Eternity Law International News Why You Should Obtain Labuan Money Broking License?

Why You Should Obtain Labuan Money Broking License?

Published:
December 14, 2020

An excellent option for those who want to expand or start their own business in the Asia-Pacific region in a brokerage or foreign exchange direction, since the Labuan jurisdiction offers remarkably preferential tax regime for such activities. New rules for conducting brokerage business have been in force in Labuan since the beginning of 2018.

The principle of the money brokerage business is that money transfers are made between clients and sellers with the help of intermediaries (brokers) who earn their interest on fees and commissions. This license does not permit the purchase or sale of Malaysian ringgit and foreign currency by a broker as principal.

Why is it worth getting this license:

  • Foreign ownership, no need for a local partner
  • Corporate income tax is 3% or a fixed amount of 20,000 Malaysian ringgit (4,000 EUR) per year; it is possible to choice between these regimes.
  • No management fees, pass-through interest taxes, technical fees and royalties
  • Currency exchange is not controlled
  • No stamp duties, no VAT
  • No sales and service taxes, as well as import duty
  • There is no capital gain tax and inheritance tax.
  • There is access to over 70 Treaties on Avoidance of Double Taxation
  • There is a tax reduction for foreign managers and specialists in the amount of 50%
  • No taxes on CEOs fees
  • There is no tax on dividends to shareholders
  • Malaysian 2 year work visa with the possibility of further extension

Eligible Applicants:

  1. Person or institution that has many years of experience in financial brokerage (at least 3 years), good references and excellent reputation.
  2. Other service providers from other jurisdictions whose local authorities have provided an approval.
  3. Any licensed institution, meeting the requirements of the Financial Services Act (2013), adopted by the Central Bank of Malaysia.

Obligation and eligibilities of a license holder:

  1. Confirmation from a Malaysian bank of paid-in capital, which is RM500,000 (approximately 100,000 EUR) without loss.
  2. Since all money transfers can be made only through Labuan, it is necessary to have an office for such transactions.
  3. Transactions of foreign currencies that you choose yourself (including Malaysian ringgit).
  4. Transactions with residents of Malaysia are allowed, including dealers authorized by the Malaysian Exchange Control.
  5. Setting the margin requirement (leverage), which must be at least 1%, in other words, 100: 1 deposit in order to open a trading position. For example, with a transfer of $ 200,000, $ 2,000 is a margin requirement.
  6. Foreign primary broker / liquidity provider or other counterparty, must be regulated by the reputable authority.
  7. Before starting to operate in other market, it is necessary to obtain approval from local authority. Approval is to be transmitted to the Labuan FSA.
  8. The licensee must inform the Labuan FSA within 14 days of any technical failures or intrusions into the system.
  9. A complete list of all active brokers, their responsibilities and roles in the business should be available to authorities.
  10. An external auditor should be appointed. Full audit is to be completed once a year.
  11. Provide segregated accounts for all clients, where all funds must be properly managed. Client must be able to withdraw their funds in the term of 3 working days.
  12. All contracts and written agreements with clients must be documented.
  13. Licensee must keep all agreements with the principal brokers, liquidly providers and trading platform available for authorities.
  14. Compliance with the AML / CFT Law and Guidelines of the Central Bank of Malaysia and the Labuan FCA.
  15. Labuan FSA will authorize company’s decision to change: director, ownership, location or to outsource some functions.
  16. Regular license fee – 5,000 ringgit (1,000 EUR).

Documents that are required to obtain the license:

  1. A business plan that includes marketing strategies and a financial plan for the next 3 years.
  2. Profile and qualifications of directors and shareholders.
  3. Latest Audited Accounts of the company-applicator for the last 2 years.
  4. KYC, AMLA and Operations Guidance’s and Procedures.

Timing:

  1. A period of 30 to 60 days, subject to the receipt of additional documents and the information that the Labuan FSA may request during the approval period.
  2. The Labuan FSA may also schedule meetings or interviews with key personnel to clarify or clarify specific issues.

Regular annual fees:

  1. Regular license fee – 5000 Ringgits (1,000 EUR).
  2. Optional fee on Marketing Office (possibility to have a representative office on the territory of Malaysia) – 7,500 ringgits (1,500 EUR).
  3. Optional fee on a Co-Located Office (possibility to locate office on the territory of Malaysia) – 10,000 ringgits (2,000 EUR).

The first payment must be made after the approval of the license, it will be valid until December 31, and then every year you must pay no later than January 15 of each year.

Steps to obtain the license:

  1. Registration of the Labuan Company.
  2. Applying for the license with the Labuan FSA.
  3. Wait the approval period.
  4. Fulfilment of additional requirements set forward by authorities during the approval period and condacting meting with the Labuan FSA.
  5. Obtaining the license.

Eternity Law International will provide you with expert advice on obtaining a forex broker license in a suitable jurisdiction. If you have any questions or need advice on obtaining a forex broker license, call us at the phones indicated on the site, or write to CRM form, our specialists will answer you online.

Table of contents

You could be interested

Company Liquidation in Georgia

Liquidating a company in Georgia constitutes an organized arrangement demanding abidance of all local ordinances to ensure a smooth winding-up. Whether firms need to liquidate a company in Georgia by choice or due to receivership, the strategy contains multiple motions such as settling outstanding debts, contacting lenders, and officially deregistering the company’s file. For those...

Investment fund in Bahamas

The Bahamas has become a popular location for many licensed investment funds due to its favorable terms and efficient regulation. The Investment Funds Act (IFA Act) has played an important role in strengthening the Bahamas’ position in the global investment vehicle management market. The Securities Exchange Board (SCB) regulates, licenses and registers investment fund Bahamas....

ISO 45001: Main Criteria

ISO 45001 – international act that defines Occupational Health & Safety (OH&S) demands and consists of guide for its practice to regulate firm’s operations, as well as maximize OH&S effectiveness and eliminate trauma. ISO 45001 is needed to be used in every company, in contempt of its scale and legal nature. It enables the company to...

Mediation Services Netherlands

Switching over to out-of-court dispute resolution practices such as mediation can be difficult; however, in smaller economies such as the Netherlands, progress is not always guaranteed, even if the merits are universally accepted. The Netherlands happens to be a small country, but in legaltech and mediation, it is king. Located at the crossroads of Europe,...

Conclusion of the UAE company to IPO

Conclusion of the UAE company to IPO is an urgent issue for the Dubai market. PPR in the financial market in Dubai is used to massively involve investors in a company with registration in the United Arab Emirates. PPR is the primary public offering, which occupies an important place in the formation of the accelerated...

DLT provider license in Gibraltar

In 2017, Gibraltar’s authority released The Distributed Ledger Technology Regulatory Framework. In this article, you can get more info about the DLT license in Gibraltar, its limitations and ideas connected with it. The Fundamental Ideas for Gibraltar’s Regulatory Framework for Distributed Ledger These ideas aim to safeguard customers as well as the economy and prestige...

Related posts

Obtaining gaming license in Nevis 2025

In the last 12 months, Nevis has emerged as a powerful draw in gambling. In the Caribbean, the island’s warm climate means that you can both work and live happily there, but from now on you’ll be rich. It features a series of uncorrupted juridical structures, easily-passed licensing channels, and an incredibly competitive tax backdrop....

Opening a business in Turkey

Turkey occupies a liminal position between Europe and Asia, making it a pivotal trade and investment crossroads. A dynamic economy and a huge local market draw entrepreneurs from around the world to the country. Understanding the local legal and financial landscape is the first step for those looking for opening a business in turkey. This...

GmbH vs UG: Credibility Premium vs Capital Efficiency for Early-Stage Teams

This is where the rubber meets the road for founders in Germany who are ready to incorporate their first company. They must choose between two very popular modes. GmbH or UG are both limited liability companies under German law that offer both forms of personal protection for shareholders and work within somewhat similar statutory frameworks....

Liquidation of companies in Cyprus

Key components in sustaining the attractiveness of the island in question as a nation for businesses include the tax system, EU membership, and corporate legislation. Termination is the last resort for a firm sometimes. It is crucial that in such a process, members of the board, investors, and advisers have exposure. The paper gives simple...

From Share Purchase Agreements to Smart Contracts: Redefining Legal Frameworks

The world of corporate deals has always had its drama. Negotiations, long documents, endless edits, lawyers from both sides who spend weeks agreeing on every comma in the Share Purchase Agreement. But imagine a completely different picture: instead of a ton of tribulations on the way to perfection, there are a few lines of code...

Argentina Corporate Tax Explained

To investors and entrepreneurs eyeing Argentina, navigating the country’s corporate taxation sphere isn’t just a bureaucratic hassle; it’s a key step to building a viable and compliant business there. The fiscal regulations are not perfectly committed, but this region is rich in detailed tax laws that are quite well crafted towards control and digital verification....
Fill the blank: