Labuan IBFC has positioned itself as a global hub for Islamic Finance. With its comprehensive Shariah-compliant regulatory framework governed by the Labuan Islamic Financial Services and Securities Act (LIFSSA) 2010, the jurisdiction provides a reliable and efficient platform for Islamic financial institutions, Islamic banks, and takaful operators. Labuan IBFC also supports Sukuk issuance and is recognized globally for facilitating Islamic financial products. 

Key Advantages:

• Integrated Shariah Framework: Labuan offers an omnibus legislation for Islamic finance.

• Shariah Supervisory Council: Renowned Islamic finance scholars ensure compliance.

• Digital Asset Fundraising: The Islamic Digital Asset Centre (IDAC) enables fundraising through Securities Token Offerings (STOs), allowing the tokenization of assets for Shariah-compliant investments.

• Diverse Investor Base: Labuan IBFC provides access to both conventional and Islamic financial institutions, high-net-worth individuals, and other investors across the Muslim Ummah.

• Diverse Offerings: Sukuk, Islamic banking, takaful, Islamic trusts, and foundations.

• Growing Islamic Fintech Ecosystem: Supporting Shariah-compliant digital financial services and investments

Labuan IBFC is at the forefront of Asia’s Digital Finance Revolution, providing an enabling environment for digital financial services and fintech innovations. Labuan IBFC has licensed digital finance-related entities since 2017, ranging from cryptocurrency platforms to digital token issuances. The jurisdiction’s progressive regulatory stance allows digital entities to operate in real-market conditions rather than restrictive sandboxes. 

Highlights:

• Digital Financial Infrastructure: Labuan IBFC provides a digital ecosystem for financial institutions and service providers to leverage cutting-edge technology.

• Blockchain and Fintech Integration: With blockchain technology supporting digital asset exchange platforms and fintech solutions, the efficiency, transparency, and security of financial transactions are enhanced.

• Low Tax Rates: Entities enjoy a tax-neutral environment and full tax exemptions on digital assets starting from 2024, creating an attractive space for global digital players.

• Global Accessibility: With a strategic location, Labuan connects to fast-growing markets in Asia, providing a gateway for businesses to explore new digital financial solutions.

Benefits of Setting Up in Labuan:

• Digital-Friendly Licensing: Digital tokens, fintech solutions, and cryptocurrency exchanges are supported.

• Regulatory Expertise: A balanced, pragmatic regulatory approach to digital innovation.

• No Capital Gains or Withholding Taxes: Digital businesses enjoy a tax-neutral environment​

Labuan IBFC offers a comprehensive digital toolbox that enables businesses to innovate and expand their operations across borders. The jurisdiction supports fintech, insurtech, and other digital financial services, offering a combination of regulatory flexibility and business-friendly incentives. Labuan IBFC’s “Pick and Mix” Digital License Toolbox allows digital players to combine licenses, enhancing operational efficiency and reducing costs. 

Key Features:

• Digital Solutions for Business: Businesses can take advantage of digital services, such as virtual offices, digital banking, and payment gateways.

• Simplified Licensing: Labuan IBFC offers streamlined licensing processes, allowing companies to get up and running quickly.

• Support for Digital Banking and Fintech: Labuan offers licenses for digital banks and insurance, creating an ecosystem of financial services to cater to global digital demands.

• Innovation-Driven Growth: With a focus on fintech, digital assets, and technological advancements, Labuan IBFC positions itself as a hub for forward-thinking businesses.

• Cost-Effective Setup: Competitive tax rates, no withholding tax, and efficient licensing processes.

• Global Connectivity: A strategic base in the heart of Asia with access to a skilled workforce

The Islamic Digital Asset Centre (IDAC) in Labuan IBFC offers a platform for Shariah-compliant digital asset trading and fundraising through Securities Token Offerings (STOs). This innovative marketplace allows issuers and investors to engage in Islamic-compliant financial activities, supporting the growing demand for digital Sukuk and other Shariah-compliant assets. 

Core Benefits:

• Shariah-Compliant STOs: Securities Token Offerings (STOs) offer a new avenue for raising funds in a Shariah-compliant way, similar to Sukuk in the traditional Islamic financial markets.

• Broad Investment Opportunities: Labuan IBFC opens the door to global Islamic and conventional investors, including government sectors, high-net-worth individuals, and private sectors.

• A Global Gateway: Through IDAC, Labuan connects businesses and investors to global financial markets, promoting growth and collaboration across jurisdictions.

• Full Tax Exemption for Digital Entities: Islamic digital entities enjoy a five-year tax exemption​ 

Labuan IBFC stands out as a premier wealth management domicile in Asia. With structures such as Labuan Trusts, Foundations, and Protected Cell Companies (PCCs). These structures cater to high-net-worth individuals (HNWIs), family offices, and wealth managers looking for efficient wealth transfer, dynastic planning, and asset protection solutions. 

Key Benefits:

• Labuan Trusts
  Labuan Trusts are one of the most powerful legal instruments for protecting assets, ensuring privacy, and managing wealth across generations. With the ability to protect assets from potential creditors and claims, a Labuan Trust offers both financial privacy and flexibility, making it a critical tool for estate planning and wealth transfer.

• Labuan Foundations
  A Labuan Foundation is a civil-law-based entity, particularly suitable for HNWIs seeking long-term wealth management. Foundations can be structured for both private wealth purposes and charitable activities. They are flexible and offer legal certainty, including the ability to hold Malaysian assets (with approval from Labuan FSA), making them an ideal structure for families looking to safeguard their legacies.

• Private Trust Companies (PTCs)
  For families looking to retain greater control over their wealth management, Labuan PTCs provide an excellent vehicle. PTCs allow trusted family members or advisors to participate in managing the family’s assets, ensuring a smoother and more involved succession planning process. This type of structure is ideal for families wishing to maintain confidentiality and control over asset management decisions.

• Protected Cell Companies (PCCs)
  Labuan PCCs offer unique advantages by allowing families to compartmentalize assets and liabilities within individual cells, all while operating under a single legal entity. This structure is highly beneficial for managing diverse assets, such as different business ventures, real estate, and family investments, while ensuring that the risks associated with one cell do not affect the others.

Strategic Benefits of Labuan IBFC for Asset Protection and Succession Planning 

1. Tax Efficiency
   Labuan offers highly competitive tax rates, with 0% tax on non-trading income and a low 3% tax on trading income. Furthermore, Labuan does not impose capital gains tax, inheritance tax, or estate duty, making it a highly tax-efficient jurisdiction for wealth accumulation and transfer.

2. Legal Flexibility and Robustness
   Labuan IBFC’s legal structures, including trusts and foundations, provide robust asset protection mechanisms. Labuan entities can be used to shield assets from foreign claims and judgments, ensuring maximum confidentiality and protection for families and individuals.

3. Access to Global Markets and Recognition
   Labuan IBFC is recognized by leading global institutions, such as the OECD and FATF, ensuring that the jurisdiction meets international standards for transparency and compliance. Labuan’s adherence to these standards allows businesses and individuals to operate with the confidence that their wealth structures are recognized and compliant globally.

4. Shariah-Compliant Options
   Labuan also offers Shariah-compliant wealth management solutions, making it one of the few jurisdictions that cater to Islamic wealth management needs. This is particularly important for families seeking to manage their wealth according to Islamic principles, ensuring compliance with Shariah law while benefiting from Labuan’s advantageous regulatory environment.

Asset Protection Strategies in Labuan 

Labuan’s robust regulatory framework and specialized structures allow for enhanced asset protection, safeguarding wealth against potential liabilities, legal claims, and financial risks. Through Labuan Trusts and Foundations, assets are effectively protected from potential creditors, ensuring privacy and security for the wealth being managed. Additionally, the jurisdiction's Protected Cell Companies (PCC) provide additional asset segregation benefits, which allow for a high degree of control and protection. 

Succession Planning Made Seamless 

Labuan IBFC excels in providing tools for seamless intergenerational wealth transfer. Whether through Labuan Trusts or Foundations, families can establish structures that ensure a smooth transition of wealth to future generations, without the complications of probate or estate taxes. Trust structures, in particular, can be tailored to preserve wealth for multiple generations, while ensuring that the founder's wishes are respected.

Labuan’s legal environment also allows for the creation of dynastic trusts, ensuring the preservation of family wealth over long periods. These trusts offer significant flexibility and control, allowing wealth holders to set specific conditions for how and when their assets are distributed to beneficiaries.