Forex License in Labuan
Obtaining a Forex License in Labuan is a promising solution among brokers due to loyal taxation, free operation with the Asian market, and the possibility of 100% foreign ownership. Gofaizen & Sherle will provide comprehensive assistance in licensing a forex company in Labuan and quickly launching a business in this jurisdiction.
Labuan, an island nation near Borneo and part of the Federation of Malaya, stands out for its offshore financial activities and attractive tax conditions for businesses. Administered by the Financial Services Authority (LFSA) since 1990, Labuan has served as a center for international brokerage operations, including forex, giving firms the ability to deal in foreign exchange and enjoy low taxes.
Labuan Forex License gives the right to conduct brokerage activities with the possibility of 100% foreign ownership, opening access to Asian markets. Registering offshore and obtaining a license promises a low tax rate or flat tax, as well as the ability to take advantage of tax incentives. The process of obtaining a license takes about three months, making Labuan an attractive jurisdiction for forex brokers. In addition, certain requirements must be met to obtain a Labuan Money Broking License: the company must have at least two directors and two shareholders with relevant education and a minimum of three years of experience in brokerage, ensuring competence and professionalism in the financial services industry.
Advantages of a Labuan Forex License
Flexible tax system
Labuan offers one of the lowest tax rates at just 3% on net profits or the choice of paying a flat tax of RM20,000, making the jurisdiction an ideal location for forex brokerage. This allows companies to optimize tax costs and invest more in business development.
Ease of opening bank accounts
Entrepreneurs can easily open a bank account with Labuan’s local financial institutions, providing convenient access to global financial markets. Despite the requirement for the personal presence of the beneficiary, this emphasizes a serious approach to financial security.
Access to tax benefits
Labuan residents can take advantage of tax incentives under international double tax treaties, which further strengthens the jurisdiction’s financial attractiveness.
Affordable Fees
Compared to other regions, Labuan offers relatively low fees of $1,000 for annual maintenance and application. This significantly reduces the financial burden on businesses compared to other regions.
Ease and speed of obtaining a license
The process of obtaining a Forex License in Labuan is simple and quick, with the entire process taking just 4 months, demonstrating the efficiency and simplicity of the regulatory environment.
International Recognition
Labuan Forex License is equivalent to a European license, which confirms a high level of trust and reputation at the international level. This opens up a wide range of business opportunities in global markets.
No currency control
Labuan does not impose restrictions on foreign exchange transactions, ensuring freedom of capital flows and facilitating international transactions.
100% Foreign Ownership
The jurisdiction allows full foreign ownership of a company, eliminating the need to seek local partners and giving entrepreneurs full control over their business.
Request more information about Forex License in Labuan
Requirements for Labuan Money Broking License
To obtain a Labuan money-broking license you must meet the following requirements:
- Have a registered capital of more than $110 000.
- Appoint a minimum of 2 directors.
- Open a corporate account.
- Proof of impeccable reputation, work experience of 3 years, and profile education of the beneficiaries.
- Registration of the brokerage company in the local registry.
- Annual payment of the state fee – about $1250.
- Bank statement with proof of capital.
- Lease or purchase a local office
- Establish a maximum leverage of 100:1 for client trades.
- Implement AML policies.
- Report any incidents within the KYC policies to the LFSA.
- Conduct an annual audit of business operations by an approved external auditor.
Process and timeline for obtaining a Labuan Money Broking License
To be approved to get Labuan Money Broking License from the regulator, you need to follow the following steps:
Document Gathering
Step 1
- Start by collecting and preparing all the necessary documents for the initial inspection. This includes corporate data, financial information, and business plans.
Sending the originals
Step 2
- Once the initial verification has been completed, send the original documents by courier to the appropriate authority for further processing.
Additional Documents
Step 3
- If requested by the Labuan Financial Services Authority (LFSA), provide additional documents requested by the regulator.
Application Processing
Step 4
- Your application will be forwarded to the LFSA for review and license.
Conditional Approval
Step 5
Capital Requirements
Step 6
- Make sure your company has the required capital of RM500,000 (about $110,000). Once the capital is deposited, you will be able to utilize these funds for your company’s needs.
Local office
Step 7
- Find a suitable location and set up your company’s office according to the LFSA requirements.
Employee Hiring
Step 9
- Hire local employees with specialized training to work in your company.
Pay annual fee
Step 10
- Before finally obtaining your license from LFSA, pay an annual fee of about $1,250. This fee must be paid each year as a license renewal fee.
Required documents for applying for a forex license in Labuan
To correctly apply for regulatory licensing, you must have a package of the following apostilled documents:
- Corporate documents
- Certified copies of personal documents of beneficiaries
- Professional resume
- Proof of residency (utility bills)
- Professional letters from a lawyer, notary, and auditor.
- Bank statement.
- Proof of specialized education.
- A realistic 3-year business plan that includes financial analysis and advertising strategies.
- Developed AML/KYC policies.
Find out more about the Forex license in Labuan
Forex Lawyers in Labuan
Position
Senior Associate, Business Development ManagerPhone
+372 5477 0344
Position
Senior Associate, Head of Sales (FX and iGaming)Phone
+372 5300 1858Regulation of Forex license in Labuan
Since the early 1990s, Labuan has established itself as a center for offshore financial services. On February 15, 1996, the Labuan Financial Services Authority (LFSA) was established, and organized under the Labuan Financial Services Authority Act of 1996. This statutory body promotes and coordinates the development of the Labuan International Business and Financial Center (Labuan IBFC).
The main objectives of Labuan FSA include promoting and expanding Labuan as a global hub for business and finance and setting strategic directions and policies for the effective growth and regulation of international business and financial services in Labuan. The Authority is also responsible for the regulation, supervision, and enforcement of international business and finance in the jurisdiction.
The Labuan Financial Services and Securities Act, enacted in 2010, establishes the legal framework for the regulation and supervision of the offshore industry in the Labuan jurisdiction. This bill was designed to create a transparent and efficient environment for international financial transactions and brokerage services. It defines the role of the LFSA as the key regulator with the power to license, monitor, and enforce regulatory requirements on the activities of companies registered in Labuan.
According to this law, brokerage services are classified as intermediary operations between buyers and sellers in the foreign exchange and money markets, with brokers receiving a commission as remuneration for services rendered. It is important to note that licensees under the Act act solely as intermediaries, without assuming the role of direct participants in trading transactions. This distinction underscores the LFSA’s commitment to transparency and fairness in financial transactions in Labuan.
The law also provides for several requirements and standards aimed at protecting the interests of market participants and maintaining a high level of confidence in Labuan’s financial sector. It establishes criteria for licenses, audits, and capital and risk management requirements for licensees.
Taxation in Labuan
The Labuan Business Tax Law, enacted as part of an effort to comply with international standards of the Organization for Economic Promotion and Development (OECD), establishes comprehensive taxation rules for offshore companies incorporated in Labuan.
The main objective of the law is to ensure that Labuan’s tax policy is in line with international norms and standards, which includes fulfilling obligations to exchange tax information and discouraging practices that impede fair and efficient taxation. It ensures transparency of financial transactions and tax liabilities of companies, emphasizing Labuan’s openness to cooperation with international regulators and financial institutions.
An important characteristic of the law is its adaptation to double taxation treaties, allowing companies operating in Labuan to take advantage of the benefits and preferences provided by these international treaties. This contributes to the attractiveness of Labuan as a jurisdiction for international business, minimizing the tax burden and encouraging investment inflows.
Labuan Forex License holders are subject to the following taxation system:
- Choice of paying a flat tax of 20,000 Malaysian Ringgit annually or 3% of net profits.
- Full tax exemption on interest, management fees, royalties, and technical fees.
- No exchange controls apply, facilitating international transactions.
- No mandatory payments such as import duty, sales, and service tax.
- A 50% reduction in tax burden for hiring expatriate professionals and managers.
- Exclusion from taxation of fees for expatriate directors by 100%.
- No tax on dividends to shareholders.
FAQ about a Forex License in Labuan
How do I get a Labuan Money Broking License?
To obtain a brokerage license in Labuan, gather the necessary documents, send the originals to the LFSA, meet all requirements including proof of RM500 000 capital and setting up a local office, and then pay the annual fee.
How long does it take to obtain a Labuan Money Broking License?
If all the requirements of the regulator are met, it takes 3 months to obtain a Forex License in Labuan.
How much is a forex license in Labuan?
The annual fee for a Labuan money-broking license costs approximately $1250. This fee must be paid every year as a license renewal fee.
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