Labuan Company (LC) Overview

A Labuan Company (LC) offers numerous advantages and opportunities for both residents and non-residents of Malaysia. Here are the key aspects:

Incorporation and Registration

• Incorporated or registered under the Labuan Companies (Amendment) Act 2022.

• Can be a company limited by shares, limited by guarantee, or an unlimited company.

• Capable of participating in various business activities.

• Requires licensing if undertaking businesses defined under the Labuan Financial Services and Securities (Amendment) Act 2022 or the Labuan Islamic Financial Services and Securities (Amendment) Act 2022.

Ownership and Participation

• Can own controlling stakes in a Malaysian domestic company.

• Residents and non-residents of Malaysia can establish an LC.

• 100% foreign ownership is allowed.

Key Characteristics

• Must have at least one resident director and one resident secretary.

• No minimum capital or authorised share capital requirements.

• Shares issued have no par or nominal value.

• Must have a registered office in Labuan, which is the office of the resident secretary.

• Incorporation can be completed within 24 hours.

• No bearer shares are allowed.

• Accepted for listing on key international exchanges, including:

  •   National Stock Exchange of Australia

  •   Hong Kong Stock Exchange

  •   Singapore Exchange

  •   NASDAQ Dubai

To understand more about Labuan Companies, click here for detailed information or contact DingerCo now for assistance.

Labuan Protected Cell Companies (PCC) 

A Labuan Protected Cell Company (PCC) offers a flexible and efficient structure for managing diverse investment and business activities. Here are the key features:

Formation and Structure

• Incorporation: Can be incorporated as a Labuan Company (LC) or converted from an existing LC. It is a limited liability company with a legal entity capable of forming “cells”.

• Asset Management: Able to hold assets or investments divided into multiple classes, catering to different objectives of individual investors while preserving the independence of each cell.

Cells of a Labuan PCC

• Core Function: May act as a core for holding non-cell or general assets.

• Cell Segregation: Can consist of any number of cells intended to segregate and protect the assets of each respective cell.

• Protection: Each cell is ring-fenced, protecting it from the debts and liabilities of other cells.

• Legal Separation: Neither the core nor the individual cells are separate legal entities, but each cell is legally separated from the others and can conduct business independently under the PCC “umbrella”.

Permitted Activities

• Captive Insurance/Takaful: Conducts Labuan captive insurance or captive takaful business.

• Mutual Funds: Operates as a mutual fund or Islamic mutual fund.

Benefits of Setting Up a PCC

• Risk Management: Provides flexibility in managing risk portfolios and funds.

• Tax Efficiency: Serves as an efficient tax planning tool.

• Asset Protection: Acts as an effective asset protection tool.

To understand more about Labuan Protected Cell Companies, click here for detailed information or contact DingerCo now for assistance.

Types of Partnerships in Labuan

Labuan Limited Partnership (LP)

• Structure: A Labuan LP is a business entity comprising two or more partners.

• Partners: Requires a minimum of two partners (one general partner and one limited partner), with a maximum of fifty partners.

• Corporate Partners: Partners may be corporations, except for firms set up for professional practice, which must consist of natural persons and be supplemented with professional indemnity insurance coverage issued by an insurer approved by the Labuan Financial Services Authority.

• Taxation: The Labuan LP is a taxable entity under the Labuan Business Activity Tax Act 1990 and can avail itself of the tax exemptions similar to other Labuan Entities, subject to satisfying the conditions.

Labuan Limited Liability Partnership (LLP)

• Structure: A Labuan LLP is a business entity comprising two or more partners who operate or manage a business together.

• Benefits: Provides the limited liability benefits of a company and the flexibility of a partnership.

• Capabilities: Capable of entering into contracts and holding property in its own name.

• Partners: Requires a minimum of two partners.

• Liability Protection: Shields partners from liability for partnership obligations created by the misconduct of another partner or person, protecting members from personal liability except to the extent of their investment in the Labuan LLP.

• Taxation: The Labuan LLP is a taxable entity under the Labuan Business Activity Tax Act 1990 and can avail itself of the tax exemptions similar to other Labuan Entities, subject to satisfying the conditions.

To understand more about the types of partnerships in Labuan, click here for detailed information or contact DingerCo  now for assistance.

Labuan Foundation 

A Labuan Foundation is a corporate body with a separate legal entity, established to manage its own property for any lawful purpose, which may be charitable or non-charitable.

Types of Labuan Foundations

• Non-Charitable Foundation (Conventional or Islamic)

  • Endowment of properties can only be done by the founder and their assignee.

• Charitable Foundation (Conventional or Islamic)

  • Private: Not permitted to receive donations from third parties or the public.

  • Public: Able to solicit public donations.

Charitable Purposes 

Charitable purposes include but are not limited to:

• Prevention and relief of poverty.

• Advancement of religion, profession, or education.

• Advancement of health, including prevention and relief of sickness, disease, or human suffering.

• Social and community advancement, including care, support, and protection of the aged, people with disabilities, children, and young people.

• Advancement of culture, arts, and heritage.

• Advancement of amateur sport that promotes health through physical or mental exertion.

• Promotion of human rights, conflict resolution, and reconciliation.

• Advancement of environmental protection and improvement.

• Advancement of animal welfare.

• Advancement of facilities for recreation or other leisure-time occupation in the interest of social welfare.

Labuan International Waqf Foundation 

This foundation is designed to hold waqf properties with the objective of managing them for identified beneficiaries and purposes based on the Shariah principles of waqf (endowment in Islam). Click here for detailed information.

Benefits of Setting Up a Foundation in Labuan IBFC

• Legacy Building: Helps in building a lasting legacy.

• Protection from Creditors’ Claims: Assets are protected from creditors' claims.

• Protection from Foreign Claims: Assets are protected from foreign claims and cannot be forcefully liquidated to satisfy other obligations such as claims arising from divorce, lawsuits, or creditors.

• Protection Against Forced Heirship: Offers protection against forced heirship.

• No Compulsory Perpetuity Period: Not subject to a compulsory perpetuity period.

• Founder’s Powers and Rights: The founder can reserve powers and rights.

To understand more about Labuan Foundations for Wealth Management, click here for detailed information or contact DingerCo now for assistance.

Investment holding companies can be broadly divided into two categories:

1. Pure Equity Holding

• Definition: Companies that hold equity participations and earn only dividends and capital gains.

2. Non-Pure Equity Holding

• Definition: Companies that hold a variety of assets and earn different types of income (e.g., interest, rents, and royalties). These companies receive non-dividend income from holding investments such as bonds, sukuk, debt instruments, properties, securities, etc.

To understand the Economic Substance Requirements (ESR) for both categories, click here for detailed information or contact DingerCo now for assistance.

1. administrative services;

2. accounting services;

3. legal services;

4. backroom processing services;

5. payroll services;

6. talent management services;

7. agency services;

8. insolvency related services;

9. management services other than Labuan company management under the First Schedule of the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2021 [P.U.(A) 423/2021]

To understand the Economic Substance Requirements (ESR) for Non-Licensed Trading Activities, click here for detailed information or contact DingerCo now for assistance.

To understand more about the application process for licensed businesses, refer to Step 3: Licensed Business Application.

Tax is one of the inevitable parts of a business. As such, the cost of improper or inadequate handling of tax issues could be devastating and might restrict the development of a company. Often, the corporation tax compliance involves a large amount of management time, effort, and costs. However, Labuan Entity Taxation is simple and straight forward with a fixed annual fiscal tax structure. As your service provider, DingerCo will act and file your Labuan Corporate Tax on your behalf.

Labuan Entity are taxed based on the type of business activity which complied with the Economic Substance Requirement (“ESR’) as stated in Labuan Business Activity Tax Act, generally the following are the type of tax:- 

1. Non-trading-Pure Equity Holding:  Complied to ESR shall be taxed 0% under LBATA 

2. Non-trading-Pure Equity Holding:  Non-compliance to ESR shall be taxed 24% on net audited profits under LBATA  

3. Non-trading-Non-Pure Equity Holding :  Complied to ESR shall be taxed 0% under LBATA 

4. Non-trading-Non-Pure Equity Holding :  Non-compliance to ESR shall be taxed 24% on net audited profits under LBATA  

5. Trading OR Mixed income of non-trading & trading:-

   • Complied to ESR shall be taxed 3% on net audited profits under LBATA

   • Non-compliance to ESR shall be taxed 24% on net audited profits under LBATA

   • Not listed under PU(A)392 shall be taxed 24% under ITA 1967

💡See Also👉 Qualifying to Labuan Corporate Tax Framework

Having issue determine type of tax for your Labuan Entity?? You may click here to check further to generally understand on the type of Tax your Labuan Entity fall under.

A Labuan Certificate of Residence (COR) allows Labuan entities to access the benefits of Malaysia’s Double Taxation Agreements (DTAs) with over 70 countries. This document certifies your Labuan company as tax-resident in Malaysia, enabling you to avoid double taxation, reduce withholding taxes, and ensure smoother cross-border business operations.

Why You Need a COR:

• DTA Benefits: Enjoy reduced tax rates on income like dividends, royalties, and interest.

• Avoid Double Taxation: Ensure that your income is taxed only in one jurisdiction.

• Boost International Business: Minimize tax burdens when engaging with global partners.

How to Get a Labuan COR:

Meet economic substance requirements (such as having a physical office and employees) and submit necessary documentation for approval by Malaysia’s Inland Revenue Board (IRB).

💡See Also👉 Labuan Recruitment Services, Labuan Payroll Services & Labuan Office Setup

Ensure your business gets the tax relief it deserves. Contact DingerCo today for assistance in applying for or renewing your Labuan COR.

Labuan IBFC is an internationally-recognised for its standards and best practices in financial services for both conventional as well as Islamic. For those who are qualified, Labuan IBFC offers various financial products and services to meet your objectives, such as Labuan Leasing, Labuan International Commodity Trading Company (LITC). Click here to understand more.

For licenses application, our complete services begin with the application and advisory, follow up with final approval of the license. Our expertise also covers for your entity ongoing operations, and compliance should you require the service.

As part of our comprehensive services for Labuan companies, we provide Attestation and Legalization Services in Malaysia. This service is essential for clients planning to expand abroad, register businesses, or fulfill legal requirements in foreign countries. With Malaysia’s strategic position as a newly industrialized market and emerging economy, our services ensure that your documents are authenticated and ready for use in international processes.

Click here to understand further on the Attestation and Legalization Services in Malaysia.

Why is Consular Legalization Necessary for Labuan Entities? 

Since Malaysia is not a member of the Hague Apostille Convention, consular legalization is the only method by which documents from Labuan entities can be officially recognized abroad. This process is critical when:

• Applying for foreign visas, work permits, or immigration.

• Expanding businesses internationally or opening foreign branches.

• Registering with foreign authorities, whether for licensing, taxes, or trade.

• Engaging in cross-border financial transactions or establishing partnerships with international businesses.

As the name goes, bookkeeping is all about the process of recording, analyzing and interpreting the financial transactions of a business. To be precise, it involves the recording, storing and retrieving of financial transactions for a company. As such, the bookkeeper is responsible for setting up financial statements for the accountant to perform legal and tax management. An experienced bookkeeper is able to produce good financial records regarding how a business works and then providing accurate information that allows the business to know exactly how well it is doing.

Section 110(1) and (3) of the Labuan Companies Act 1990 stipulates that:-

(1) A Labuan company shall cause to be kept proper accounting and other records as will sufficiently explain the transaction and financial position of the company.

(3) the accounting and other records of a Labuan company shall be kept at the registered office of the company or at such other place in Labuan as the directors think fit and shall at all times be open to inspection by any director and shall be kept in such manner as to enable them to be conveniently and properly audited.

In view of the above, we are pleased to inform you that DingerCo Labuan is offering Safekeeping/Storing of Documents and Book-keeping services to our clients.