Introduction to Labuan IBFC

Labuan International Business and Financial Centre offers a comprehensive suite of financial solutions. Strategically located just off the Borneo coast, IBFC is on track to become Asia’s leading international financial hub.


Labuan International Business and Financial Centre (IBFC) was established by the Malaysian government in 1990.

It provides a wide spectrum of financial products and services for corporations and individuals, in the conventional and Islamic space.

The jurisdiction has moved beyond banking, capital markets, leasing and insurance to include protected cell companies, partnerships, trusts, foundations and an international shipping registry, among others.

The domicile boasts a wide range of business and investment structures facilitating cross-border transactions, business dealings and wealth management needs.

The jurisdiction is regulated by its own special regulator, Labuan Financial Services Authority (FSA), which is governed by Malaysia’s Ministry of Finance.

Meanwhile, Labuan IBFC Incorporated Sdn Bhd (Labuan IBFC Inc.), a wholly owned subsidiary of Labuan FSA, acts as the official marketing agency for the centre.

Strategically located in the heart of Asia Pacific, Labuan IBFC is well positioned to tap into one of the fastest-growing regions in the world, presenting the perfect opportunity for businesses seeking to connect with Asia’s economies and beyond.

A well-regulated jurisdiction

Labuan IBFC’s modern and globally recognised regulatory framework adheres to international standards and best practices in financial services and prudential supervision, including protocols on anti-money laundering and exchange of information and regulatory requirements as determined by the OECD.

This underscores Labuan IBFC’s commitment to ensuring a safe and secure business environment.

Forward-looking legislation

Labuan IBFC’s wide-ranging regulatory framework caters to a broad range of legal entities including companies limited by shares or by guarantee, foundations, special purpose trusts, protected cell companies, captives, limited liability partnerships and private trust companies.

Businesses in Labuan IBFC are governed by:

  • Labuan Business Activity Tax Act 1990
  • Labuan Companies Act 1990
  • Labuan Trusts Act 1996
  • Labuan Financial Services Authority Act 1996
  • Labuan Financial Services and Securities Act 2010
  • Labuan Islamic Financial Services and Securities Act 2010
  • Labuan Foundations Act 2010
  • Labuan Limited Partnerships and Limited Liability Partnerships Act 2010

Availability of Shariah-compliant financial service

Labuan IBFC is the first international business and financial centre to introduce the world’s first omnibus legislation governing all Shariah-compliant businesses.

The centre also has its own Shariah Supervisory Council, which provides a greater degree of comfort and certainty to businesses and investors as it covers every aspect of Shariah-compliant financial services.

Simple tax structure

Labuan IBFC’s simple and straightforward tax system applies to Labuan entities carrying on a Labuan business activity under the Labuan Business Activity Tax Act 1990.

It has an unambiguous fiscal framework that provides an ideal ecosystem for global companies to house their international dealings and transactions.

Labuan offers global investors and financial services providers a competitive tax structure and various tax exemptions, as well as access to the majority of Malaysia’s extensive network of more than 70 double taxation treaties.

Substance-enabling jurisdiction

In addition, Labuan is a cost-efficient, substance-enabling jurisdiction with an English-speaking and well-educated workforce.

The domicile also adheres to Malaysia’s AML/CFT requirements and international standards and best practices set by multilateral global institutions.

Labuan IBFC: insurance solutions

Labuan offers comprehensive insurance solutions, which can be broadly categorised into Labuan insurance business, Labuan insurance-related business and Labuan general takaful business.

The Labuan insurance business category encompasses Labuan general insurance business, Labuan life insurance business, Labuan reinsurance business, Labuan takaful and Retakaful windows as well as Labuan captive business.

Labuan captive business

The domicile offers various captive structures, including pure/single owner captives, group/association captives, master and subsidiary rent-a-captives, as well as cell and multi-owner captives.

To establish a Labuan captive business, an applicant must be a Labuan company (including protected cell companies) incorporated or registered under the Labuan Companies Act of 1990, or a special purpose vehicle.

Every Labuan captive insurer must have an operational management office in Labuan, managed by a team that has adequate knowledge and expertise in the insurance business, including the captive insurance business.

Otherwise, they need to appoint a licensed Labuan underwriting manager. Persons in control, directors and principal officers need to be approved by Labuan FSA.

A Labuan captive insurer needs to maintain a minimum paid-up capital or working funds amounting to a specified sum with a bank in Labuan.

In addition, the captive insurer needs to monitor the level of its solvency regularly. Higher capital requirements may be imposed commensurate with the Labuan captive insurer’s business activities and risk exposures.

Last but not least, they must also be a member of the Labuan International Insurance Association.

Labuan International Insurance Association

The Labuan International Insurance Association (LIIA), which is based in Labuan, has more than 200 members involved in various areas of insurance and reinsurance – from life and non-life insurance and reinsurance brokers, insurance and reinsurance companies, including captives, to related management and accounting services.

The LIIA membership is a requirement for all insurance and reinsurance-related entities in Labuan. The association serves as the gatekeeper for the laws and guidelines related to the sector, in addition to offering seminars and training for members. It also produces and circulates newsletters reporting on relevant issues and trends.

5-6 November 2025

Property continues pushing Marsh US clients to increase captive retentions

Global insurance market index found US property insurance rates increased by 11% in Q4 2023, the 25th consecutive...

Captive regulators clamp down on HCM after principal’s guilty plea

Captive regulators in Utah, Tennessee and Nevada respond after Hamilton Captive Management founder Peter J. Strauss pleaded guilty...

Oklahoma reveals 2023 captive figures

Of Oklahoma’s 59 captives and cell/series captives, 16 of them took the 831(b) tax election, latest figures for...

Minister eyes future Gibraltar-UK partnership for new captive regime

Gibraltar finance minister Nigel Feetham was speaking at the inaugural meeting of the Gibraltar government’s working group for...