Guide To Set Up a Private Foundation In Labuan

Labuan International Business and Financial Center (Labuan IBFC) is at the cutting-edge of worldwide cross-jurisdictional wealth planning, offering high-net worth individuals abundance of structures focusing on wealth creation and wealth preservation; in both conventional and Islamic structures. Labuan private foundations are regulated by the Labuan Foundations Act 2001, which enables a Labuan private foundation to establish its properties and assets for charitable or non-charitable purposes.

In recent years, the offshore private foundation is gaining popularity in Asia, though the Europeans have been exposed to this wealth management and succession method more than 100 years ago. It is deemed a separate legal entity that is not affected by any involuntary bankruptcy of the beneficiaries. A private foundation also offers protection against foreign claims and cannot be liquidated forcefully to satisfy the claims arising from divorce, lawsuit or creditors. Another added advantage of a Private Foundation in Labuan  is that it can own assets and various businesses under one single legal entity either for the sake of the beneficiaries or family business succession. Additionally, offshore private foundations in Labuan are free from taxation unless they engage in business activities or profitable investments; in that case, income derived will be taxed at 3% after net profit.

Key tax profile of a Labuan private foundation:

  • 0% tax on the distribution of profits to beneficiaries
  • 0% tax on interests earned for placing deposits in Labuan offshore banks
  • 0% corporate tax for the investment in a holding company
  • 0% withholding tax on interest, management fee, royalty and technical fee
  • Ability to access more than 70 international tax treaty partners
  • Corporate tax of 24% for revenue derived from Malaysia
  • No foreign exchange control for banking transactions globally

Before establishing the offshore private foundation, the individual or Founder needs to define the purpose and guidelines for the private foundation. This is essential to determine the structure and tax treatment of the foundation.

Steps to start an offshore private foundation in Labuan:

  • Determine the structure and objective of the foundation and its beneficiaries to appoint a licensed Labuan Trust Company to assist with the incorporation of the Labuan private foundation
  • The Labuan Trust Company will submit all the documents to the Labuan Authority for approval

Our QX Trust team of private wealth expert is capable and possesses many years of experience in assisting clients with incorporation of their Labuan foundation for charitable purposes and holistic estate planning and family business succession If you are still uncertain about how an offshore private foundation in Labuan can help you, connect with us today and let our private wealth consultants help you design your ideal private foundation to protect you and your generations to come.

Reach us at +60 3 9212 6940 or write to us at to schedule a complimentary consultation.