How to incorporate a company in Malaysia through Labuan in 2024
For most of our Clients interested in doing business from Malaysia, Healy Consultants Group recommends market entry via a Labuan company. Labuan company incorporation is straightforward, and can be completed in four weeks. Our Client is not required to travel during the engagement. Our local representative will complete all mandatory steps from A to Z.
The steps for starting business in Malaysia through a Labuan company include:
PRE-INCORPORATION
- Consultation: Following a face-to-face meeting or conference call, Healy Consultants Group and the Client agree on: i) specific business activity and license requirements ii) target company names and their availability, and iii) share capital requirements;
- Reserve name: Once formally engaged, our dedicated Labuan relationship manager will conclude a business name search with the Labuan Companies Registrar (IBFC) and reserve several options in order of preference. If available, we file the name reservation and settle the RM50 reservation fee;
INCORPORATION PROCEDURE
- Document preparation: Our team prepares i) Memorandum and Articles of Incorporation ii) Declaration of compliance Form 6 and iii) director/shareholder consent Form 24. In addition, we prefill all other required forms and email them to our Client for e-signature. The Government fee for form submission is RM6,000;
- Company Incorporation: We submit signed documents to IBFC to complete incorporation of the new company. The company is registered within eight business days, after which we email the Certificate of Incorporation (COI) to our Client;
POST-INCORPORATION PROCEDURE
- Tax registration: Following company formation, Healy Consultants Group registers our Client’s company for tax, completing and submitting Form CP600C to the Inland Revenue Board;
- Corporate bank account opening: Once above is completed, we open a local Malaysian corporate bank account with our Client’s preferred local or international bank. Thereafter, Healy Consultants Group and our Client agree upon and courier the original corporate bank account forms to the company’s agent in Labuan. We work with internationally recognised banks including Standard Chartered, DBS and local banks such as Maybank and CIMB. Immediately after bank account opening, our Client deposits the initial share capital of the company;
- Internet banking activation: Having received the corporate bank account number, we request the bank to activate internet banking and issue tokens to the company directors. This process is typically completed within one business week;
- Support services: If required, our team can offer support services including i) securing multiple employee visas; ii) locating office premises and iii) registering trademarks;
- Engagement completion: The Labuan company incorporation engagement is considered complete. We courier a company kit to our Client, including original corporate documents, unopened bank correspondences and a Client feedback survey.
Other considerations
- A Labuan company can lease office premises in Kuala Lumpur and/or Iskandar Malaysia, Johor Bahru;
- As per the LBATA Amendments 2019, a Labuan company can now issue sales invoices to Malaysia customers and conduct sales in Malaysian Ringgit. Moreover, all other global income can be booked into the Labuan company;
- All Labuan trading companies dealing with Malaysia resident companies are subject to 17% corporate tax on chargeable income below RM500,000 and 24% for income above this threshold;
- All Labuan companies can secure Malaysia employment visas for staff;
- To curb tax evasion and other harmful tax practices, since January 2019 Labuan companies have been subject to new economic substance requirements. Companies operating in certain sectors must now hire full-time employees, and meet minimum annual operating expenditure requirements in Labuan;
- Companies which do not meet substance requirements are liable to pay a tax rate of 24% on taxable profits, as per the Income Tax Act 1967. Companies operating under the regulations of the Labuan Business Activity Tax Act 1990 are taxed at 3% of audited profits.
- All Labuan companies must always secure and maintain an office space in Labuan, if they plan to hire expatriate staff;
- In addition to the annual Labuan Government fees, an annual fee of RM7,500 will be payable to the Malaysia Government.
Work permit considerations
- To be eligible for a Malaysia work permit, an expatriate employee of a Labuan company must be: i) Top management (Managing Director, Principal Officer) ii) Chief Executive Officer, Chief Financial Officer, Chief Operating Officer iii) Middle management (Manager, Assistant Manager) iv) Professional (Accountant, Lawyer, Consultant, Underwriter) v) Technical expert (IT Specialist, 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.
