Labuan offshore companies
Since 2003, Healy Consultants Group PLC has been assisting 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?
- A Labuan offshore company is a non-resident Malaysian entity that is usually used as a tax-optimized trading or holding vehicle by international investors;
- Offshore companies in Labuan are allowed to: i) conduct business with both Malaysian resident and non-resident companies; ii) carry on shipping operations to anywhere including Malaysia; iii) transact in all currencies; and iv) offer products and services in non-regulated industries.
|Trading company||Non-trading company|
|Business activities permitted||Banking, insurance, shipping or any other Labuan trading activities||Holding of investments in securities, stock, loans etc|
|Corporate tax rate||3% on net profits;|
24% on IP and royalty income
|0% for holding activities;|
24% if rental income is receivable
|Tax regime applicable||LBATA 1990, ITA 1967||LBATA, Onshore Malaysia Income Tax (if rental income is receivable)|
|Annual audit obligations||Yes||No|
|Economic substance requirements||Minimum 3 employees;|
Annual operating expenditure of US$45,000 in Labuan.
|Minimum 2 employees;|
Annual operating expenditure of US$12,500 in Labuan.
Note: If a company carries out both Labuan trading and non-trading activities then, it will be deemed to be a Labuan trading activity and will be subject to a corporate tax rate of 3%.
What are the advantages of establishing an offshore company in Labuan?
- Setting up an offshore company is easy and only requires i) US$1 of share capital; ii) one shareholder; and iii) one director, both of whom can be foreigners to Malaysia
- Labuan offshore companies enjoy 3% corporation tax on annual net profits. They must submit financial statements for an annual independent statutory audit.
- However, their income from royalty and intellectual property are subject to a corporate income tax of 24% (ITA 1967) and are not deemed taxable under the LBATA;
- In accordance to LBATA amendments and BEPS regulations, Labuan offshore companies can now do business in Malaysia.
What an offshore company cannot do?
- For businesses planning to trade in Malaysia or planning 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.
Healy Consultants Group PLC fees
- Our fees to complete the A to Z (click link) of a Labuan offshore company set up amounts to US$12,000, including i) company formation services; ii) company secretary and registered office fees; iii) government registration fees; and iv) corporate bank account opening;
- Refer to the embedded pdf file to view a detailed breakdown of the above:
Let us know if you require Healy Consultants Group PLC’s assistance to setup a Labuan offshore company to achieve you desired business goals.