LABUAN INTERNATIONAL BUSINESS AND FINANCIAL CENTRE

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1 LABUAN INTERNATIONAL BUSINESS AND FINANCIAL CENTRE Labuan IBFC s Shariah-Compliant Products & Solutions 8 th May 2018 Aderi Adnan Director, Business Development, Labuan IBFC Inc. Where is Labuan? Off the coast of Sabah, East Malaysia Federal Territory Common time zone with major Asian cities Where business meets leisure 2 1

What is Labuan IBFC? International business and financial centre. A tax-efficient jurisdiction to facilitate business, trading, investments and etc, through financial services and legal structures.

Our Vision To be Asia Pacific s leading midshore international business and financial centre Striking an ideal balance between client confidentiality and international best standards Internationally

2 What is Labuan IBFC? International business and financial centre. A tax-efficient jurisdiction to facilitate business, trading, investments and etc, through financial services and legal structures. Well-balanced legal and regulatory framework. Our Vision To be Asia Pacific s leading midshore international business and financial centre Striking an ideal balance between client confidentiality and international best standards Internationally Recognised Group of International Finance Centre Supervisors (GIFCS) Member since 1999 International Organisation of Securities Commissions (IOSCO) Member since 2003 Group of International Insurance Centre Supervisors (GIICS) Member since 1999 International Association of Insurance Supervisors (IAIS) Member since 1998 Islamic Financial Services Board (IFSB) Member since 1998 International Islamic Financial Market (IIFM) Member since 2002 Asia/Pacific Group on Money Laundering (APG) Member since 2000 Labuan IBFC Adheres to OECD s International Standards and Best Practices 2

Connecting Asia s Economies 70% of Labuan Companies are Asian-based (as at 2015) Comprehensive Legislation Labuan Financial Services and Securities Act 2010 Labuan Business Activity Tax Act 1990

3 Connecting Asia s Economies 70% of Labuan Companies are Asian-based (as at 2015) Comprehensive Legislation Labuan Financial Services and Securities Act 2010 Labuan Business Activity Tax Act 1990 Labuan Islamic Financial Services and Securities Act 2010 Labuan Financial Services Authority Act 1996 Labuan Foundations Act 2010 Labuan Trusts Act 1996 Labuan Limited Partnerships and Limited Liability Partnerships Act 2010 Labuan Companies Act

Labuan IBFC s Islamic Infrastructure Removed points of friction - tax, stamp duty Labuan Islamic Financial Services & Securities Act Double tax treaties

Founding membership of IFSB, IIFM Islamic Banks & Financial Institutions Service providers - lawyers - accountants - trust companies Flexible Tax Regime

3% per annum or maximum of MYR20,000 per annum Tax efficiency via yearly election Tax certainty via statutory perpetuity Irrevocable election provided

4 Labuan IBFC s Islamic Infrastructure Removed points of friction - tax, stamp duty Labuan Islamic Financial Services & Securities Act Double tax treaties More than 80 nations Shariah Supervisory Council One-stop regulator Labuan s Islamic infrastructure Talent pool Clear laws & arbitration process Founding membership of IFSB, IIFM Islamic Banks & Financial Institutions Service providers - lawyers - accountants - trust companies Flexible Tax Regime Labuan Business Activity Trading income taxed under Labuan Business Activity Tax Act 1990 Non-trading income, not taxable Investment income, not taxable 3% per annum or maximum of MYR20,000 per annum Tax efficiency via yearly election Tax certainty via statutory perpetuity Irrevocable election provided Non-Labuan Business Activity Income taxed under Income Tax Act 1967 Tax rate at 25%* on Malaysian source income Applicable for all domestic trade (* YA 2016) 4

5 Wide Array of Solutions Labuan Companies Holding company Trading company Banking, insurance/takaful, leasing and other licensed companies, i.e. captives Protected cell companies Labuan Specialised Entities Company limited by guarantee Limited partnership Limited liability partnership Private trust company Labuan Asset Protection and Wealth Management Trust Special trust Purpose trust Charitable trust Waqf Foundation Foundation Private funds Available in Shariah-compliant forms Marketing offices may be located in Kuala Lumpur or Iskandar Malaysia (north of Singapore) Business Activities Companies (13,260) Banking (51) Insurance (204) Leasing (383) Trust Cos. (47) Investment holding Trading Wholesale banking Investment banking Loans/deposit Financial guarantees Trade finance Wealth Management (240) Life/general Broking Captives Re-insurance Management Commodity Trading (50) Aviation Shipping Heavy machinery Company incorporation Company administration Corporate secretarial Trustee services Trust Oil and gas Foundations Agriculture Private Trust Companies Minerals Source: Statistics from Labuan FSA s Annual Report

6 LIWF Structure LABUAN INTERNATIONAL WAQF FOUNDATION Governed by Shariah principles on Waqf Founder (Waqif) Endow assets through Waqf LIWF (acts as Trustee/ Nazir/Mutawalli) Charter (Waqfiyyah) Shariah Adviser Supervisory person Council Officer Secretary Governance and management of Waqf foundation and assets Distribution of income/ usufruct Beneficiaries Why Labuan IBFC for Islamic Finance? World s first exchangeable SUKUK listed on LFX in World s first omnibus legislation (Labuan Islamic Financial Services and Securities Act 2010). Commitment of Regulators both onshore (e.g. MIFC initiative) and offshore (LFSA). International Financial Centre with a strong focus on Islamic Finance that enables unique solutions and innovations an ideal platform as the world s Islamic Financial Test Bed. Shariah Supervisory Council for Shariah guidance and reference point. 6

7 Key Islamic Finance Numbers in Labuan IBFC Average Growth p/a Islamic Bank Islamic Investment Bank Islamic Window Operator % Full- Fledged Retakaful, Family and Takaful Operators Retakaful Window Operators % Islamic Notes Listed on LFX % Total Capitalisation of Islamic Notes USD7.6 bil USD8.1 bil 3.3% Total Islamic Banking Assets USD1.6 bil USD1.9 bil 9.4% Total Gross Contribution by Retakaful USD38.1 mil USD54.7 mil 21.8% Source: Statistics from Labuan FSA s Annual Report For Inquiries.. Aderi Adnan aderiadnan@libfc.com

It is not intended to be a substitute for detailed research or the exercise of professional judgment.

8 Thank You This presentation should not be regarded as offering a complete explanation of the matters referred to and is subject to changes in law. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Labuan IBFC cannot accept any responsibility for loss occasional to any person acting or refraining from action as a result of any material in this presentation. 8

Innovative Solutions in Islamic Wealth Management. 20 April 2016, Jakarta

Innovative Solutions in Islamic Wealth Management 20 April 2016, Jakarta WELCOME REMARKS Danial Mah Abdullah Deputy Director General, Labuan Financial Service Authority INNOVATIVE SOLUTIONS IN ISLAMIC