Company Structures / Labuan Company
Labuan Company
A Labuan company is a company incorporated or registered under the Labuan Companies Act 1990 (LCA 1990). Residents and non-residents of Malaysia are allowed to establish Labuan companies. Companies incorporated under this Act while meeting certain conditions, including the substance requirements will be taxed at preferential rates.
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Key Advantages of Labuan
- NO withholding tax on payments of dividend or interest made to non-Resident.
- NO stamp duty on all instruments executed by Labuan entity in connection with Labuan business activity.
- NO foreign exchange controls
- NO capital gain tax / inheritance tax.
- NO Goods and Services Tax (GST) / Sales and Service Tax (SST) / value added tax (VAT).
- Fully tax exemption for director’s fee received by a foreigner.
- Enjoy DTA (Double Tax Avoidance) tax treaties with more than 70 countries.
Tax Regime in Labuan
Labuan Business Activity Tax Act 1990
Labuan Trading Company
Labuan trading company are taxed under Labuan Business Activity Tax Act 1990 which is 3% of its audited net profit with fulfilled substance requirements.
Labuan Non-Trading Company
Labuan Non-Trading Company is also an investment holding company. A Labuan investment holding company is divided to two category which is pure and non-pure equity holding.
Labuan Non-Trading Companies are not subjected to tax (0% tax) with the submission of yearly management account and fulfilled substance requirement.
Document required for company incorporation
Individual (shareholder/director)
- Passport (foreigner) / NRIC (Malaysian)
- Proof of address (such as the most recent utility bill, which does not exceed 3 months)
For corporate’s shareholder/director
- Company registration certificate
- Memorandum and Articles of Association
- Latest annual return
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FAQ
One share in any denomination in foreign currency except Malaysia Ringgit
Approximately 7-14 business days upon complete collection of the required documents
The director and the shareholder must be at least one person and can be the same person. It
can be fully owned by a foreigner.
A resident secretary is required.
• Trading company – please see attachment “LFSA – Code 20” for allowed activities under trading company.
• Non-trading company/investment holding – income mainly from dividend or interest.
*Kindly take note that the tax for general trading or import/export services is ranging from 15% – 24% under Malaysia Income Tax Act 1967.
• Trading company companies are taxed under Malaysia Income Tax Act 1967, which the tax ranging from 15%-24% of its profit except for Labuan licensed company. (Audit required)
• Tax for Labuan licensed company and business nature under “Code 20” is 3% of its audited net profit with fulfilled its substance requirements. (Audit required)
• Investment holding companies are not subjected to tax (0% tax) with the submission of yearly
No.
• CTC of Passport
• CTC of Proof of address (such as the most recent utility bill, internet bill, insurance statement, etc)
*CTC – Certified True Copies: Certification of documents must be made by competent persons such as a notary public, solicitor, chartered secretary, or certified public accountant,
and made in accordance with the law in Malaysia or in the country where the certification was made.