LABUAN: The issue of extending three per cent tax benefits to all business sectors in Labuan does not arise, as various incentives are already in place under existing tax laws, said Deputy Finance Minister Lim Hui Ying. Lim stated that the government provides a range of tax incentives for qualifying industries nationwide, including manufacturing and service activities in Labuan.

According to BERNAMA News Agency, Lim highlighted that some promoted activities enjoy full income tax exemptions, which surpass the preferential three per cent tax rate available under Labuan’s tax regime. She made these remarks at a press conference after officiating the MADANI Financial Carnival at Financial Park Complex.

Lim noted that Labuan’s tax framework, established in 1990, was designed to support its development as an International Financial Centre (IFC). Under this regime, Labuan trading companies can choose between a preferential tax rate of three per cent on net audited profits or a flat tax rate of RM20,000.

In 2019,
the regime was enhanced to ensure only activities aligning with international standards for an IFC qualify for the three per cent preferential rate. Lim also mentioned that substantial activity requirements were introduced to create job opportunities and stimulate Labuan’s economic development. These requirements include maintaining a physical presence in Labuan, having an adequate number of employees, and incurring annual operating expenses locally.

When questioned about directing fiscal contributions from industry players in Labuan’s financial sector to enhance the local economy, Lim explained that all states contribute to the national gross domestic product. The government’s focus remains on the overall revenue generated from all states across Malaysia.