Labuan
Introduction
The
Labuan Offshore Financial Services Agency
(LOFSA, since renamed the Labuan
Financial Services Authority),
which is responsible for processing and
granting applications for licences to operate
business in Labuan, has made e-commerce
a focus of its planning for future growth
of the jurisdiction.
Go
to Offshore-e-com.com for an extensive analysis
of the commercial possibilities and the
legal background of offshore e-commerce.
Labuan Offshore Activities
The
natural bonding of the Internet and Offshore
stems from the fact that both, of their
nature, manage for the most part to avoid
tax. Businesses which can operate on the
Internet without, so to speak, touching
ground in a high-tax jurisdiction will naturally
migrate to offshore jurisdictions; while
businesses that already have offshore existence
will find it highly convenient to be able
to use the Internet to trade with their
high-tax customers without having to make
a landing in their countries.
As
a growing offshore jurisdiction with some
thousands of offshore enterprises already
installed, including many trading companies,
it is only a matter of time before Labuan
becomes a centre of e-commerce activity.
The island's geographical location between
continents, its good telecommunications
links, sophisticated business infrastructure
and the low-cost, English-speaking, highly-educated
work-force are all factors which will attract
the sales, marketing and administrative
departments of retail operations, particularly
those trading into Asian countries.
By
locating websites in Labuan to carry out
functions previously based in high-tax jurisdictions
such as sales and marketing, treasury management,
supply of financial services, and most of
all, the supply of digital goods such as
music, video, training, software etc, businesses
can take advantage of low rates of taxation
for increasingly substantial parts of their
operation.
In
many countries, the distribution of goods
from a warehousing facility does not constitute
the carrying on of a trade or business in
that jurisdiction, so that even for physical
goods, in many case it will be possible
to avoid a permanent establishment (taxable
presence) altogether in many high-tax jurisdictions
where trading activities currently take
place.
A
number of companies have already chosen
to establish e-commerce platforms in Labuan.
A
company operating an e-commerce facility
in Malaysia will very probably choose Offshore
Company status (see Offshore
Legal and Tax Regimes) and will therefore
have minimal local taxes to pay.
For
information about the impact of e-commerce
on a number of the main offshore activities,
click on a link below to go to our specialist
E-commerce site Offshore-e-com.com
Sales and Distribution of Physical Products
Sales and Distribution of Digital Products
Banking and Financial Services (including Investment
Funds)
Corporate
Support Functions
To
see an analysis of the current state of
legal and tax issues surrounding offshore
e-commerce, click here.
Labuan Case Studies
This
section will contain case studies of e-commerce
solutions applied to offshore business activities
carried out from Malaysia. The case studies
will be developed in association with lowtax
partners. Contact
us to learn more.
LOWTAX.NET
