What assets can be held by a Labuan trust?

1. Shares in both listed and unlisted companies.
2. Real estate.
3. Work of art.
4. Investment portfolios.
5. Real and intellectual property.
6. Bank deposits.
7. Life assurance policies issued on the life of the Settlor.
8. Most other types of asset.

Why establish a Labuan trust?
There are many reasons why a settlor may wish to create a Labuan trust but some of the principal ones include those listed below.

Tax Mitigation:
Labuan trusts have traditionally been a very important tax planning device and even today a very high proportion of tax saving schemes involve trusts. When a Labuan trust is established , then there will be no taxes applicable to the assets and income of the trust.

Preservation of Family Wealth:
Labuan trust may be used to own specific assets, for example land or interest in family company which it would be appropriate or practical for a settlor to divide between individuals. The use of the trust will allow relevant individuals to benefit from the assets without being directly interested in the assets or having personal ownership and so preserve the assets intact for future generations.

Avoidance of Probate:
Avoidance of probate can be of significant benefit to settlor, both in terms of tax saving and in preservation of confidentiality. As the legal title to the assets concerned passes from the settlor to the trustee of the Labuan trust at the time the settlement is made, there is no change of ownership when the settlor dies, and this neither will nor probate is required at the time of his death.

Emigration:
When a person and or his family moves from one country to another this is often an ideal time and perhaps the only time to set up a trust to take advantage of the tax, exchange control and other laws of the countries concerned in order to preserve family wealth and flexibility to manage it, and allow the members of the family to enjoy the capital and income in the most advantageous ways.

Protection of Assets:
Since the legal ownership of assets within a trust is vested in the trustee of the Labuan trust and not the in the beneficiaries, the settlor and the beneficiaries have no legal control over the assets. As a result, benefits can accrue where the declaration of wealth are required to be provided by individuals in their own countries. In addition the Labuan trust will also protect at least a portion of a person’s wealth from legal attacks by third persons, as for example in the case of suits based on professional negligence or malpractice.

Modern trust deeds can be tailored to meet your specific requirements. Generally they are worded in the widest possible terms to allow a trustee scope to respond to changing circumstances and requirements.

Discretionary Trusts
The most flexible form of Labuan trust and used in wealth protection and tax planning. A discretionary Labuan trust will normally allow the Trustees to appoint additional beneficiaries or to remove existing beneficiaries, and will usually also allow the Trustees to distribute the income and capital of the trust to the beneficiaries in varying amounts and at various times. When a Settlor establishes a discretionary trust he will generally provide the Trustees with a Letter of Wishes, which provides guidance to the Trustees on how he would like them to administer the trust and manage the assets.

Interest in Possession Trusts
These differ from discretionary trusts in that the beneficiaries will be entitled to receive income and capital from the trust as detailed in the trust deed.

Accumulation and Maintenance Trusts
Almost always established for the benefit of children. The trust deed will specify that the trust fund be used for the education and maintenance of the children up to a certain age with surplus income being accumulated by the trust. Once a predetermined age has been reached the beneficiaries will be entitled to receive income and capital from the trust as detailed in the trust deed.

The Advantages of Labuan Trusts
Private relationship, for example, in most jurisdictions trust deeds are not publicly registered.

1. Wealth protection.
2. Tailored to specific family requirements.
3. Recognized in all common law jurisdictions.
4. Increasing recognition in important civil law jurisdictions.
5. An important tool in international income, capital gains and estate tax planning.
6. Used by corporations for employee benefit plans, retirement and stock option schemes, insurance plans and special financing arrangements.

Labuan Trust Solutions for Individuals
A trust provides many useful solutions to individuals, some of which are:

1. Preserving their wealth against uncertainty, political, economic or family.
2. Transferring wealth to their heirs in a tax-efficient manner. They want to plan their estate to maximize the benefits of their wealth for family members and others.
3. Transferring wealth to their heirs in accordance with their wishes and not in accordance with the laws of the country where they live.
4. Consolidate the ownership of assets owned throughout the world in one location.
5. Centralizing reporting of business and assets.
6. Minimizing or eliminating estate taxes arising on the death of the Settlor.

• Pay bills on the go, purchase flight ticket or make a hotel reservation or rent a car.
• Provide a card to a family member, staff or associates.
• Easily reloadable each time you need to give them fund.
• Reload as often as you want up to the annual card load limit.
• Save from paying high fees to transfer fund using company such as western union.

• The card is a prepaid, reloadable travel cash card.
• Safest and easiest way to carry your money during vacation.
• Even if the card is lost or stolen, all of the funds are replaceable. Your Travel Card can be used at ATMs worldwide.
• Always keep your Card and use it for your next travel. It’s better to be safe than sorry.

• A prepaid, re-loadable card which your kids can use at any of the millions of ATM locations around the world.
• Unlike a credit card, a prepaid card is limited to the amount of money that is loaded onto the card.
• Further, parents can authorize others, family or friends to put money onto the Teen Card.
• Definitely much more secure and faster way than giving cheque or cash.

New Guidelines on Employment Pass;

1. Licensed Entity Download
2. Non-Licensed Entity Download

Major requirements:

1. Minimum paid up capital if at least MYR250k or its equivalent in foreign currency
2. Physical office in Labuan

In making any new application or renewal of employment pass, Law & Commerce is obligated to make sure that;

1. application is genuine and not solely motivated by the desire take up residence in Malaysia,
2. applicant’s business is not conducted with residents of Malaysia,
3. application has a real business to be conducted, as evidenced by proven previous or current business,
4. applicant has the financial resources to support not only his Labuan company but his family whilst living in Malaysia,
5. applicant is fit and proper person for the post he is appointed,
6. the applicant and or his Labuan company is not involved in illegal or undesirable activities
7. applicant will not abuse his employment pass
8. the Labuan company remains in compliance with the laws
9. the expatriate registers for personal tax number, pays his personal income tax in Malaysia and file his personal tax return in Malaysia,
10. the applicant stands a better chance to renew for the next term

To ensure that applicant is genuine and is not purely used as a tool to get residence, Law & Commerce requires the applicant/Labuan company to take the following mandatory services;

1. Opening of corporate bank account
2. Payment of monthly tax deduction for expatriate,
3. Accounting service
4. Audit service

A) Law & Commerce’s fee (estimate)

1. Company formation: US$2750
2. Opening of bank account: US$800
3. Application for Employment Pass: US$1,500 per applicant
4. Application for Dependant Pass: US$800 per dependent
5. Renewal of Employment Pass: US$1,000 (after 2 years)
6. Renewal of Dependant Pass: US$300 per dependent
7. Annual accounting: US$600 min
8. Annual audit: US$600 min unless choosing to pay flat tax
9. Monthly tax payment and preparation of annual tax return: US$300
10. Certification and translation cost and other disbursements, if any, will be bill separately.

B) Fees payable to Immigration:

1. applicant pays RM600 for 2 years plus RM50 processing fee.
2. dependant pays RM180.00 for 2 years plus RM50 processing fee
3. journey performed fee, if required is RM500.00

A) Employment Pass

1. Completed Forms DP10 & DP 11 and such other forms required by Malaysian Immigration
2. clear copy passport of the applicant (only pages which have been stamped);
3. passport having validity of not less than 18 months,
4. address in Malaysia-this address is to be used as correspondence address, unless otherwise suggested,
5. 4 copies passport size photographs; (white background)
6. your C.V;
7. your academic qualifications; (to be translated if not in English)
8. contract of employment stating;
   • designation you are employed in or position in the company
   • your monthly remuneration – not less than RM10,000.00,
   • your duration of employment,
   • your acceptance of the employment.
   • letter from employer applying work permit for the employee;
   • Malaysian income tax number, if any,
9. Letter of consent from the applicant to the academic/professional institution to give consent to Labuan FSA to verify the academic/professional certificate as and when required by Labuan FSA;
10. Latest organizational chart
11. Company profile detailing clearly at least the following;
    • Nature of business to be conducted,
    • Financial projection
    • Products or services to be offered,
    • Type of industries,
    • Type of customers,
    • Location of customers
    • Expected annual turnover for the next 3 years
12. One professional reference from lawyer, accountant or other professional who have known you for at least 3 years and is familiar with your business,
    OR
13. One business reference. The business reference may be from a supplier or customer who knows you or your business for the last 3 years.

Items 1, 8 & 9 will be prepared by Law & Commerce.

B) Dependant Pass

1. Immigration forms to be completed
2. clear copy of passport of your spouse/children;
3. 2 copies of passport size photographs of spouse/children,
4. marriage certificate/ birth certificate of children;
5. where no marriage certificate is available, letter from own embassy conforming marriage;
6. letter from the work permit applicant requesting for dependant pass.

Items 1 & 6 will be prepared by Law & Commerce.

IMPORTANT NOTES:

1. Those documents that are in foreign languages other than English have to be translated and authenticated by own embassy.
2. For those applicants requiring entry visa, please state the name of the Malaysia Embassy/ High Commissioner Office where they are to apply for the visa.
3. Nationals from some countries may have to leave Malaysia and get their visa from nearest Malaysian Embassy. However this could be avoided by paying “journey performed” fee of RM500.00.
4. Applicant must be at least 27 years of age at the time of application in order to qualify. Exemption is given for ICT related industry where minimum age of 24 is allowed PROVIDED written proof of at least two years working experience in related ICT industries can be shown.
5. Successful applicant is required to Labuan, with his dependants, if applicable, once approval is given.

• Pay bills on the go, purchase flight ticket or make a hotel reservation or rent a car.
• Provide a card to a family member, staff or associates.
• Easily reloadable each time you need to give them fund.
• Reload as often as you want up to the annual card load limit.
• Save from paying high fees to transfer fund using company such as western union.

• The card is a prepaid, reloadable travel cash card.
• Safest and easiest way to carry your money during vacation.
• Even if the card is lost or stolen, all of the funds are replaceable. Your Travel Card can be used at ATMs worldwide.
• Always keep your Card and use it for your next travel. It’s better to be safe than sorry.

• A prepaid, re-loadable card which your kids can use at any of the millions of ATM locations around the world.
• Unlike a credit card, a prepaid card is limited to the amount of money that is loaded onto the card.
• Further, parents can authorize others, family or friends to put money onto the Teen Card.
• Definitely much more secure and faster way than giving cheque or cash.