What is the Labuan company tax rate?

As of 2025, the Labuan company tax rate remains one of the most competitive in Asia. Here’s what you need to know: Trading companies: Under the LBATA, qualifying trading activities (e.g., import/export, consulting, management services) are taxed at 3% on audited net profits. Note: licensing of intellectual property (royalties) is taxed under Malaysia’s Income Tax Act 1967, not LBATA. Non-trading companies: Entities engaged in passive income activities such as holding investments, receiving dividends, or owning property can enjoy 0% corporate tax. Substance requirements: To access these rates, Labuan companies must meet OECD-aligned conditions: Maintain a physical office in Labuan. Employ a minimum number of full-time employees in Labuan (nationality not prescribed) and incur prescribed annual operating expenditure in Labuan. Incur adequate annual operating expenditure in Labuan. Other trading services generally require at least 2 full-time employees in Labuan and RM50,000 annual OPEX; Pure Equity Holding requires no FTE, RM20,000 annual OPEX, and clear control & management in Labuan (e.g., board meeting in Labuan, resident secretary, records kept in Labuan). Alternative taxation option: A Labuan company may irrevocably elect to be taxed under Malaysia’s Income Tax Act 1967 (e.g., for market or treaty reasons). Additional tax advantages: Withholding tax: Not applicable on interest, royalties and section 4A service fees paid by a Labuan company to non-residents, and dividends from a Labuan company are exempt in the recipient’s hands, under the Income Tax (Exemption) Order 2025 (effective from YA 2023, currently through YA 2027). Capital gains: No CGT applies to income taxed under LBATA; however, Malaysia’s CGT on disposals of unlisted shares (from 1 Jan 2024) may apply if the entity is taxed under the ITA or the disposal falls within the ITA scope. Access to Malaysia’s double taxation agreements (DTAs) in certain cases. Why work with Offshore Company Services?To get your taxes right in Labuan, you need to follow the rules and show you're really doing business there. Offshore Company Services can help you with everything, from signing up your company to keeping up with taxes and accounting. We make sure your business follows all the rules and gets the most out of the 3% or 0% tax breaks.

What are the different types of business licenses in Malaysia?

A business license in Malaysia is an official approval or permit issued by government authorities, allowing individuals or companies to legally operate within the country. It provides proof that the company operates within local jurisdictions guidelines, safety laws per regulations and zoning resolutions.Depending on the nature of the business, industry, and location, different types of licenses may be required. They essentially refer to one of these categories in three ways: General Licenses (applicable to all businesses): Company Registration with the Companies Commission of Malaysia (SSM) is a mandatory prerequisite for most businesses before obtaining other licenses. Income Tax Registration with the Inland Revenue Board (LHDN). Employees Provident Fund (EPF) and SOCSO registration if hiring employees. Business Premises License and Signboard License, usually issued by local municipal councils. Sector-Specific Licenses: Sector-specific licenses are required for industries such as finance (regulated by Bank Negara Malaysia), healthcare and F&B (regulated by the Ministry of Health), and telecommunications (regulated by MCMC). For online businesses or e-commerce platforms, registration with the Malaysia Communications and Multimedia Commission (MCMC) and compliance with the Consumer Protection regulations may be required. Special Permits or Approvals: For businesses involved in import/export, manufacturing, or foreign labor employment. May require clearances from agencies like MITI, Customs Department, or Immigration Department. => More Information: Company Formation in Labuan, Malaysia

Why do companies incorporate in Labuan?

Companies incorporate in Labuan for its strategic location, tax efficiency, and flexible business environment. As a midshore financial center under Labuan IBFC, it offers key advantages for trading, holding, and financial services. Low tax rates: 3% on trading profits or 0% for non-trading/holding companies Full foreign ownership and free repatriation of profits Access to select double tax treaties via Malaysia, but applicability depends on the partner country and nature of the income. Fast incorporation (5–7 days) with low capital requirements Confidentiality: Beneficial owner information is filed with the Labuan FSA but is not available to the public, ensuring confidentiality while maintaining regulatory oversight. Ideal for: International trade, investment holding, fintech, fund managementLabuan companies may access certain Malaysian double tax treaties, but applicability depends on the partner country and nature of the income. Investors should check whether Labuan entities are covered under relevant DTAs.This makes Labuan especially attractive for international trading companies, holding structures, investment funds, wealth management, and fintech ventures looking to operate across Asia with tax efficiency and legal clarity.

How to search for a company in Labuan?

If you want to search or verify a company that is registered in Labuan, follow the below steps to check if the company is licensed or recognised under the jurisdiction:Step 1: Visit the Labuan FSA official websiteVisit www.labuanfsa.gov.my – this is the official site of the Labuan Financial Services Authority, which regulates all licensed entities within the Labuan International Business and Financial Centre.Step 2: Visit the Licensee ListOn the home page, look for the Licensee List link (usually in the List & Schedule or Licensees menu). The website provides downloadable PDFs or search lists of licensed institutions.Step 3: Search by category or nameIf you know the business type or firm name (e.g., trust company, insurance company, fund manager), scroll down the corresponding list to locate the firm information. Each entry lists the business type, license number, and firm name.Step 4: Interpret the list of entities mentionedObserve that the listing would include only licensed and registered companies (i.e., insurers, fund managers, trust companies, banks). Private Labuan companies that do not require licensing (i.e., normal trading or holding businesses) are not listed.Step 5: Ask for verification by a Labuan trust companyIf the company cannot be located in the Licensee List but you need to verify its incorporation anyway, you will have to reach out to a Labuan-licensed trust company or corporate service provider. These companies have an in-house registration database and can determine the legality status of the company, normally on formal application and due diligence.Step 6: Take care of confidentiality requirementsLabuan's privacy regime is strong. What this means is that, unlike Malaysia's local company register (SSM), Labuan does not offer open-access databases on all business entities. Company searches typically require professional assistance or regulatory support.For investors or businesses looking to register or verify a Labuan entity efficiently, professional service providers such as Offshore Company Services can assist with company searches, licensing checks, and compliance, ensuring full due diligence in line with Labuan regulations.=> Full Information: Everything You Need to Know About Labuan Company Search

Does Malaysia have any double tax agreements in place

Yes, the country has signed double tax agreements with 65 countries.

What is a business license in Malaysia?

What is a business license in Malaysia? In Malaysia, a business license is a legal permit from the government that authorizes a person or company to carry out business within this particular country. This is a law for both local and foreign businesses in order to guarantee that local operation complies with Malaysia's laws, Safety Norms and Regulations.

A business license in Malaysia may refer to one or more permits depending on the business nature and location, including:

A premise license
Signboard license
Sector-specific approvals

Securing a business licence is very important not only for legal grounds but also because it would build the credibility of the customers, suppliers and financial institutions. Operating without the appropriate licenses can result in fines, legal action, or forced business closure.

=> More Information: Company Formation in Labuan, Malaysia

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