Labuan-based businesses involved in Islamic finance activities, such as Islamic digital banking, digital exchanges, Ummah-Linked Companies (ULCs), and Islamic securities token issuers, will enjoy a 100% income tax exemption for a period of five years. This incentive applies to income generated from Islamic financial activities and is part of Malaysia’s strategy to make Labuan a global hub for Islamic finance.
The tax exemption applies to Labuan-based entities that are involved in:
Ummah-Linked Companies (ULCs) focus on Islamic social finance, including services like Hajj savings, pension funds, and the collection of zakat and wakaf (Islamic charitable donations). These companies will benefit from the same tax exemption incentives, positioning Labuan as a key player in global Islamic finance.
The Islamic Digital Asset Centre (IDAC), as part of the Labuan IBFC Strategic Roadmap 2022-2026, will play a key role in supporting the digital finance sector. It will focus on facilitating Shariah-compliant fundraising, asset tokenization, and digital investments, helping businesses, especially SMEs, to digitize their assets and issue tokens for investment.
The Labuan Financial Services Authority (Labuan FSA) has issued guidelines for Securities Token Offerings (STOs), including both conventional and Shariah-compliant token issuances. These guidelines encourage the issuance of ESG-compliant securities and promote financial inclusion by expanding access to new markets while ensuring compliance with Shariah principles.
The five-year income tax exemption will apply from the Year of Assessment 2024 (basis year 2023) to the Year of Assessment 2028 (basis year 2027). This exemption is designed to encourage businesses to set up or expand their operations in Labuan IBFC.
Labuan-based businesses involved in Islamic finance can enjoy a full income tax exemption for a period of five years (from 2024 to 2028). This creates a favorable environment for business growth, allowing companies to reinvest savings into further expansion.
Labuan is positioning itself as a global hub for Islamic digital finance. Businesses involved in Islamic digital banking, digital asset exchanges, and Shariah-compliant blockchain technologies can benefit from tax incentives that foster innovation and global partnerships.
Labuan’s tax incentives support Ummah-Linked Companies (ULCs), which focus on Islamic social finance, including Hajj savings, pension funds, and zakat. These businesses benefit from the same tax exemptions, promoting social welfare within the global Muslim community.
powered By
