Setting Up an Offshore Company – Know the Process

The term “offshore company” or “offshore corporation” is used in at least two distinct and different ways. An offshore company may be a reference to :-

  1. A company, group or sometimes a division thereof, which engages in offshoring business processes for cost effective purposes.
  2. International business companies (IBC) or other types of legal entities, which are incorporated under the laws of a jurisdiction, prohibits local economic activities.
  3. A reference to companies dealing with offshore oil and gas operations and business activities.


Labuan Offshore Company

The process of incorporating a Labuan company is easy and foreign investors can have entire foreign ownership over the legal entity they register here. The most commonly used business form is the Labuan international company – the legal entity which enables 100% foreign ownership and benefits from all of the tax advantages practiced in Labuan.

Labuan corporate tax is 3% after audited net profit and the tax requirements will be based on the business activities performed by the company. For instance, the requirements for tax and audit are mandatory only for active companies. The Offshore Company in Labuan is very flexible and can be used for trading, investment and holding purposes. Non-trading companies and dormant companies are taxed in a different manner.

Simple Steps to Set Up a Labuan Offshore Company

To ensure all necessary approvals are obtained from the relevant authorities for setting up a Labuan offshore company, it is crucial to clear the necessary due diligence process in order to steer clear from any confusions or issues and ensure a smooth registration of your Labuan Offshore Company.

There is a distinctive difference between Malaysia local ‘SDN BHD’ Company and Labuan Offshore company that you need to know to ensure you have the right structure based on your business nature and full comply with all regulations. This to avoid any major problems of owning a wrong business entity in Malaysia which often happened to foreigners including wasting effort, time and money.

While Malaysia Government welcomes foreigners to set up international businesses in Malaysia to enjoy low tax benefit and ownership of 100% via a Labuan Offshore Company, all business owners are expected to fully comply with the following relevant authorities:

  1. Labuan Company Formation Authority
  2. Inland Revenue Authority
  3. Malaysia Immigration Department
  4. Central Bank of Malaysia

Information Required to Set Up a Labuan Offshore Company

  1. Business nature and structure of the company to align with tax and compliance.
  2. Decide your company identity: propose 3 names to check for availability and choose the suffix to be used: “Co. Ltd”, “Limited”, “Ltd” or “Inc”.
  3. Decide on company paid-up capital.
  4. Finalising the type of bank account and currencies required.
  5. Decide if you need any two 2 years multiple entry work visas for yourself, partners and family members.

Profiling and Documentation for Expatriate Visa Application

It is essential to profile your documents and receive apt guidance in preparation of each piece of document needed for each stage to lodge successfully for approvals.

Below-mentioned are the 5 different stages of processes from formation of the company complete with an opening bank account and your 2 years work visa under the Labuan company –

  • Stage 1 – Registration of Labuan Company
  • Stage 2 – Application of Work Visa for Labuan Expatriates
  • Stage 3 – Application of Entry Visa
  • Stage 4 – Landing Procedure and Final Stamping of Visa for Expatriates and their dependents
  • Stage 5 – Opening of Bank account and Interview

*Dependents of spouse and children (aged under 18) can be included in the (two) 2 years’ work visa application. Parents can be included in the applicant for a yearly visa.

Labuan Company holds a corporate tax rate of 3% while a Labuan Investment Holding company enjoys 0% corporate tax. QX Trust holds relevant expertise and experience in serving clients from all over the world in all aspects of business setup and Investment in Malaysia and commit to serve and offer you a comprehensive list of support and services. We are committed in ensuring all our clients comply with all legality and up to date information which in return helps ensure :-

  1. Your Labuan company is active and not penalised or blacklisted.
  2. Your Labuan bank account is credible and active with the banking system in Malaysia.
  3. Your Labuan work visa is renewable upon expiration (after the initial (two) 2 years).

Should you be interested to setup your offshore company for your international business, do get in touch with our QX Trust team at +60 3 9212 6940 or for a free consultation today! Our Consultants shall guide you on the necessary requirements as well as the tax treatment while you just focus on your growing the business.