AN INTRODUCTION TO GIFT
The Global Incentives for Trading (GIFT) Programme is a scheme set up to attract international commodities traders to use Malaysia as their operational and trading base.
Malaysia, and by extension Labuan IBFC, is strategically located in the heart of Asia Pacific and populated with a diverse, talented and multilingual workforce. It is a cost efficient destination from which global commodity producers and traders can base their regional operations and service clients internationally.
Why participate in GIFT?
- Malaysia's strategic position makes it an ideal base to expand into Asia Pacific.
- Offers a viable entry point into Malaysia's expanding upstream and downstream segments of the oil and gas industry.
- Awards flexibility to expand and enhance a company's scale of operations due to the availability of competitively priced storage space, deep-water jetties, roads, refinery complexes, warehousing and bunkering.
- Access to a wide pool of multilingual skilled professionals and technical workforce.
- Access to world-class banking and financial services.
HIGHLIGHTS OF THE GIFT PROGRAMME
HOW CAN I PARTICIPATE IN GIFT?
The GIFT programme is available to all commodities companies that satisfy certain incorporation requirements and commit to setting up their operations in Malaysia via the establishment of a Labuan International Trading Company (LITC).
LITCs are a dedicated type of Labuan Company that is registered with the Labuan Financial Services Authority (Labuan FSA), the regulator of Labuan International Business and Financial Centre (Labuan IBFC).
Only companies set up as Labuan International Trading Companies are accorded privileges under GIFT.
Uniquely, although set up as a Labuan company, LITCs are allowed to operate anywhere in Malaysia, and as such, are not limited to operating out of Labuan.
In order to qualify for the GIFT programme, the operations of LITCs should encompass the following:
- Trading of physical commodities products deemed permissible under GIFT*.
- Tradition of derivatives products linked to physical commodities. The derivatives trading activities may include over-the-counter (OTC) or exchange traded contracts.
*The commodities that are allowed to be traded under GIFT include:
- Petroleum & petroleum-related products including LNG
- Agriculture products
- Refined raw materials
- Base minerals, including coal
Entities looking to establish a LITC in order to enjoy benefits from the GIFT programme are required to meet the following criteria:
- Minimum turnover of USD100 million annually
- Local business spending* of at least USD1 million annually
- Employ a minimum of three professional traders, with a minimum salary of RM15,000 (approximately USD4,000) per month. These traders will be residents of Malaysia, with their personal income tax assessed under the Malaysian Income Tax Act 1967.
For the first 5 years, there is no penalty imposed if the qualifying criteria are not met. However, if the criteria are still not met after five years, Labuan FSA will review each of the LITC's registered company on a case-by-case basis.
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