Business Support / Tax Filing Service
Tax Filing Service
Labuan entities, irrespective of their operational status, are required to complete their annual corporate tax filing within three months following the conclusion of the fiscal year, or any extended period authorized by the Director-General. This obligation stems from recent amendments to Section 5 and Section 10 of the Labuan Business Activity Tax Act 1990 (LBATA). The assessment of tax liabilities depends on the specific Labuan business activities undertaken throughout the financial year, with the standard fiscal year-end set on December 31st, unless an alternative date is specified.
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In compliance with these regulatory revisions, Labuan entities are mandated to undergo audit procedures and submit the prescribed tax forms within three months from the commencement of a given assessment year, effective from the assessment year 2022. The mandatory income tax return forms (IRTF) required for submission to the Inland Revenue Board of Malaysia (LHDN) annually before March 31st include:
- Form LE1: Return of Profits by a Labuan Entity pursuant to Section 5 and Section 10 of the LBATA
- Form LE4: Statutory Declaration pursuant to Section 5 of the LBATA (related to Labuan trading activities)
- Form LE5: Statutory Declaration pursuant to Section 10 of the LBATA (related to Labuan non-trading activities)
- Audited Financial Statements
All affected Labuan entities are obligated to engage an approved external auditor in Labuan for the preparation of Audited Financial Statements for the relevant assessment year and Management Accounts for audit purposes.
In facilitating compliance with these tax obligations, entities may seek professional assistance from reputable firms such as BBS Trust, known for their expertise in trust services, corporate governance, and tax compliance. BBS Trust offers comprehensive solutions tailored to meet the specific needs of Labuan entities, ensuring adherence to regulatory requirements and effective tax management strategies.
Labuan Business Activity | Form LE 1 | Form LE 4 | Form LE 5 | Duly Signed Audit Report | |
---|---|---|---|---|---|
Trading Activity
Only one business activity code
| |||||
More than one business activity code
| |||||
Non-Trading Activity
Only one business activity code
| * Submission of Non-Audited Financial Statement if comply with Substance Requirement | ||||
More than one business activity code
| * Submission of Non-Audited Financial Statement if comply with Substance Requirement |
Labuan business activities not included under P.U.(A) 423/2021, P.U.(A) 482/2021, and Code 20 will be taxed at a rate of 24% under the Malaysian Income Tax Act 1967 (ITA). Entities must obtain a tax file number from the Inland Revenue Board of Malaysia (IRBM), Labuan F.T. Branch, and appoint a licensed tax agent for ITA submissions.
To file taxes under the Labuan Business Activity Tax Act (LBATA) and be subject to a 3% tax rate, the following conditions must be satisfied:
- The Labuan entity must conduct a Labuan Business Activity (either trading or non-trading) listed under P.U.(A) 423/2021, P.U.(A) 482/2021.
- The Labuan entity must meet the economic substance requirements, which include maintaining a specified number of full-time employees and meeting the required annual operating expenditure in Labuan.
Dormant Labuan Entities
A Labuan entity is classified as dormant under the following conditions:
- It has not commenced operations since its incorporation.
- It has previously operated or conducted business but has now ceased all operations or business activities.
- It has had no significant accounting transactions for one financial year prior to a substantial change (i.e., 50% or more) in its equity shareholding. This means there are no recorded entries in the company’s accounts except for the minimum expenses required for compliance with statutory requirements. These minimum expenses include:
- Filing the company’s annual return with the Companies Commission of Malaysia or Labuan Financial Services Authority.
- Secretarial fees for the filing of the company’s annual return.
- Tax filing fees.
- Audit fees.
- Accounting fees.
A Labuan entity is not deemed dormant if it owns shares, real properties, fixed deposits, or other similar investments, including any income such as rent, or interest received from these investments.
During the annual tax filing, a dormant Labuan entity must submit a management account duly signed by the director.
Labuan Business Activity | Form LE 1 | Form LE 4 | Form LE 5 | Duly Signed Audit Report | |
---|---|---|---|---|---|
Dormant
(Submit LE1 together with LE4 or LE5) | If A duly signed report is not prepared, the management account is acceptable. |
Advantages of Partnering with Us
- Expertise and Accuracy:
Tax professionals have extensive knowledge of tax laws and regulations, ensuring your tax return is accurate and compliant, which reduces the risk of errors and potential audits.
- Time-Saving:
Preparing and filing taxes can be very time-consuming. A tax filing service handles all the paperwork and calculations, freeing up your time for other important tasks or personal activities. - Maximizing Deductions and Credits:
Tax professionals are skilled at identifying deductions and credits you might miss, potentially lowering your tax liability and increasing your refund. - Stress Reduction:
Tax season can be stressful, especially with complex financial situations. A tax filing service alleviates this stress by managing the entire process for you, ensuring everything is handled smoothly and efficiently.
Elevate Your Tax Filing Experience with BBS Trust
BBS Trust boasts a robust and highly skilled backend team, including a dedicated accounting and tax advisory team, to expertly handle your tax filing needs. With their extensive knowledge and experience in tax regulations, they ensure accurate, compliant, and timely tax returns, maximizing your deductions and credits while efficiently managing complex financial situations. Trust BBS Trust to streamline your tax filing process with professionalism and precision.
Ensuring Accurate Tax Compliance from the Outset Minimizes Future Hassles!
Why Choose BBS?
We understand the challenges encountered by entrepreneurs who are operating in a highly competitive and ever-changing environment. With more than 25 years of combined experience, we provide comprehensive business structure advisory and related services to assist entrepreneurs in navigating through challenges.
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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 management account and fulfilled substance requirement.
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.