A Guide to the GIFT Programme

1. Strategic Location: Labuan IBFC’s central location within Asia Pacific offers proximity to key markets and trade routes, making it a cost-efficient and practical base for global commodity traders.

2. Access to Multilingual and Skilled Workforce: Malaysia boasts a highly skilled and multilingual workforce, providing the technical expertise needed to support international trading operations.

3. World-Class Banking and Financial Services: Labuan IBFC is home to more than 60 global banks, offering easy access to financing and risk management solutions.

• 3% Flat Corporate Tax Rate: A key attraction of the GIFT programme is the flat 3% tax on income generated by the Labuan International Commodity Trading Company (LITC).

• Stamp Duty Exemption: All instruments for Labuan business activities, mergers, acquisitions, and share transfers are exempt from stamp duty.

• Tax Exemptions:

  • Dividends: Dividends received by or from the LITC are exempt from tax.

  • Royalties and Interest: Royalties and interest received by both residents and non-residents from the LITC enjoy tax exemptions.

Companies must set up a Labuan International Commodity Trading Company (LITC) to enjoy the benefits of the GIFT Programme. The LITC is a specialized type of Labuan company, registered with the Labuan Financial Services Authority (Labuan FSA), and it can operate from anywhere in Malaysia while meeting the following requirements:

• Annual Turnover: A minimum turnover of USD 50 million annually.

• Local Business Spending: An annual expenditure of at least MYR 3 million.

• Employment: The LITC must employ at least three professional traders who are residents of Malaysia, with their income taxed under Malaysian tax laws.

The commodities eligible for trade include:

• Petroleum and petroleum-related products (including LNG)

• Minerals, agriculture products, and chemicals

• Refined raw materials

• Base minerals (e.g., coal)

1. Risk Mitigation and Insurance: Labuan IBFC provides access to a wide range of insurance and risk management solutions, including captive insurance, making it an attractive base for commodity traders.

2. Access to World-Class Storage: Labuan traders benefit from access to large-scale storage facilities, such as the Tanjung Pengerang deep-water port in Johor, Malaysia, facilitating efficient storage and shipment of commodities.

3. Cost-Effective Operations: Operating costs in Malaysia, including labor and infrastructure, are significantly lower than in other global commodity trading hubs like London and Geneva.