Auditing Services for Labuan Companies

Labuan is a Federal Territory of Malaysia, located off the coast of Borneo. k It is made up of an island and several smaller islets. It is situated in the vicinity of the Sabah state of Malaysia and the Sulu Archipelago of Philippines. Labuan is known as the Labuan International Business and Financial Centre (IBFC). It is a special economic zone that offers a range of tax incentives and business-friendly regulations to attract foreign investment. The Labuan IBFC is governed by the Labuan Corporation, which is responsible for promoting and developing the economic and financial activities in the territory.

The main industries in Labuan Federal Territory include oil and gas, shipping, international trade, and financial services. The Labuan IBFC is also a popular location for businesses looking to establish a presence in Southeast Asia, due to its strategic location and the availability of a well-trained workforce.

Under the Labuan Companies Act 1990, A Labuan company shall keep proper accounting and other records as will sufficiently explain the transaction and financial position of the company.

Labuan licensed entities — In Labuan, licensed entities are required to submit audited financial statements to the Labuan Financial Services Authority (Labuan FSA) within 6 months from the financial year end. Labuan licensed entities are companies or businesses that are licensed under Labuan Financial Services and Securities Act 2010 to carry out specific licensed activities.There are several types of Labuan licensed entities, including:

• Labuan insurer, reinsurer, takaful or retakaful operator
• Labuan underwriting manager
• Labuan insurance manager or takaful manager
• Labuan insurance broker or takaful broker
• Labuan captive insurer or captive takaful
• Labuan bank, investment bank, Islamic bank or Islamic investment bank
• Labuan trust company
• Labuan leasing or Islamic leasing company
• Labuan credit token or Islamic credit token company
• Labuan development finance or Islamic development finance company
• Labuan building credit or Islamic building credit company
• Labuan factoring or Islamic factoring company
• Labuan money broker or Islamic money broker
• Labuan fund manager
• Labuan securities licensee or Islamic securities licensee
• Labuan fund administrator
• Labuan company management
• Labuan International Financial Exchange
• Self-regulatory organisation
• Labuan international commodity trading company

These entities are licensed by the Labuan FSA and comply with the regulations and guidelines established by the authority. This includes submitting regular financial statements, maintaining accurate and complete financial records, and having internal controls in place to prevent fraud and errors.

All Labuan licensed entities are required to appoint an approved auditor and file audited financial statements with the Labuan FSA on an annual basis. The auditor must be an approved Labuan auditor and must have the necessary experience and qualifications to conduct the audit.

Other Labuan Companies/Investment holding Companies

Under Labuan Companies Act 1990, other Labuan companies or investment holding companies shall lay audited accounts or unaudited accounts at the member general meeting within nine (9) months from the financial year-end.

Nevertheless, with the deletion of Section 7 of the Labuan Business Activity Tax (Amendment) Act 2020 9, a Labuan taxpayer effective from 1 January 2019 (year of assessment 2020) can no longer elect to pay tax at the fixed amount of MYR 20,000 for each year of assessment. Therefore, tax will be charged at the rate of 3% or 24% on audited net profits for the eligible labuan business activities. Hence, other labuan companies are now required to submit audited financial statements together with tax return to the Inland Revenue Board (IRB) in Malaysia.

To be eligible for 3% tax rate in Labuan, a Labuan entity must be:

• undertaking business activities listed in the P.U. (A) 423 and;
• fulfilled substance requirements (number of full time employee in Labaun & minimum operating expenditure incurred in Labuan)

The other list of business activities (other than licensed entities) recognised in P.U. (A) 423 includes:

• Administrative services
• Accounting services
• Legal services
• Backroom processing services
• Payroll services
• Talent management services
• Agency services
• Insolvency-related services
• Management services

A statutory audit is an independent examination of a company's financial statements that is conducted in accordance with the law. The purpose of a statutory audit is to provide assurance that the financial statements of a company are accurate, complete and comply with the applicable financial reporting framework. Our audit is performed in accordance with approved standards on auditing in Malaysia and International Standards on Auditing.

During a statutory audit, an auditor will review and assess the company's financial records, including its balance sheet, income statement, and cash flow statement, to ensure that they are accurate, complete, and comply with accounting standards and other regulations. The auditor will also assess the internal controls of the company to ensure that they are adequate to prevent fraud and errors.

Statutory audits are mandatory for most companies, and the financial statements must be audited by a qualified and independent auditor in order to be filed with the regulatory authorities. In most countries, including Labuan Federal Terriroty, the statutory audit must be conducted by approved auditors registered with LFSA.

The objectives of our audit are to obtain reasonable assurance about whether the financial statements of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Choosing the right auditing firm can be a critical decision for any business, and there are several reasons why CWC & ENG PLT may be the best choice for your auditing needs in Labuan. We are approved auditors licensed by LFSA - Click Here

• Experience and expertise: Our team of chartered accountants and other qualified professionals have years of experience in the field of auditing, and are well-versed in the latest accounting standards and regulations.
• Tailored services: We understand that every business is unique, and we offer customized auditing services to meet the specific needs of each client.
• Competitive pricing: We offer competitive pricing for our services and we are transparent about our fees, so you can budget and plan accordingly.
• Proven track record: We have a proven track record of delivering high-quality auditing services to a wide range of clients.
• Strong communication and client service: We believe in building strong relationships with our clients, and we make it a priority to keep lines of communication open throughout the audit process. We understand that the auditing process can be disruptive to business operations, and we work closely with our clients to minimize disruptions and ensure a smooth and efficient process.
• Use of technology: We make use of the latest technology and software for our audit process, which allows us to perform audits more efficiently and accurately, and provide our clients with real-time access to their financial data.
• Continual professional development: We are committed to ongoing professional development for our team members, which ensures that we are always up-to-date on the latest auditing standards and best practices.

In summary, by choosing us for auditing services, you can benefit from our experience and expertise, tailored services, independence and objectivity, proven track record, strong communication and client service, competitive pricing, continual professional development and use of technology.