Regulatory Tax Updates on Labuan 2022

Further to Tricor Insights 9/2021, this issue provides an update on the recent key amendments to the Labuan tax legislation up to 31 December 2021. For the reader’s ease of reference, a recap of the content of Tricor Insights 9/2021 is also outlined below.

On 22 November 2021, the Labuan Business Activity Tax (Requirements For Labuan Business Activity) Regulations 2021 was gazetted to replace the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018 issued on 31 December 2018. Two main changes to the Regulations are discussed below.

Subsequently on 23 November 2021, the Income Tax (Exemption) (No.11) Order 2021 was issued to provide exemption from the application of Section 39(1)(r) of the Income Tax Act 1967 (ITA) which restricts the deductibility of payments made to Labuan entities.

The tax regime for Labuan International Commodity Trading Companies is governed under a separate gazette order i.e. the Business Activity Tax (Requirements for Labuan International Commodity Trading Company) Regulations 2021 which was published on 27 December 2021.

The proposed amendments to the Labuan Business Activity Tax Act 1990 (“LBATA”) as announced in the Budget 2022 were enacted via the Finance Act 2021 on 31 December 2021. The key amendments are outlined below.

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