Shipping Business & Ship Registration Through Labuan IBFC

 

 

Establishment of Shipping Business Through Labuan IBFC

 

 

With the new laws introduced in Labuan IBFC and many major amendment has been made to the existing Labuan IBFC legislations of which has widen the scope of business activities and offerings by Labuan IBFC. One of the major amendment and new products offerings introduced by Labuan IBFC is Shipping Business. The new amendment to Labuan Business Activity Tax Act, 1990 (LBATA) saw the introduction of Labuan shipping activity as one of the approved Labuan business activity under LBATA. Under the LBATA Shipping operations means transportation of passengers or cargo by sea or the letting out on a charter of ships on a voyage or time charter basis. To qualify as “Labuan trading activity” under the Labuan Business Activity Tax Act 1990 (“LBATA”), the shipping operations by a Labuan entity;

 

  • must be carried out in Labuan or outside Malaysia;

  • deals with non-resident or with another Labuan entity; and

  • in a currency other than Malaysian currency (MYR)

 

“Resident” in the above context means:

 

  • a citizen or a permanent resident of Malaysia; or

  • a person who has established a place of business, and is operating, in Malaysia

  

Labuan IBFC’s strategic location enables investors to foster long-lasting business relationships with Asia’s emerging economies such as China and India. In addition, it lies in close proximity to major shipping routes and boasts excellent shipping support services and facilities. It is also located in the waters of the South China Sea where it is close to major shipping routes, free from natural disasters such as typhoons and hurricanes.

 

 

Ship Registration Through Labuan IBFC

 

 

The Malaysian International Ship Registry (MISR), introduced to attract individual or foreign shipping companies to register their ships through Labuan IBFC thereby without having to comply with the requirement of Malaysian majority shareholder.  Among the major requirements under MISR is;

 

1. Port of Registry

 

 - The port of registry for a Malaysian international ship is Labuan.

 

2. Ship Owner Eligibility

 

 - The Registrar of Ships may register a ship as a Malaysian international ship, if it is          owned by a corporation that satisfies the following requirements:

 

  • Incorporated in Malaysia

  • The office of the corporation is established in Malaysia; and

  • The majority of the shareholding, including voting shares of the corporation are not held by Malaysian citizens.

  • Ship Manager Eligibility

 

3. The owner of a ship shall, before applying for a ship to be registered, appoint a ship manager who shall be:

 

  • A Malaysian citizen having his permanent residence in Malaysia; or

  • A company incorporated in Malaysia and having its principal place of business in Malaysia.

  • Vessel Age and Survey Requirements

 

4. No ship shall be registered under the MISR unless:

 

  • it is fitted with mechanical means of propulsion

  • it is not less than 1,600 gross tonnage; and

  • the age of the ship is not more than 15 years if it is a tanker or a bulk carrier, or not more than 20 years if it is of a type other than a tanker or a bulk carrier.

  • Surveys are conducted by ship surveyors working under the direction of the Surveyor-General who may also authorise classification societies on his behalf.

 

5. Authorised Classification Society

 

The following are the recognised classification societies for the MISR:

 

  • American Bureau of Shipping

  • Bureau Veritas

  • Det Norske Veritas

  • Germanischer Lloyd

  • Lloyd's Register of Shipping

  • Nippon Kaiji Kyokai.

 

 

Advantages of Establishing Shipping Business Through Labuan IBFC

 

 

Ships or yachts may be owned by a Labuan company and registered within the jurisdiction which can prove a cheaper and more tax efficient method of ownership. A separate company may be formed to operate or charter the vessel, thus separating ownership and income for additional tax benefits. Ships and yachts are registered in Labuan IBFC because of the advantageous maritime laws and flexibility given the owners as well as it will yield a more tax efficient method of ownership. In addition the benefits of registering a vessel offshore include enhanced confidentiality, the potential to mitigate tax liabilities, limited of liability for the owner, increased flexibility for crew selection and the protection of a neutral flag. 

 

Individual or shipping companies can utilise Labuan company for their shipping business purposes and/or the may register their ships under MISR to enjoy the benefits offered by Labuan IBFC, inter alia; 

 

  • 0% income tax on ship-owning company 

  • For trading company competitive tax rates apply which are 3% of net profits as per audited accounts; or a lump-sum of RM 20,000 upon election annually

  • Full tax exemption on Dividend, Royalty, Lease Rental, Interest, Technical or Management Fee.

  • No stamp duty on all instruments relating to Labuan company business activities including share transfer

  • No indirect tax such as import duty / sales tax / service Tax, GST, VAT and Custom Duty

  • No estate duty on the inheritance of shares

  • No foreign exchange controls

  • No capital gain tax / inheritance tax

  • Access to Double Tax Agreements between Malaysia and over 70 countries

  • 50% exemption on Gross Employment Income for Nor Non-Malaysian Managers and/or expatriate professionals employed by the Labuan company

  • 100% exemption for director’s fees received by non-citizen directors of Labuan companies

  • Tax Residency Certificate available for Company and Individual Shareholder.

  • Expatriate professionals allowed to stay and work in Malaysia

  • No tax on the salaries of crew members* (Subject to crew resident);

  • Worldwide recognition of the Competence Certificate issued by Malaysian authority

  • Labuan ships can call at any port in the world, and in most, enjoy favoured national

  • treatment;

  • A quick and easy way of obtaining certificates for the ship;

  • Low tonnage tax and other duties paid for registration fees, annual tonnage tax, mortgages etc;

  •  

 

 

Our Shipping Services

 

 

We offer extensive and bespoke solutions to individual, corporate or ship owners to establish and structure shipping business through Labuan IBFC. In addition we can assist ship owners to register their ships or vessels under the MISR. 

 

Through our group’s extensive resources and experience we can assist our client in all aspects from the establishment of the company and business to extensive corporate structuring  not just in Malaysia but internationally. We provide clear, comprehensive advice and implementation on all aspects of; 

 

  • Advice and consultation on shipping business and ship registration

  • Preparation of details proposal on business model prior commencement of business

  • Establishment of entity to carry out the business activity and ship ownership

  • Advice and consultation company structuring to suit the business model

  • Application and approval for any necessary  licence application required to carry out the business activity

  • Ship registration with Malaysian authority

  • Ship management and payroll service for large multinational ship

  • Legal services such as - shipping law, including marine casualties, admiralty disputes, ship finance, day-to-day commercial disputes arising under shipping contracts, bills of lading as well as shipbuilding contracts. We also provide advice on arrest of ships and releases from arrest, methods of obtaining security or evidence, freight, hire, demurrage and other sums due under charter parties, shipbuilding, ship sale agreements, agency and freight forwarding matters, freezing injunctions, enforcement of foreign judgements and arbitration awards, ports, harbours and related services and ship and asset financing.

 

We have knowledge of Malaysia Merchant Shipping Law and Regulations and work closely with our group and partners local or internationally in the maritime industry to ensure client objectives are met.  We have affiliations with local attorneys who can provide legal opinions and legal advice on all aspects of Malaysian maritime law.

 

 

For more information kindly contact us at info@zrctrust.com for free initial consultation without any obligation. We are more than happy to help you in any way we can.

Why you should choose ZRC International Trust Inc. ?

Licensed & Regulated

Bespoke Services

Tailor Made Solutions

Competitive Rates

No Hidden Cost

Pool of Professionals

Total Confidentiality

Visit us:

Lot 20, Level 1 

Lazenda Commercial Centre 

Phase 3, Jalan OKK Abdullah

87000 F.T Labuan, Malaysia

 

Contact us:

TEL : +6087-581022

FAX : +6087-581020

 

Email us:

info@zrctrust.com

 

 

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