Incorporating in Labuan


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Forming a company in Labuan is a secure way to conduct business in Labuan and the Asia Pacific region. Although incorporating in Labuan is complicated, Healy Consultants efficiently completes company all requirements for starting a business in Labuan. The following information will help you determine whether forming a company in Labuan is the best solution for you:

When incorporating in Labuan, 2 local resident directors must be appointed to each Labuan company and a company secretary is required. Also when incorporating in Labuan, note that a company director can also act as the company secretary.

A Labuan registered office is required when incorporating in Labuan.

Those considering forming a company in Labuan should note that according to the 2012 Index of Economic Freedom by The Heritage Foundation, Malaysia ranks poorly as having the world's 53rd-freest economy, and scores at 30% in terms of investment freedom and capital flows.

Labuan is a low-tax jurisdiction. A Labuan Offshore Company which is trading is required to pay either a 3% tax on net audited profits, or a fixed sum of RM20,000 (approximately US$6,515). A Labuan Offshore Company which does not trade is not required to pay tax.

To support those starting a business in Labuan, the country has signed double taxation treaties with 68 countries.

Labuan company formation may be perceived as an offshore tax haven structure. Additionally, Malaysia is ranked poorly as the world's 60th least corrupt country, according to the 2011 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians.

When incorporating in Labuan, note that there are no restrictions on the repatriation of capital and dividends from Labuan.

Healy Consultants can open a international corporate bank account to support Labuan company formation. Healy Consultants works with internationally recognised banks such as HSBC, Standard Chartered and Citibank to provide corporate bank account services.

A Labuan Offshore Company is required to keep a set of accounting records in Labuan. However, non-trading companies, as well as those trading companies which elect to pay the RM20,000 (US$6,515) tax, are not required to file financial statements.

10.

Those forming a company in Labuan should note that the Labuan government offers various incentives for those who are starting a business in Labuan. These include:

i) Income derived from outside Labuan and remitted to Labuan by resident companies (except those involved in the banking, insurance, air and sea transportation business), non-resident companies and non-resident individuals are exempted from tax;

ii) Investors starting a business in Labuan and invest in the manufacturing sector enjoy tax incentives under two broad categories: Pioneer Status or Investment Tax Allowance;

iii) Investors starting a business in Labuan who are granted Pioneer Status enjoy a 5-year partial exemption from the payment of income tax; applications received from companies located in the “Eastern Corridor” of Peninsular Labuan enjoy 100% tax exemption on their statutory income during their 5-year exemption period;

iv) Investors starting a business in Labuan and are granted the Investment Tax Allowance (ITA) get an allowance of 60% on qualifying capital expenditure (such as factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date on which the first qualifying capital expenditure was incurred;

v) Investors starting a business in Labuan to promote or are involved in the production of promoted products in areas of new and emerging technologies, qualify for both the Pioneer Status and Investment Tax Allowance incentives;

vi) Investors starting a business in Labuan that engage in strategic projects that involve heavy capital investments with long gestation periods, have high levels of technology, and have a significant impact on the economy, qualify for both the Pioneer Status and Investment Tax Allowance incentives;

vii) Investors starting a business in Labuan should note that small-scale manufacturing companies set up in Labuan with shareholders' funds not exceeding RM500,000 (approximately US$163,000) and holding at least 60% in equity are eligible for the Pioneer Status and Investment Tax Allowance incentives;

viii) Investors starting a business in Labuan that propose to manufacture promoted products or to participate in promoted activities in an Industrial Linkage Programme are eligible for the Pioneer Status and Investment Tax Allowance incentives;

11.

When incorporating in Labuan, a licence is required for the following activities:

i) Manufacturing

ii) Banking

iii) Oil and gas industry

iv) Wholesale and Retail Trade

v) Building and Construction

For further information on incorporating in Labuan, email email@healyconsultants.com or telephone us at (+65) 6735 0120.

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