Labuan is a tax haven. The region of Malaysia has a maximum of 3% corporate income tax rate and welcomes investors from all around the world to set up a company.
Almost No Taxes
The corporate tax rate for investment activities is 0% while you need to pay 3% on audited net profits if your company partakes in trading. Alternatively, trading firms can also pay RM 20,000 fixed tax.
There are no indirect taxes like service tax, sales tax, GST, VAT, and Custom Dury. If you are planning to set up your company in Labuan and reside outside Malaysia (foreign director), you won’t have any personal income tax. Again, with 0% stamp duty and no withholding tax and 50% exemption on gross employment income for non-Malaysian managers, Labuan is one of the most attractive regions to have a business.
Even being a tax haven, Labuan is known for its tax transparency and exchange information. The territory of Malaysia has DTAs with more than 70 countries, meaning that you won’t be taxed twice if you are running an international venture.
Is 100% Foreign Ownership Allowed in Labuan?
Yes, and it is one of the main reasons the territory is becoming more and more popular among international investors.
Availability of an Offshore Registration
An offshore company is a company that has been registered in one place but does its business in another country. This allows the company to make a profit in a region, at the same time, take tax and other benefits of a more favourable jurisdiction.
Once you register a company in Labuan, you can conduct your business activities from anywhere in the world, and still pay a very low tax.
Easy to Incorporate a Company
Of course, there are some requirements and officialities, but with the right guidance, it won’t take more than a month to register a company in Labuan.
Here are the requirements to open a company in Labuan:
- At least one director who doesn’t necessarily need to reside in Labuan.
- Between 1 to 50 shareholders. The director can be a shareholder.
- There isn’t a minimum investment requirement. However, having a minimum share capital of at least USD 10,000 is going to improve the chances of your application being accepted.
- You need to hire a resident secretary. The secretary should be an approved officer of a Labuan trust or its wholly-owned subsidiary.
- A registered address, which should be a real physical address and not just a PO Box Number. The registered address is the office of the secretary.
Do I Need to be Physically Present in Labuan to Set up a Company?
You see, running a company in Labuan is great, but registering can be a hassle, especially if you don’t have experience or familiarity with the Malaysian registration processes. Furthermore, mismatching documents will unnecessarily extend the registration time, so you need proper guidance.
You don’t need to travel to Labuan if you should work with a Corporate Service Provider that can accept your requirements and register your company for you. You can also take their help to set up a Labuan offshore company.