PETALING JAYA: The revision of a dedicated tax regime for Labuan and greater emphasis on financial services have benefited the island’s economy, the chairman of a commerce chamber said.
Daniel Doughty said amendments to the Labuan Business Activity Tax Act in 2019 led to the abolition of the flat RM20,000 tax, with companies now paying a minimum of 3%.
The amended act also saw investment holding companies being exempted from paying taxes.
In addition, the Labuan International Business and Financial Centre (LIBFC) had increased its focus on financial services, including banking, insurance, capital markets, money broking as well as digital finance services, he said.
“These changes have had a positive impact,” Doughty, the chairman of the Labuan Chamber of Commerce (LCC), told FMT.
He added that last year alone, LIBFC contributed RM1.2 billion in taxes.
Doughty also said the centre had been instrumental in providing employment opportunities, with more than 53% of Labuan’s workforce employed in the financial sector.
He said updated policies — such as the introduction of the i-Box for Islamic digital banking and revised guidelines on captive insurance which allow for more innovative structures to be offered — had enhanced Labuan’s attractiveness.
Doughty cited the Labuan Financial Services Authority’s 2023 report which revealed that there were over 230 insurers and intermediaries now operating in Labuan, contributing US$2.7 billion in premiums.
“The LIBFC also serves as a robust platform for digital assets trading, with several money broking companies licensed in Labuan.”
More growth in business, financial sector expected
Doughty said the LCC anticipated further growth in international business and the financial services industry.
He said strengthening air links was crucial to ensure Labuan’s overall growth remained sustainable and relevant.
Meanwhile, the federal territories department is focussing on boosting the island’s tourism sector.
The department recently completed the last of its three corporate social responsibility (CSR) projects at Pulau Rusukan Besar in Labuan, as part of an initiative to woo more tourists, local and domestic, to the island.
Last month, federal territories minister Dr Zaliha Mustafa said they wanted to build better facilities for tourists, including a new jetty for Pulau Rusukan Besar.
“We will also think of new tourism products to woo tourists to Labuan and enhance the tourism industry,” she had said in an interview with Astro Awani.
