Labuan offshore companies
Since 2003, Healy Consultants assists our Clients to incorporate offshore businesses in Labuan, Malaysia. Most of our Clients are interested by the formation of Labuan offshore companies to be used as trading or holding companies. In this case, registration procedures are completed with the Malaysia International Business and Finance Center (Malaysia IBFC).
What is a Labuan offshore company?
- An offshore company is a non-resident company in Malaysia. Such business entity is usually used as a trading company to conduct business from Labuan with non-residents or as an holding company;
- Offshore companies in Labuan are allowed to: i) conduct business with Malaysia nonresidents ii) carry on shipping operations to anywhere but Malaysia iii) transact in all currencies but MYR (the local currency is still allowed for settling administrative and statutory expenses) and iv) offer product and services in non-regulated industries.
What are the advantages of establishing an offshore company?
- Setup of an offshore company is easy and only require i) US$1 of share capital ii) one shareholder and iii) one director, who both can be foreigners and are not required to be ordinarily residents in Labuan or other parts of Malaysia;
- Labuan offshore companies are subject to reduced corporate tax, either in the form of a flat tax or a reduced rate of 3% over their global earnings. They will furthermore not be subject to audit requirements if they choose to pay the flat tax;
- Labuan offshore companies can open representative offices in Kuala Lumpur and Johor Bahru (the closest Malaysian city to Singapore). This way, entrepreneurs setting up a Labuan company can do business in Malaysia using a Labuan company.
What an offshore company cannot do?
- For business planning to trade in Malaysia or to offer banking, insurance and financial services from Labuan, it is however not possible to form an offshore company in Labuan. These companies must be incorporated with the Companies Commission of Malaysia and eventually licensed with the Malaysia Securities Commission or the Central Bank;
- Clients can however setup regular Malaysian LLCs, PLCs, branch offices and representative offices in Labuan as well as other parts of Malaysia. Please visit our Malaysia business setup page for further details.
|On shore LLC||Offshore LLC|
|How long to set the company up?||4 weeks||2 weeks|
|How long to open company bank account?||4 weeks||4 weeks|
|Wholly Foreign owned?||Yes||Yes|
|Minimum paid-up share capital?||US$1||US$1|
|File annual tax return?||Yes||Yes|
|Corporate Bank Account?||SCB||HSBC|
|Does our Client need to travel?||No||No|
|Resident director required?||Yes||No|
|Resident shareholder required?||No||No|
|Minimum directors allowed?||2||1|
|Malaysian resident company secretary required?||Yes||Yes|
|Corporate shareholders allowed?||Yes||Yes|
|Corporate director(s) allowed?||No||Yes|
|Public register of shareholders and directors?||Yes||No|
|Corporate Tax Rate?||25%||3% or US$6,000|
|Statutory audit required?||Yes||Only if paying tax at 3%|
|Allowed to invoice Malaysian Clients?||Yes||No|
|Allowed to sign sales contracts with Malaysian Clients?||Yes||No|
|Allowed to import and export goods?||Yes||No|
|Can rent an office in Labuan?||Yes||Yes|
|Can buy Labuan property?||Yes||Yes|
|Can own equity in other Labuan companies?||Yes||Yes|
|Total business setup costs in Yr. 1||US$10,580||US$8,350|
|Subsequent annual costs (incl. accounting and tax fee)||US$4,915||US$5,370|
|Sample Engagement fee Invoice|