Labuan: E-Commerce

On this Page:

- LABUAN INTRODUCTION
- LABUAN OFFSHORE ACTIVITIES
- LABUAN CASE STUDIES

Labuan Introduction

The Labuan Offshore Financial Services Agency (LOFSA, since renamed theLabuan Financial Services Authority), which is responsible for processing and granting applications for licences to operate business in Labuan, has made e-commerce a focus of its planning for future growth of the jurisdiction.

Go to Offshore-e-com.com for an extensive analysis of the commercial possibilities and the legal background of offshore e-commerce.

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Labuan Offshore Activities

The natural bonding of the Internet and Offshore stems from the fact that both, of their nature, manage for the most part to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore jurisdictions; while businesses that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.

As a growing offshore jurisdiction with some thousands of offshore enterprises already installed, including many trading companies, it is only a matter of time before Labuan becomes a centre of e-commerce activity. The island's geographical location between continents, its good telecommunications links, sophisticated business infrastructure and the low-cost, English-speaking, highly-educated work-force are all factors which will attract the sales, marketing and administrative departments of retail operations, particularly those trading into Asian countries.

By locating websites in Labuan to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training, software etc, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation.

In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many case it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.

A number of companies have already chosen to establish e-commerce platforms in Labuan.

A company operating an e-commerce facility in Malaysia will very probably choose Offshore Company status (see Offshore Legal and Tax Regimes) and will therefore have minimal local taxes to pay.

For information about the impact of e-commerce on a number of the main offshore activities, click on a link below to go to our specialist E-commerce site Offshore-e-com.com

Sales and Distribution of Physical Products
Sales and Distribution of Digital Products
Banking and Financial Services (including Investment Funds)
Corporate Support Functions

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Labuan Case Studies

This section will contain case studies of e-commerce solutions applied to offshore business activities carried out from Malaysia. The case studies will be developed in association with lowtax partners. Contact us to learn more.

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