Labuan company registration

Labuan company registration

DOING BUSINESS IN LABUAN

Since 2003, Healy Consultants has assisted our Clients with starting their business in Labuan. Our services include i) Labuan business registration ii) government license registration iii) business bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.

Press the link headings below to read detailed, relevant, up to date information.

  • Advantages and disadvantages

    Advantages of Labuan company registration

      Bolivia business registration advantage
    1. It is possible to register a Labuan offshore company with only 1 director and 1 shareholder, who can be of any nationality. The minimum paid-up share capital required is US$1 and our Clients do not need to travel to complete engagement;
    2. Our Clients enjoy several tax benefits with their Labuan offshore company including:
      • Offshore companies established in Labuan have the option of paying corporate tax of either i) 3% on profits or ii) a flat sum of US$6,000. Companies can elect the best option for them in each tax year;
      • Companies that choose to pay a flat corporate tax of US$6,000 do not require auditing;
      • Companies conducting non-trading activities, such as holding companies, are exempt from corporate tax in Labuan;
      • There are also no sales tax, VAT, custom duties and stamp duties;
      • Our Clients will not have to pay withholding taxes on i) dividends ii) royalties and iii) interest payments;
      • Non-resident directors of a Labuan offshore business do not have to pay personal income tax on director fees, unlike non-resident directors of onshore Malaysian companies who have to pay personal income tax on their director fees at a rate of 26%;
      • Labuan based companies can take advantage of Malaysia’s double tax avoidance treaties with 68 countries including Canada, China, India, Singapore, and the United States;
      • Our Clients’ offshore companies in Labuan will not be seen as evading taxes. Malaysia is in fact listed on the OECD “White list” of jurisdictions that have adopted international standards of transparency and exchange of information between countries.

    3. Businesses in Labuan enjoy easy registration procedures and compliance requirements including:
      • Our Clients do not need a local Malaysian shareholder. A Labuan company can be 100% foreign owned;
      • Our Clients’ personal details remain confidential, as there are no public records of companies registered with the Labuan International Business and Financial Center;
      • Our Clients can be the sole director of their Labuan Company even if they do not reside in Malaysia;
      • There are no trade license requirements for several industries including i) e-commerce ii) import/export and iii) consultancy businesses;
      • Labuan offshore companies can open a marketing office in Kuala Lumpur and Johor Bahru, to i) facilitate meetings with Clients and ii) to build relationships with potential Clients. This enables our Clients to find Clients in Malaysia through a Labuan Company.

    Disadvantages of Labuan company registration

    1. Although Labuan is not blacklisted as a tax haven, Labuan companies still face some discrimination such as:
      • Labuan offshore companies are less reputable than offshore companies in neighboring Singapore and Hong Kong;
      • All Labuan companies are required to have an “(L)” in its name, which is undesirable for Clients who do not wish to reveal that their company was incorporated in Labuan;
      • Some countries including Australia, the U.K, and Japan that have a DTA with Malaysia, have excluded Labuan from double taxation treaty benefits

    2. Labuan is not an efficient place to do business in Malaysia because:
      • A Labuan company cannot make sales in Malaysia, nor sign sales contracts;
      • A maximum of 3 staff can be hired in Malaysia;
      • A Labuan company cannot open a Malaysian Ringgit corporate bank account. Hence local payments cannot be made or received in the local currency.

    3. It is difficult to register a financial services company in Labuan because:
      • The annual financial license fees can be up to US$30,000;
      • Our Clients will struggle to find and retain talented employees. Because Hong Kong’s and Singapore’s financial industries are ranked the 3rd and 4th best in the world respectively, employees are eager to migrate to these neighboring countries;
      • Malaysian assets held by Labuan companies may not be attractive to foreign buyers. Assets valued in Malaysian Ringgit are likely to lose value, because the Ringgit is a volatile currency.

  • Best uses for a Labuan company

    1. Our Clients can conduct business in Asia through a Labuan offshore company because:
      • With a Labuan company, our Clients can open a foreign currency corporate bank account anywhere in Malaysia;
      • Through a Labuan company, our Clients’ can lease Malaysian office premises and secure Malaysia visas for expatriate staff;
      • Labor costs in Labuan are low, as the minimum wage is only US$225 per month;
      • Our Muslim Clients can take advantage of Labuan being a hub for Islamic finance. There are more than 40 Shariah compliant foundations in Labuan.

Company registration

  • Time to incorporate: Two weeks
  • Cost to set up: US$8,350
  • Minimum capital: US$1
  • Registered office: Registered address

Required appointments

  • Shareholders: 1
  • Directors: 1
  • Company secretary: Yes
  • Resident director: No

Key facts

  • Corporate tax rate: US$6,000 or 3%
  • Corporate tax base: Worldwide
  • Shelf companies: Unavailable
  • Main company type: Private Limited

Contact us

For additional information on our company registration services in Labuan, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Kunal Fabiani, directly:
client relationship officer - Kunal
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