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Following participation in the Forum on Harmful Tax Practices, Malaysia has enacted major tax reforms to the Labuan tax regime.

Since 1 January 2019, numerous changes have been made to the Labuan regime (including the introduction of substance requirements for Labuan entities and the abolition of the election to pay tax at a fixed amount of RM20,000). Keeping up to date with these changes can be challenging.

In this regard, KPMG is pleased to share an article entitled "Taxation in Labuan – Then and Now!" penned by Nicholas Crist, Executive Director of Corporate Tax.

The article covers notable amendments made to the Labuan Business Activity Tax Act 1990 ("LBATA") and delves deep into the Labuan substantial activity requirements as well as the 24% tax rate under the LBATA.

The recent changes to the basis of taxation for Labuan entities are undoubtedly significant and should be carefully considered by businesses with existing Labuan structures or those intending to set up new ones.

This article was first published in Tax Guardian, the official journal of the Chartered Tax Institute of Malaysia. Kindly note that the article predates the release of the Finance Bill 2020.

Should you have any questions or require further clarification, please do not hesitate to contact any of KPMG’s Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organization. 

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Tai Lai Kok
Executive Director &
Head of Tax
Nicholas Crist
Executive Director
Corporate Tax