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What is a Labuan Company?
What is a Labuan Company?
A Labuan company is an entity incorporated or registered under the Labuan Companies (Amendment) Act 2022 (LCA 2022). Both residents and non-residents of Malaysia can establish a Labuan company, which benefits from Labuan’s attractive tax rates and flexible legal framework. The company structures available include:
Company Limited by Shares
Company Limited by Guarantee
Unlimited Company
Additionally, Labuan companies can operate as:
Labuan Company
Labuan Foreign Company
Why Use a Labuan Company?
Why Use a Labuan Company?
Labuan companies offer a variety of benefits for international businesses, including:
Access to over 70 Double Taxation Agreements (DTAs) signed by Malaysia.
A competitive tax regime, with:
3% tax on net audited profits for Labuan trading activities, provided certain substance requirements are met.
0% tax on non-trading activities (e.g., holding investments in securities, stocks, loans, etc.).
Option to make an irrevocable election to be taxed under the Malaysian Income Tax Act (MITA 1967) at the prevailing rate (24%).
A strategic location within the Asia Pacific region, offering ease of doing business with access to banking and trade finance services, skilled labor, and English/Chinese-speaking talent.
No indirect taxes, foreign exchange controls, or other hidden costs.
Flexibility for marketing offices anywhere in Malaysia for Labuan financial services companies.
Requirements to Set Up a Labuan Company
Requirements to Set Up a Labuan Company
Setting up a Labuan company requires meeting specific regulatory requirements:
Share Capital:
Can be in any currency.
Requires a minimum of one share (no par value).
Number of Directors:
At least one director, who must be a resident.
Company Secretary:
Must have a Labuan Trust Company as the company secretary.
Registered Office:
The company must have a registered office, typically the principal office of a Labuan Trust Company.
Accounting Requirements:
Labuan companies must submit audited accounts as part of their tax filings.
Economic Substance Requirements:
Must maintain a minimum number of employees in Labuan.
Must meet a specified level of annual operating expenditure based on the company’s business activities.
Fees for Setting Up a Labuan Company
Fees for Setting Up a Labuan Company
The following are the fees payable to the Labuan Financial Services Authority (LFSA) for establishing a Labuan company (excluding the cost of engaging a Labuan Trust Company as company secretary):
Reservation of company name: USD 15
Incorporation fees:
Less than MYR 50,000: USD 300
MYR 50,000 to MYR 1 million: USD 600
Over MYR 1 million: USD 1,500
For foreign Labuan companies: USD 2,000
Annual Fees:
Labuan company: USD 800
Foreign Labuan company: USD 1,500
Conclusion
Labuan companies offer a unique blend of benefits, including competitive taxation, ease of doing business, and access to a thriving business ecosystem. Whether you're seeking to optimize your tax position, expand internationally, or tap into Asia’s burgeoning markets, a Labuan company can provide the flexibility and resources you need to succeed.
For more information on setting up a Labuan company, contact DingerCo now today and explore how Labuan can be the ideal hub for your business.
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