Seize Global Opportunities
Why Incorporate an Offshore Labuan Company in Malaysia
In today's interconnected world, businesses are no longer bound by geographical limitations. Entrepreneurs are constantly seeking opportunities to expand their operations internationally and optimize their tax efficiency. Malaysia's offshore Labuan company is emerging as an attractive option for those looking to take their business global while enjoying significant tax benefits. In this article, we'll explore the compelling reasons why incorporating an offshore Labuan company in Malaysia can be a game-changer for your business.
Tax Advantages
One of the most significant advantages of establishing an offshore Labuan company in Malaysia is the favorable tax regime. Labuan, a federal territory of Malaysia, offers a highly attractive tax structure. Labuan companies can benefit from low corporate tax rates, including a fixed annual tax cap for trading activities and zero tax for non-trading activities. Additionally, Labuan entities are exempt from local taxes, such as Goods and Services Tax (GST) and Value Added Tax (VAT), making it a tax-efficient choice for international businesses.
Privacy and Confidentiality
Labuan International Business and Financial Centre (Labuan IBFC) ensures a high degree of confidentiality for company owners. Shareholder information is not publicly disclosed, enhancing privacy and protecting sensitive business details. This level of confidentiality can be crucial for businesses operating in industries where discretion is paramount.
Versatility and Diverse Activities
Labuan companies are incredibly versatile and can engage in a wide range of activities, including trading, investment holding, asset management, and leasing. This flexibility allows entrepreneurs to adapt their business activities to changing market conditions and seize new opportunities as they arise.
Access to International Markets
Malaysia’s strategic location in Southeast Asia provides Labuan companies with easy access to international markets. Its proximity to major Asian economies and well-established trade routes make it an ideal base for businesses looking to expand regionally and globally.
Wealth Management and Estate Planning
Labuan also offers wealth management solutions, making it an attractive choice for individuals looking to optimize their financial portfolios and engage in estate planning. Trust and foundation structures in Labuan provide options for asset protection, succession planning, and wealth preservation.
Double Taxation Avoidance Agreements (STAs)
Malaysia has an extensive network of DTAs with numerous countries, including major economies like China, the United States, and the United Kingdom. Labuan companies can benefit from these agreements to minimize the risk of double taxation on income earned internationally.
Labuan Benefits
- Corporate Tax:
- Investment Activities (0% with substance)
- Service & License Activities (3% from audited net profit with substance)
- Audit Required
- 0% Personal Income Tax (Non Malaysian Director)
- 0% Indirect Tax (e.g. Sales Tax, Service Tax, GST, VAT & Custom Duty)
- Labuan is a Tax Free Port (0% Stamp Duty)
- Double Tax Agreements with more than 68 counties
- Require only 1 director / shareholder, can be the same person
- o% withholding Tax on:
- Dividend
- Lease Rental
- Interests
- Technical or Management Fee
Investment
(Pure Equity)
Labuan Activities
Holding Company
- Only hold/Invent in Company's shares
- Type of Income: Dividend
- Corporate Tax: 0%
- Audit is required
Substance Requirements
- Management & control in Labuan
- Record keeping in Labuan
- 1 BOD meeting in Labuan annually
- RM20,000 yearly OPEX in Labuan
Labuan Company as SPV of Public Listing
- Well recognized by IOSCO
- 0% Withholding tax for professional fee pay to oversea
- 0% Stamp Suty for transfer/disposal of shares
Investment
(Non Pure Equity)
Labuan Activities
Investment Company
Investments in securities, stock, shares, loans, deposits or any other properties situated in Labuan
- Type of Income: Interest, Capital gain
- Corporate Tax: 0%
- Audit is required
Substance Requirements
- Management & control in Labuan
- 1 office in Labuan
- 1 staff in Labuan
- RM20,000 yearly OPEX in Labuan
Optional Enhancement
Private Fund/ Financing Structures
- Issue preferential shares to investors
- Can chose to lodge Information Memorandum (IM) to Authority
- 0% withholding tax for distribution to investors
Services based
Labuan Activities
Corporate tax
3% of audited net profit
Substance Requirements
- 1 office in Labuan
- 2 staff in Labuan
- RM50,000 yearly OPEX in Labuan
Services Company
Scope of activities:
– Administrative
– Accounting
– Legal
– Backroom processing
– Payroll service
– Talent management
– Agency services
– Management service
– Insolvency related services
