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KUALA LUMPUR, Nov 2 (Bernama) -- The government is proposing for the restructuring of the Labuan International Business Financial Centre (IBFC) tax treatment in line with initiatives to further promote the long-term competitiveness of Labuan as an international financial hub and ensure compliance to the internationally agreed taxation standards.
In the appendix to the 2019 Budget, the Ministry of Finance proposed for the abolishment on the option for income tax to be assessed at the fixed rate of RM20,000 under the Labuan Business Activities Tax Act 1990 and remove restrictions on transactions conducted in ringgit, and on transactions between a Labuan entity and residents of Malaysia.
As part of the restructuring, the government is proposing for the imposition of new conditions including substantive condition, as determined by a committee, on Labuan IBFC activity carried out in Labuan and the prevailing income tax rate under the Income Tax Act 1967 on income from intellectual property assets held by a Labuan entity.
Finally, tax deduction on expenditure incurred, limited to three per cent of the allowable expenditure for residents who have transactions with a Labuan entity, is also being proposed.