Labuan Business Activity Tax Act amended to improve assessment on chargeable profits
30 March 2020
On 10 February 2020, the Labuan Business Activity Tax (Amendment) Act 2020 (“Amendment Act”) came into force. The Amendment Act seeks to amend the Labuan Business Activity Tax Act 1990, mainly for the purpose of improving the administration of tax in relation to tax assessment made on chargeable profits of a Labuan entity in order comply with international requirements.
Briefly, the Amendment Act introduces the following key amendments:
- Non-compliance with substance requirements for one year attracts tax at 24% of chargeable profits
- Director General able to disregard or vary certain transactions
- Director General able to substitute price on certain transactions
- Director General able to call for specific returns and production of books
- Director General has full and free access to buildings and documents
- Duty to keep records for seven years from end of year of assessment