Offshore banking

Definition

-bank located outside of the investor’s country of residence of the depositors.

Offshore banking business in Labuan

·         Providing credit facilities ,

·         Receiving deposits,

·         Offshore investment banking service,

·         Islamic banking business,

·         Building credit business,

·         Development finance business,

·         Leasing business

·         Other activities as approved by the Minister of Finance.

Entry requirement

q  Must be a bank or financial institution.

q  Possesses a sound track record.

q  Accorded a good credit rating by acceptable rating agencies.

q  Supervised by a competent regulatory authority.

q  Conforms to generally accepted standards of international banking practices

Offshore bank vs Domestic bank

	Offshore bank	Domestic bank
Location	·       Located in Labuan	·      Situated within Malaysia
Regulations	·      Offshore Banking Act 1990	·
Deposit	·      USD 5,000	·
Currencies	·     All currencies except Malaysian currencies	·      All currencies
Facilities	·     Serve from their management office	·     Serves ATM, Debit cards and internet banking

(http://labuanbusiness.com/how-to-set-up-off-shore-bank-account-for-labuan-company/)

(http://classroom.synonym.com/difference-between-offshore-banking-onshore-banking-20256.html)

(http://labuantax.com/)

Advantages and disadvantages of offshore banking

Advantages	Disadvantages
·  operate with a lower cost base and can          provide higher interest rates	·  sometimes less financially secure
·  Interest is generally paid by offshore banks           without tax being deducted	·  associated in the past with the underground          economy and organized crime, through          money laundering
·  provide access to politically and economically           stable jurisdictions	·  usually more accessible to those on higher           incomes, because of the costs of establishing           and maintaining offshore accounts
·  linked to other structures

(https://en.wikipedia.org/wiki/Offshore_bank)

List of Labuan bank

·         Public Bank (L) Ltd

·         Maybank International (L) Ltd

·         Standard Chartered Bank Offshore Labuan Bank

·         Rabobank Nederland

·         Rhb Bank (L) Ltd.

·         Rusd Investment Bank Inc.

·         Sumitomo Mitsui Banking Corporation, Labuan Branch

·         The Bank Of East Asia, Ltd Labuan Offshore Branch

·         The Bank Of Nova Scotia, Labuan Branch

·         The Bank Of Tokyo-Mitsubishi Ufj, Ltd. Labuan Branch

·         The Hongkong & Shanghai Banking Corporation Limited, Offshore Banking Unit

Overview

Offshore Market

1. Introduction: What is Offshore Market?

            1.1 Definitions

            1.2 Characteristics

2. Labuan International Business and Financial Centre (LIBFC)

            2.1 Background

            2.2 Objectives

            2.3 Legal Framework

            2.4 LIBFC Business Activities

 2.5 Characteristics of LIBFC

            2.6 Advantages and Distinct Capabilities

            2.7 Components in LIBFC

                        2.7.1 Labuan Financial Services Authority (LFSA)

                                    2.7.1.1 Background

                                    2.7.1.2 Objectives

                                    2.7.1.3 Services

                                    2.7.1.4 List of company 

                        2.7.2 Offshore Company

                                    2.7.2.1 Background

                                    2.7.2.2 Objectives 

                                    2.7.2.3 Entry Requirement as Offshore Company

                                                2.7.2.3.1 Tax Structure and Incentives

                                                2.7.2.3.2 Provision of Secrecy and 
                                                               Confidentiality

                                    2.7.2.4 Differentiations between Offshore Company 
                                                and Domestic Company

                                    2.7.2.5 List of offshore company 

                        2.7.3 Offshore Banking

                                    2.7.3.1 Background

                                    2.7.3.2 Objectives                                            

                                    2.7.3.3 Offshore Banking Activities

    2.7.3.4 Entry Requirement as Offshore Banking

    2.7.3.5 Laws and Regulations

                                    2.7.3.6 List of offshore banking 

                        2.7.4 Exchange Control Rules

                                    2.7.4.1 Exchange Restrictions under Offshore Market

OFFSHORE COMPANY IN LABUAN

Definition:

An enterprise which only carries out economic activities outside the country it is registered.

For example, Mr. Zaki, a Malaysian wants to incorporate an offshore company at Melbourne, Australia.

Names of company:

1.       Must not resembling the existing company’s name

2.       Reflects royalty or government patronage

3.       Reservation of name fee is RM50

4.       Approval is within 24 hours and the reservation for a period of 3 months

Restrictions to carry on business:

1.       Malaysians cannot carry on business unless permitted by the OBA 1990

2.       Carry on business of banking or insurance unless it is licensed under OBA 1990

3.       Carry on business with Malaysian currency except for defraying its administrative and statutory expenses

http://www.ocra.com/jurisdictions/labuan-nontrading.asp

Registration/incorporation of company:

- Take period of 4-8 days

Process of incorporation:

1.       The applicant must be aware of the legislative framework of Labuan IBFC and the power and duties of a Labuan company and its member under Labuan Companies Act 1990

2.       Applicants must appoint a licensed Labuan trust company , which should conduct  its own due diligence on the prospective client.

3.       Reservation of a company name

4.       Application must be accompanied with the documents required.

Documents required for incorporation:

1.       Memorandum and Articles of Associations

2.       Consent form to act as a director

3.       Statutory Declaration of Compliance with the Companies Act

4.       Certificate of identity

5.       Statutory declaration by persons before appointments as director

6.       Requisite fee

Fees	Amount
	RM	USD
Registration fees
Paid up capital
RM50000 and below	1000	300
Exceeds Rm50000 but less than rm1 million	2000	600
RM1 million and above	5000	1500
Registration of foreign company	6000	2000
Annual fees
Labuan company	2600	800
Foreign Labuan company	5300	1500

http://labuanibfc.com/areas-of-business/92-92/labuan-structures/faq.html

Advantages:

1.       Can be 100% foreign owned without local Malaysia partner

2.       Paid up capital of the company ( min USD 1) is low and straight forward to eligible for all necessary approval

3.       Can act as investment holding company for property, assets andwealth.

4.       For your international trading business

5.       Simple structure ( need only one director, one shareholder)

6.       Incorporation is fast ( 14 days)

7.       No trade license needed for trading, e commerce, import, export and consultancy business

8.       No GST

9.       No withholding tax for I interest, dividend, management, technical, royalty, lease rental

10.   Yearly taxation on profit only 3 % or maximum RM20000 based upon your election

11.   No tax on investment holding company structure

http://malaysiabizadvisory.com/advantages-registering-malaysia-labuan-company/

Benefits:

1.       Lower tax or tax exemption

2.       Fewer or no auditing and accounting requirements

3.       Confidentiality

4.       Limited liabilities

5.       Less regulations and paperwork

6.       Anonymity

7.       Low operating cost and fees