Doing business in Malaysia through a Labuan Company
A Labuan company is an excellent business entity incorporated in a low tax jurisdiction which allows companies to i) establish a marketing office in some other parts of Malaysia, specifically Kuala Lumpur and Johor Bahru and ii) hire local or expatriate staff to work in Malaysia.
- All Labuan companies can lease office premises in Kuala Lumpur and/or Iskandar Malaysia, Johor Bahru;
- A Labuan company cannot issue sales invoices to Malaysia customers. However, all other global income can be booked in the Labuan company;
- All Labuan companies can secure Malaysia employment visas for staff. The number of staff in the Malaysia Marketing Office should not exceed four;
- All Labuan companies must secure and maintain an office space in Labuan at all times if they plan to hire expatriate staff.
- There is no minimum share capital requirement for a Labuan company;
- A Labuan company must pay either a 3% tax on net audited profits, or a fixed sum of US$6,000. A Labuan offshore company which does not trade is not required to pay tax;
- The name of the Labuan Company must be easily legible in Romanized characters, printed on a signboard affixed at the entrance of the marketing office;
- In addition to the annual Labuan Government fees, an annual fee of MYR7,500 will be payable to the Malaysia Government.
Malaysia work permit eligibility
- To be eligible for Malaysia work permit, the employee of a Labuan company must be one of the following:
- Top managerial officer e.g. Managing Director, Principal Officer;
- Executive Officer, Chief Financial Officer, Chief Operating Officer;
- Middle management e.g. Manager, Assistant Manager;
- Professional e.g. Accountant, Lawyer, Consultant, Underwriter;
- Technical expert e.g. IT Specialist or other specialist related to Labuan trading activity.
- The employer must have a valid address in Malaysia;
- The applicant must have the technical and academic qualification, professional certificate or relevant working experience related to the position applied.
12 Steps to incorporate a company and obtain the work visa
- Our Client settles our fees and signs Healy Consultants’ engagement letter;
- Healy Consultants provides our Client with a detailed engagement plan, outlining a roadmap for the Labuan company setup and obtaining visa, thus minimizing unwanted surprises and meeting Client expectations;
- Healy Consultants Compliance Team receives the required corporate and personal due diligence information from our Client;
- Before Healy Consultants starts procedures for the Labuan Company formation, our Client confirms the corporate structure, including shareholders and directors.
- Healy Consultants Incorporation Team performs a company name search with Registrar of Companies and, if approved, we begin setting up your offshore company;
- Healy Consultants Incorporation Team emails i) Consent to Act as director and shareholder and Memorandum and ii) Articles of Association to our Client for signature and courier-back;
- Healy Consultants Incorporation Team liaises with the Labuan FSA to complete Labuan company registration;
- Once the Certificate of Incorporation is received from the Labuan Registrar of Companies. Our team will immediately email it to our Client. Our Client can sign a lease agreement for a Malaysia office;
- Healy Consultants submits the Malaysia work permit application to Labuan Financial Services Authority (FSA) for their approval;
- Subsequently, Healy Consultants submits the work permit application to the Labuan Immigration Department. The processing time is approximately 3 weeks;
- Upon approval of the Immigration Department, the applicant is required to travel to Labuan in order to have their passport endorsed with the work permit. Our Clients staff are legally allowed to live and work in Malaysia;
- Following completion of the engagement, Healy Consultants e-mails an Engagement Feedback Survey to our Client.
Post-incorporation/work permit application steps
Labuan LLC and Malaysia visa costs in year 1 will amount to US$3,900 and annual company costs in year 2 and thereafter amount to US$1,570. Average engagement fees approximate US$13,350 including i) Labuan company formation ii) company secretary and legal registered office iii) government registration fees iv) corporate bank account v) tax registration vi) accounting and tax and vii) Malaysia business visa for one person. Press this tab to view a sample draft invoice for Labuan LLC and Malaysia visa: