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Labuan, Malaysia Company Formation Frequently asked questions (FAQs)

1. What is Labuan company tax rate?

3% of Audited Net Profit for trading activities.

No tax for Non-Trading activities.

2. Does Malaysia have any double tax agreements in place
Yes, the country has signed double tax agreements with 65 countries.
3. What is the minimum capital requirement of Labuan entity?
From US$ 1 onward
4. Can a Malaysian incorporate a Labuan company?
Both Malaysian or Non Malaysian can be the director & beneficiary of a labuan company.
5. Is there any requirement to file account for Labuan company?

Only for licensed companies and companies electing to pay 3% tax.

Nevertheless, there is still a requirement to keep accounts that will sufficiently show the financial position of the company. With increased compliance, it is common that most companies will be required to prepare at least management accounts

Read more:

6. Is there any requirement to file an annual return?
Yes but it is simple.
7. Does Labuan Company require Company secretary?

Yes and if more than one is appointed at least one must be a resident secretary.

Only an approved officer of a Labuan trust co or its wholly owned subsidiary may be appointed as a resident secretary.

Read more:

8. Do I need to be physically present in Labuan to incorporate the Labuan Company?
Not necessary.
9. How long will it take to register a Labuan company?
2 - 3 working days upon receiving your full documentation.
10. Do I need to inform Labuan Financial Services Authority when I register a Labuan company?
No. One IBC will assist you in incorporating the Labuan Company from start to end.
11. What are the minimum director and shareholder requirements for a Labuan company?
One director who can either be an individual or a corporate entity and one shareholder who can either be an individual or a corporate entity.
12. Is it possible to open a bank account for Labuan Company in Labuan
Yes, One IBC can assist you.
13. Do Labuan Company need to file annual return?
Yes. Annual returns must be filed not later than 30 days prior to the anniversary of the date of incorporation.
14. Must financial statements of Labuan Company be audited?
Yes for Trading Company. Not required for Holding Company.
15. What are the benefits to do business in Labuan, Malaysia? How to open an offshore company in Labuan, Malaysia?

Malaysia is the third-largest country in Southeast Asia and the 35th in the world. The government of Malaysia has built a friendly business environment and provided a variety of incentive policies for foreign investors and businesses to open an offshore company in Labuan.

Labuan is a Federal Territory of Malaysia and a strategic place to invest in Asia. In recent years, Labuan has become a popular jurisdiction to attract many investors and businesses around the world. Investors and businesses will enjoy a lot of benefits such as low taxes, 100% foreign-owned, cost-effective, and confidentiality secured, etc. to do business in Labuan, Malaysia.

Labuan is not only a famous place to travel but also an ideal place to open an offshore company. In order to do business in Labuan, you need to follow these steps:

Step 1: Choose your business nature and structure that fits your business plan;

Step 2: Decide and propose 3 valid names for your company; 

Step 3: Decide on Paid-Up Capital;

Step 4: Open a corporate bank account for your offshore company;

Step 5: Consider if you need two years’ multiple entry work visas for yourself, partners, and family members.

Together with Singapore, Hong Kong, Vietnam, etc. Labuan has become the new destination in Asia, where global investors and businessmen come to expand their business. 

16. What is the Labuan International Business and Financial Centre?

Labuan is a Federal Territory of Malaysia which was originally established on 1 October 1990 as Labuan Offshore Financial Centre. Later on, it was renamed to Labuan International Business and Financial Centre (Labuan IBFC) in January 2008.

Like some other offshore financial centers, Labuan IBFC offers a wide range of financial services and products to customers including banking, insurance, trust business, fund management, investment holding and other offshore activities.

Incorporation of a Labuan company in Labuan International Business and Financial Centre (Labuan IBFC) must be done through a registered agent. The application should be submitted together with the Memorandum and Articles of Association, consent letter to act as director, statutory declaration of compliance as well as payment of registration fees based on paid-up capital.

17. What is Labuan Financial Services Authority?

The Labuan Financial Services Authority (Labuan FSA), formerly known as Labuan Offshore Financial Services Authority (LOFSA), is a one-stop agency which was established on 15 February 1996 as a single regulatory body to promote and develop Labuan as an International Business & Financial Centre (IBFC). Its establishment further draws the attention of the government’s commitment to make Labuan a premier IBFC of high repute.

Labuan FSA is formed to focus on business development and promotion, process application and supervise business and financial activities, develop national objectives, policies and set priorities, administer and enforce legislation, and incorporate/register Labuan offshore companies.

18. What are the main functions of Labuan Financial Services Authority?

Labuan Financial Services Authority (Labuan FSA) helps in managing and regulating the international business and financial centre and undertakes economy research and development. Labuan FSA also comes out with plans for further growth and greater efficiency of the Labuan IBFC.

Furthermore, since Labuan’s establishment in 1996, it has reviewed the current legislations for the purpose of making the required and proper changes as well as to plan new activities to enlarge and deepen the financial services industry.

Labuan FSA is also taking measures to draw more interest to a bigger number of professionals and skilled workers to live and work in Labuan IBFC to support the industry.

Besides that, Labuan FSA has come out with policies that help to facilitate and assist the creation of a competitive and attractive business environment in Labuan. Furthermore, Labuan’s legislative framework is not only business-friendly but at the same time it helps to protect Labuan’s international image as a clean and reputable international business and financial centre.

19. What is the corporate tax needed to pay in Labuan, Malaysia?

Labuan, Malaysia is a region that has an incentive tax for business. Opening a company in Labuan, the owners will gain more benefits from the tax exemptions policy for business activities. Therefore, most foreign companies are interested in starting a business in Labuan, Malaysia because of its tax policy.

In fact, the annual corporate tax rate for each company isn't small. As a result, companies always want to optimize their tax lines to increase their revenue.

Thanks to open trade policy as well as the incentive tax rates for businesses, Labuan has become a place to attract many foreign businesses. Many overseas companies are willing to open more subsidiaries or invest in Labuan.

In addition, Labuan (Malaysia) is considered as the lowest tax jurisdiction in Asia. Businesses will not be required to pay tax if profits are earned from business operations outside of Labuan.

The Labuan company is also known as Labuan International Company. There are 4 types of companies with different tax rates for a Labuan International Company. The foreign business owners can consider the following kinds of business entities:

  • Investment Holding Company

    The company’s investment income does not have tax requirement as well as auditing without any trading activities.

  • Trading, Exporting, and Importing Company

    The tax rate is 3% on the net profits and the companies need to file the annual audit report.

  • Trading Company

    The business owners can choose one in two options:

    • Pay the 3% corporate tax
    • The flat tax of RM 20,000
  • Non - Trading company

    If the business income from outside Malaysia, the companies do not need to pay tax and file the audited report.

Contact One IBC to have the best solution for your company in Labuan, Malaysia. We can support the customers to choose the most suitable jurisdictions which fit the client’s strategy. With many years of experience in offshore company incorporation, One IBC believes that the customers will be completely satisfied with our services.

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