Setting Up A Company In Labuan – Advantages | QX Trust | Offshore Labuan Consultants

Labuan lies off Malaysia’s eastern coast. It is a federal territory and is best known as the financial centre. The region has been developed as a special economic zone and it attracts foreign investors and entrepreneurs who look forward to having full ownership of the companies they set up in other countries. Further, as one of the key offshore centres in Asia, Labuan allows businessmen to incorporate different types of legal entities within the jurisdiction. The main benefits of setting up a company in Labuan are as follows:

  • Traditionally, you were required to have a local citizen as your associate in order to register a company in Malaysia. Now, the country’s commercial legislation foreigners to incorporate a company with 100 percent ownership. This regulation is applicable in Labuan as well.
  • A company in Labuan is not required to have a citizen of Malaysia as its director. The investor can act as the director and shareholder of the company.
  • The minimum share capital required to establish a company in Labuan is $1
  • A company can be registered in Malaysia in just about two weeks.
  • The investor is not required to be physically present in Malaysia for the incorporation process.
  • A Labuan company entitles you to a 2 year (renewable) work permit/ visa for Malaysia

The following taxes are not applicable in Labuan:

  • Sales and government service tax
  • GST or VAT
  • Capital gains tax
  • Withholding tax for royalty, lease rental, technical services, interest income, or management fee payment
  • Corporate tax for investment holding
  • Dividend remitted in the home country
  • Stamp duty for the execution of instruments related to a Labuan company operation
  • Personal income tax on the fee received by the non-Malaysian director of a Labuan company
  • Tax estimation policy

Further, there are no audit requirements to be complied with unless your company is involved in industrial sectors such as insurance and banking. As a Labuan company enjoys a special regime, it is not required to apply for special licences and permits for some types of activities like trading, consultancy businesses, and e-commerce, among others.

Other benefits of setting up a company in Labuan

  • Corporate tax rate – 3 percent only (on audited net profits; however, the maximum payable is only MYR 20,000)
  • No restrictions on exchange control
  • 50 percent exemption on the gross income received by a non-Malaysian citizen employed in a Labuan company in a managerial position
  • 50 percent exemption on the gross Labuan Territory and housing allowances received by a resident of Malaysia employed in a Labuan Company in Labuan
  • Privacy and confidentiality policy – Company search by a third party can be done only after obtaining a written authorization letter from the director or shareholders of the company
  • Labuan work permit enables foreign businessmen to stay and work in Malaysia
  • Operation cost is low compared to some of the other major Asian cities
  • Proximity to time zones and strategic location

If you are interested in knowing more about the advantages of setting up a company in Labuan, call us today or contact us.