Labuan Private Foundation and Its Structure

Labuan Private Foundation and Its Structure

While great wealth can be easily built worldwide, High-Networth-Wealthy-Individuals are on the lookout for better jurisdictions to provide them with a one-stop solution for their wealth and succession planning. This offers a consolidated effort for both the client and service provider in managing wealth from multiple jurisdictions and taking into consideration the different legislations on inheritance and other tax matters.

Labuan Private Foundation is the most ideal and only wealth management tool in Asia governed by the Labuan Foundations Act 2010 (“the Act”). It is by far one of the best ways for wealth protection and succession planning in Asia and globally. It is not only protected by the Act but founders can also enjoy zero taxes with low cost to operate with the Labuan Private Foundation.

A private foundation in Malaysia is a flexible structure in which founders can be individual or corporate while the beneficiaries can be anyone including family members or charitable organisations.

Why Private Foundation in Labuan

  • Registered corporate body with the separate legal entity
  • Used for private or charity purposes
  • Protection from creditors’ claims and foreign claims
  • Simple and straightforward tax systems in Labuan
  • No tax in Labuan on non-trading activities
  • Founders can reserve powers and rights
  • No foreign exchange controls
  • No withholding tax /capital gain tax/inheritance tax

Like other jurisdictions, Labuan Private Foundations are separate legal entities and they are not affected by an accidental bankruptcy of the beneficiaries. The Labuan Private Foundation in Malaysia can have the founders’ assets protected; conduct investments and trades or be involved in other types of businesses under the private foundation name, for the sake of the beneficiaries. They have no time limit to operate, and are led by an advisory board. Labuan Private Foundation can even continue to operate after the demised of the founders.

The structure of a Labuan Foundation is pretty flexible, which enables the wishes of the founders to be amended or altered easily and be managed efficiently just like a company! With its structure, the foundation owner (founder) can have full control over the assets i.e. to be protected against creditors / estate taxes while in adhering to the compliance of laws. All assets and wishes of the founder are stipulated in the Charter and all assets are under one umbrella. This confers easy management to the family office in managing the HNWIs wealth. The privacy laws under Labuan Private Foundation has made it more attractive to HNWIs in modern world as compared to a Trust and Will.

Offshore private foundations are free from taxes in Labuan for investment holding purposes, but if they engage in business activities and receive profits, they will have to pay a 3% corporate tax on the net profits attained.

What Labuan Private Foundation Structures Offer:

  • Wealth Preservation – helps preserve wealth in a tax-efficient manner
  • Flexibility – changes/update/amendments can be made with minimal interruption
  • Protection – foreign claims, insolvency claims and marriage claims
  • Confidentiality – ownership is held under the foundation’s name
  • Certainty – able to decide based on one holistic structure
  • Control – founder will have the ability to dictate terms
  • Consolidation – can structuralise their total asset worth and place it into a consolidated asset holding

Which Structure Suits Best – Would Depend On:

  • Each client’s specific needs and ambition
  • Long term plans – business / personal
  • Short term objectives – what to achieve now (planning/protection vs
  • investment / diversification)
  • Their current needs vs family/children’s needs in the future

Foreign Businesses Profit Lock-in for Wealth and Succession Planning with Labuan Private Foundation

As an entrepreneur, you have to face many risks or challenges during your daily course of running businesses. However, setting up a Private Foundation in Labuan, your risk will be hugely reduced by legally transferring (endow) all your ownership in companies, shares, assets, jewelleries, yacht and other valuable items which are under personal name to the Private Foundation vehicle for wealth and succession planning should anything happen to them.

Foreign Assets Lock-in for Protection with Labuan Private Foundation

Assets purchased or invested under a private foundation will be able to lock-in for protection, acting as a safe deposit. Structure of a Labuan Foundation enables claims to be easily organised and managed.

Protect Your Wealth Today! Speak to QX Trust on How to Register Your Labuan Private Foundation!

At QX Trust, we offer professional advisory in customising and setting up the right asset protection structure to fit your needs. Our experienced consultants will enlighten you on the latest regulations, updates and necessities for your foundation registration in Malaysia! To know more about the structure of a Labuan Private Foundation or to start a Private Foundation in Malaysia, contact us at +60 3 9212 6940 or consultant@qx-trust.com.