Tax Break Proposed For Labuan Takaful, Islamic Finance - MoF

KUALA LUMPUR, Oct 18 (Bernama) -- The government is proposing an income tax exemption for Labuan commercial entities conducting Islamic financial activities, including Labuan takaful and eligible related businesses, according to the Ministry of Finance (MoF).

The MoF said the exemption aims to attract investment in the Islamic financial sector, particularly in digital technology, at the Labuan International Business and Financial Centre.

The exemption will be effective from the assessment year 2025 to 2028.

Labuan trading entities include Labuan takaful and re-takaful operators, whose eligible activities involve takaful and re-takaful businesses compliant with Shariah principles, either through risk arrangements or product development.

"For Labuan underwriting managers or Labuan underwriting takaful managers, eligible activities include providing underwriting services and administrative tasks related to Labuan takaful business," the MoF said in an appendix issued alongside the presentation of Budget 2025 today.

Additionally, Labuan insurance and takaful managers offer management or administrative services related to Labuan takaful businesses.

Other eligible entities include Labuan insurance or takaful brokers who arrange Labuan takaful and re-takaful businesses or provide financial analysis.

Currently, income tax exemptions are available for five years, from the assessment year 2024 to 2028, for Labuan trading entities engaged in Islamic financial activities.

These include Islamic digital banking, Islamic digital exchanges, ummah-related companies and Islamic digital token issuers.

-- BERNAMA