Labuan offshore companies in 2024
Since 2003, Healy Consultants Group has been assisting our Clients to incorporate offshore businesses in Labuan, Malaysia. Most of our Clients choose the formation of Labuan offshore companies for trading or as a holding company. Registration procedures are conducted through the Labuan International Business and Finance Centre (IBFC).
What is a Labuan offshore company?
- A Labuan offshore company is a non-resident Malaysian entity typically used by international business people as a tax-optimised trading or holding vehicle;
- In accordance to LBATA amendments and BEPS regulations, a Labuan offshore company can also now do business in Malaysia;
- Offshore companies in Labuan can: i) conduct business with both Malaysian resident and non-resident companies ii) conduct shipping operations to anywhere including Malaysia iii) transact in any currency 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, it is considered to be conducting Labuan trading activity and will be subject to a corporate tax rate of 3%. Also, income from royalties and intellectual property are taxed at 24% (ITA 1967) and are not deemed taxable under the LBATA.
What are the advantages of establishing an offshore company in Labuan?
- Setting up an offshore company is easy, requiring i) US$1 of share capital ii) one shareholder and iii) one director. Both shareholder and director can be non-Malaysian;
- Labuan offshore companies are taxed at just 3% annual net profits. However, the company must submit financial statements for an annual independent statutory audit.
What an offshore company cannot do?
- It is not possible to form an offshore company in Labuan to i) trade in Malaysia or ii) offer banking, insurance and financial services from Labuan. Such companies must be incorporated with the Companies Commission of Malaysia and be licensed with the Malaysia Securities Commission or Central Bank;
- To conduct the above activities, clients can set up Malaysian LLCs, PLCs, branch offices and representative offices in Labuan and other parts of Malaysia. Please visit our Malaysia business setup page for further details.
Healy Consultants Group fees
- Our fees to complete the A to Z of a Labuan offshore company set up amounts to US$19,300. This fee includes i) Labuan company formation services ii) company secretary and registered office iii) government registration and iv) corporate bank account opening;
- Refer to the embedded pdf file to view a detailed breakdown of the above:
Conclusion
Let us know if you require Healy Consultants Group’s assistance to setup a Labuan offshore company to achieve your desired business goals.
