Labuan Credit Token Business

a) Introduction
A credit token business is defined as any business where a token, being a cheque, card, voucher, stamp, booklet, coupon, form or other document or thing is given or issued to a person (referred to as “customer”) by the person carrying on the business (referred to as “issuer”), whereby such issuer undertakes that:

• on the production of the token, whether or not some other action is also required, the issuer will supply cash, goods or services on credit; or
  where, on the production of the token to a third party, whether or not any other action is also required, the third-party supplies cash, goods or services, the issuer will pay the third party for them, whether or not deducting any discount or commission, in return for payment to be made thereafter to the issuer by the customer.
• And for the purposes of this definition, the use of a token to operate a machine provided by the issuer or by a third party shall be regarded as the production of the token to the person providing the machine.

b) Requirements

The applicant:

• Must inform Labuan FSA of any changes in its shareholding structure and/ or any erosion of paid-up capital,
• Must maintain a physical presence in Labuan. All dealings must be done through this office in Labuan,
• Can only transact business in foreign currency and not deal in ringgit except for the purpose of defraying administrative and statutory expenses,
• Is prohibited from dealing with residents other than authorized dealers as specified under Section 4 of the Exchange Control Act 1953,
• Is required to appoint an auditor, and
  Must notify Labuan FSA of any amendments or alteration to any information in its constituent documents.

c) Applicable Taxation

• A Labuan Company involved in credit token business is deemed a Labuan Trading Company under Section 2 of the Labuan Business Activity Tax Act, hence the company has to pay a 3% of audited net profit as its tax with fulfilled its substance requirements.
• Fails to comply with the substance requirement for a basis period for a year of assessment shall be charged to tax at the rate of twenty-four per cent (24%) upon its chargeable profits for that year of assessment.