Are you a business owner? Are you thinking in terms of setting up a business in another country? If your answer to these questions is a yes, we can help you. Setting up a business in one’s own country is not an easy task. So, setting up a company in another country could be a little more difficult but it is not impossible. Of course, with our help, it may not be as difficult as you perceive it to be.
Now, if you are wondering as to which is the best country to set up a business, it is undoubtedly Malaysia. This is because there has been a dramatic shift in economic power to Asia over the last decade, driven forward by its rapidly expanding consumer base. This has encouraged multinational corporations to migrate so as to stay afloat amid changing marketing conditions.
In light of these developments and its strategic location, Malaysia is fast becoming an international business operations hub. Other aspects that are also contributing towards this are Malaysia’s business-friendly environment, efficient tax planning as well as wealth management options, and investor-friendly jurisdiction.
In Malaysia, the best jurisdiction for businesses from other countries to set up operations is Labuan. The Federal Territory Labuan consists of six small islands and it is located off Sabah state on the east coast of Malaysia. Since 1990, Labuan has developed into a jurisdiction for businesses all over the world to set up offshore businesses.
Why Register A Company In Labuan?
There are many reasons as to why you could consider registering a company in and use Malaysia as a launch pad for expanding your operations in the region. Some of them are as follows:
- Foreigners can own 100 percent of a Labuan company. They need not team up with a local Malaysian partner.
- You can incorporate a company within 7 days. You need not even go to Labuan for the purpose. You can do it from your own home country.
- You can transact in a foreign currency of your choice (USD, euro, etc.).
- A corporate bank account can be opened in Malaysia Ringgit/most foreign currencies.
- Annual tax payable on net profit is only 3.0 percent.
- For an investment holding company, there is no tax. An audit report is not required either.
- You can deal with Malaysian residents or companies @ 24 percent tax rate.
- You need not pay sales tax or service tax.
- There is withholding tax for interest, royalties, technical fees, and management fees.
- For the work visa application, the paid-up capital required is as low as RM250000.
- Work visa holders can reside anywhere in Labuan or West Malaysia. Spouse and children (below 18 years) can be included in the visa application. Parents are eligible for a yearly visa.
Limited Liability Company In Labuan
When it comes to setting up a limited liability company in Labuan, the steps involved are as follows:
Choose A Name for Your Labuan Company
Your company should have a unique name. It cannot resemble the name of any other company in Malaysia. You can use any foreign name but it should be written using the Latin alphabet. The ending word of the company name must be “Labuan”, “Limited”, “Inc.”, “Ltd”, “Co, Ltd”, or “LLC”.
Register the Labuan Company
A limited liability company in Labuan may be limited by shares/guarantee. Additional license may be required if you want to do specific businesses such as banking, insurance/insurance-related, leasing, factoring, company management, and fund management.
To register your company, you have to submit the following documents:
- Articles of Association and Memorandum of Association
- A consent form from the director of the company
- Statutory Compliance Declaration
Further, the Malaysian government agencies with which you must register your Labuan International Company are:
- Company Formation Authority in Labuan
- Malaysia Immigration Department
- Central Bank of Malaysia
- Inland Revenue Authority
Shareholders may be from any part of the world. At least one shareholder is essential.
At least one director is essential (a person/corporation).
A company secretary is a must. However, he/she can reside anywhere. If more than one secretary is required, a local resident must be one of them.
The minimum authorized capital required is $10,000 (10,000 shares of $1 each. Minimum issued capital – 1.
How to open a bank account in Labuan
Anyone, even non-residents, is allowed to open a bank account in Labuan. The steps involved are as follows:
- Fill in the application form.
- Sign on the specimen cards and get them verified.
- To open a corporate account, attach notarized copies of Certificate of Incorporation and Article of Association along with the application form.
- For personal and corporate personal accounts, a certified copy of the passport issued by the government and the utility bill in original (address proof) are to be submitted. Further, a bank or professional reference should be provided.
Other documents/information to be furnished is:
- Account holder’s CV/resume
- Nature of business
- A cash flow projection
- Company/business profile
- Source of funds
- Counterparties’ names
- Reason for opening a bank account in Labuan
Account holder need not be physically present for opening an account. It takes about a couple of working days to open an account.
Labuan Tax laws
As per the Tax Act, Labuan businesses are considered to be involved in trading or non-trading activity. Ministers have the power to decide as to what type of business activity a company is involved in. According to the new Section 2B, Labuan entities should have a specific number of employees. The amended Section 4 states that incomes derived from royalty or ‘IP right’ are taxable at the rate of 3.0 percent. #5: Finally, Section 7 is no longer there. Therefore, the option to pay RM 20,000 flat as tax does not exist. Instead, businesses will be charged a tax of 3.0 percent.
Finally, an offshore company in Labuan with a turnover exceeding RM 500,000 is liable to pay GST. Further, the company has to satisfy all of the terms and conditions laid out by Malaysian Customs. All global business entities incorporating a company in Labuan should be ready to comply with this stipulation.
To start a business in Labuan, you have to follow certain procedures. They are not difficult but have to be handled carefully. At QX Trust, we have the experience and expertise to handle company setup procedures. You can visit https://www.offshore-labuan.com/ for more information in this regard.