable income, a 100% exemption on directors fees paid to non-Malaysian directors, and a 50% exemption on gross employment income for non-Malaysian professional traders and managers of LITC companies.

There is also an exemption of stamp duties on documentation for such business activities, a tax exemption on dividends received by or paid from LITC companies, and all of the other fiscal incentives that are attached to operating a Labuan entity.

Ahmad Hizzad also emphasized that the attractiveness of using the Labuan IBFC as a base for oil trading business in Malaysia extends beyond fiscal incentives. The IBFC hosts to over 400 international financial institutions comprising 61 banks, 169 insurance and insurance-related companies, 176 leasing companies, amongst others, and is an ideal location as it provides the oil and gas trading companies with a comprehensive range of financial products and services, both under conventional and Shariah-based principles.

The Labuan FSA, he said, is pleased to note that the banks and insurance companies in Malaysia, including Labuan, are already gearing up towards providing the specialized financial services in their oil trading desks that will needed by the trading companies.

A comprehensive report in our Intelligence Report series, titled "Offshore For Corporates", discusses in depth the comparative merits of offshore HQs, with a Corporate Treasury section analysing how to get an optimal blend of tax-efficiency and profits and finally a study into how two types of international business can use onshore low-tax regimes in parallel with offshore jurisdictions to construct highly tax-efficient corporate structures, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report7.asp
TAGS: tax | business | company formation | tax incentives | energy | banking | international financial centres (IFC) | corporation tax | fees | oil and gas | offshore company formation | offshore | stamp duty | Malaysia | tax breaks | dividends | individual income tax | Labuan | services

To see today's news, click here.

Leave a comment

Read our Posting Guidelines

 






Close

Password Reminder

Please enter your email address to receive a password reminder.

 

Log into Tax-News+
Not registered yet? Find out about our daily news alert service »

 Email: 
 Password: 

Login »

Forgotten your password?







Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Tax-News+ Updates

Receive FREE daily updates from Tax-News.com, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...

 

Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »