Labuan Company Formation Service

Labuan Company

Two tax systems

Incorporated under Labuan Company Act, Labuan companies are also under the ruling of Labuan Business Activity Tax Act (LBATA). LBATA is designated for attracting non-Malaysian capital (i.e. any currency other than MYR) to construct their international business, so it offers attractive tax benefits to Labuan companies:

• Zero tax when it is doing “investment holding” business; OR
• 3% profit tax on its annual audited account when it is a “trading” company dealing with non-Malaysian entities; OR
• Flat fee of RM20,000 when it is a “trading” company dealing with non-Malaysian entities, but audited account is exempted;

Tax benefits by LBATA is huge. To prevent tax avoidance, LBATA rules that Labuan companies can deal with Malaysian entities if and only if these Malaysian dealings are conducted in non-RM and are taxed under the Malaysia Income Tax Act (ITA), profit tax rate is 24% of audited profit.

Compulsory reporting on dealing with Malaysian

When Labuan company deal with Malaysian entities, it needs to report to Labuan FSA after the transaction is made whether the deal is profitable or not. When the Labuan company has reported deals with Malaysian, it is required to to prepare audited, and the profit sourced from Malaysian entities is subjected ITA tax rate.

Self-election to ITA

Labuan companies can voluntarily make tax election under ITA. If the election is made, it will permanently lose the tax benefits under LBATA, but it will enjoy:

• • Access to Malaysia’s double taxation agreement network of more than 70 countries including Germany, India, Australia, Japan, United Kingdom, Netherlands, Sweden, Luxembourg, Chile, Indonesia, South Africa, Spain, South Korea, Hong Kong, and mainland China.

Starting offshore financial service

Labuan company can apply for Labuan’s financial service-related licenses such as banking, insurance, factoring, money brokering, securities, fund management, and leasing.

Labuan bank account

Requirement

• Minimum one director and one shareholder, director and shareholder can be the same person.
• Corporate directors and shareholders are allowed.
• Nationality (or place of incorporation) of directors and shareholders are not restricted.

Service Scope

• Labuan “Investment Holding” Company incorporation
• Labuan “Trading” Company incorporation
• Labuan incorporation handling
• Local company secretary
• Local registered office address
• Accounting and taxation optimization relating Hong Kong company

Service Fee

Our service fee is based on the combination of 2 factors:

• Time spent
• Level of expertise required

We can incorporate Labuan companies based on your preference. Please contact us to make an appointment, we are glad to provide free initial consultation for you.