Labuan Offshore Company Registration with Bank Account
Labuan and is located off the coast of the state of Sabah in East Malaysia. It is officially called the “Federal Territory of Labuan.” It is a territory of Malaysia made up of Labuan Island and six small-er islands. Victoria is Labuan’s capital. It is a popular tourist destination for scuba divers. Since 1990, Labuan is best known for providing international financial and business services (IBFC). It is also known for providing IBFC services to ocean oil and gas companies in the region.
The Labuan International Business and Financial Centre is a reputable free trade area located in the Federal Territory of Labuan, an island off the coast of the state of Sabah in East Malaysia.
Labuan is becoming one of the major financial hubs of Asia due to its pro-business regulation, low taxes and compliance with international standards on due diligence and transparency.
Companies incorporated in Labuan carrying on certain business activities and having economic substance in Labuan benefit from an attractive tax regime.
Corporate Legislation
Labuan’s legal system follows English common law. Labuan has enacted laws to help assist off-shore corporations and to make an investment in Labuan more attractive.
Overview of a Labuan Offshore Company
Set up a Labuan Company
Labuan business activities (as defined by law) qualify for a 3% concessionary tax rate (as opposed to the Malaysian 24% standard tax rate). Any business done with Malaysian residents may be subject to 24% tax (and limited deductibility of expenses). The qualifying activities for the 3% tax rate include,
- Labuan insurer, Labuan reinsurer, Labuan takaful operator, Labuan retakaful operator
- Labuan underwriting manager or Labuan underwriting takaful manager
- Labuan insurance manager or Labuan takaful manager
- Labuan insurance broker or Labuan takaful broker
- Labuan captive insurer or Labuan captive takaful
- Labuan International Commodity Trading Company
- Labuan bank, Labuan investment bank, Labuan Islamic bank or Labuan Islamic investment bank
- Labuan trust company
- Labuan leasing company of Labuan Islamic leasing company
- Labuan development finance company or Labuan Islamic development finance company
- Labuan building credit company or Labuan Islamic building credit company
- Labuan factoring company or Labuan Islamic factoring company
- Labuan money broker or Labuan Islamic money broker
- Labuan fund manager
- Labuan securities licensee or Labuan Islamic securities licensee
- Labuan fund administrator
- Labuan company management
- Labuan International Financial Exchange
- Self-regulatory organisation or Islamic self-regulatory organisation
- Holding Company
- Administrative, Accounting and Legal Services
Labuan is a small set of islands off the coast of Borneo officially a “federal territory” of Malaysia. The Labuan Offshore Jurisdiction has become one of the preferred jurisdictions in Asia for offshore company formation since the Malaysian government made it into an international offshore finan-cial centre in 1989.
The formal name for an offshore company in Labuan is a “Labuan International Business Compa-ny” (Labuan IBC). Incorporation is very quick and easy with minimal start-up requirements and fees.
The legislature which governs offshore company formation in Labuan allows for a number of practical benefits of the jurisdiction, such as its cost-effective and convenient incorporation laws, favourable taxation, and high level of confidentiality.
It is also a highly reputable jurisdiction which is fully compliant with international standards. Its location is ideal for giving business owners access to both Middle Eastern and Asian markets.
The most significant corporate legislation in Labuan was signed into law in 2010. The primary goals behind these new laws were to help make Labuan a more attractive choice for offshore in-vestors. Many of these new laws allowed Labuan to create more opportunity for foreign invest-ment in the region, including financial products and services, both Islamic and conventional. Fur-thermore, the legislation also helps with keeping the status of the Labuan IBFC as a beneficial and credible region with business transactions that follow internationally accepted standards and best practices.
The corporate legislation regulating financial transactions in Labuan includes:
- Labuan Business Activity Tax Act of 1990
- Labuan Companies Act of 1990
- Labuan Financial Services Authority Act of 1996
- Labuan Trusts Act of 1996
- Labuan Limited Partnership and Limited Liability Partnership Act of 2010
- Labuan Financial Services and Securities Act of 2010
- Labuan Foundations Act of 2010
- Labuan Islamic Financial Securities and Services Act of 2010
Why Labuan Company?
Simple Incorporation Requirements
The business structure is a simple one that only requires one director and one share holder and they can be the same person.
No Financial Requirement
The taxes and costs associated with setting up a company in Labuan and a residential address are low, the minimum paid-up capital for the company needs to be only 1 USD.
Low Tax
The corporate income tax for a company in this special region is only 3% on your profit and in some cases, companies are completely exempt from the profits tax.
Fast Incorporation
The general incorporation of a Labuan company only takes 5-7 days and can be accomplished even if the foreign investors cannot be present in Labuan during the entire procedure.
The Unique Characteristic of a Labuan Company
- A Labuan Company has an excellent confidentiality policy.
- Labuan is located in Malaysia and Malaysia is a politically stable country.
- Malaysia is a Commonwealth Country. Laws are based on the English legal system.
- Labuan has a liberal exchange control.
- Labuan has a good banking system and facilities, with tens of onshore banks and offshore banks. Multicurrency online banking account is available for a Labuan Company. Initial de-posits can range from USD$10,000 to USD$500,000.
- Malaysia is a major trading country worldwide especially in South East Asia, and Labuan is part of it.
- Labuan Shelf companies are an available for swift business setup or turnkey project.
- Labuan Company has Low paid-up capital requirements. The paid-up capital of a Labuan Company can be as low as USD$1.
- Directors and shareholders of a Labuan Company can host meetings from any location across the world.
- Labuan Company has no restrictions on nationality for directors and shareholders.
- Labuan company has no nationality requirements for directors and shareholders.
- Any currency can be used for a Labuan Company.
- Labuan company adopts no authorized capital and no-par value regime
How to Incorporate Your Company in Labuan
Preparation
Decide on your company name to be registered and send it to us by email or WhatsApp.
Your Labuan Company Details
Provide the documents and information required in our company reg-istration checklist by email or WhatsApp.
Make Payment
Make payment and send us the bank in slip by email or WhatsApp. You may Wire Transfer for the payment.
Await documents
Once registration is done, you will receive the necessary documents including Certificate of Incorporation, Business Registration, Memo-randum and etc.
Labuan- the ideal jurisdiction for your international business
The first very appealing characteristic of Labuan Company is that a Labuan Company can be fully owned by single foreign business owner. This simply means that there is no need to have a local resident partner in a Labuan company. A non-Malaysia can fully own the Labuan Company. This is why many foreign investors or business owners choose to setup a Labuan Company to operate their international business.
Another important characteristic for the Labuan Company is the low paid-up capital requirements. The minimum paid-up capital is as low as USD1 allowing investors and business owners to start their business with minimum start-up expenditure. Other types of companies in other jurisdictions will have higher or different requirements.
Labuan Company is a type of legal entity that has a very simple business structure. A Labuan Com-pany can be formed by only one director and one shareholder and they can be the same person. Moreover, the Labuan Company can be used as a vehicle for asset and wealth management.
A Labuan Company can be registered very fast. The entire process takes less than a week upon submission of full documentation required for company registration. You can commence the com-pany registration even if you are still in your country of residence.
There is no goods and services tax (GST) or sales and services tax (SST) on sales transactions per-formed in Labuan. The GST/SST in Labuan is equivalent to value-added tax (VAT), an indirect tax that applies to the sale of goods and services in other countries. It usually ranges from 5%-10% and sometimes higher.
It is one of the taxes payable by companies in many other countries.
Apart from the GST, SST or VAT exemption, there are no withholding taxes on dividends, interest, royalties, management and technical fees. This broad tax exemption policy become an important benefit for all foreign investors and business owners in Labuan.
One of the most important advantage from a taxation point of view is that the corporate tax for a Labuan Company is only 3% on profit, making it one of the lowest in the region. If the Labuan Company is solely doing holding activities, the corporate tax is 0%.
Advantages & Top Uses of a Labuan Offshore Company
- Allows 100% foreign ownership - offshore companies require only a single director and shareholder who can be the same person or corporate body.
- Labuan Offshore Companies are subject to either zero or very low taxes (maximum of 3% corporate tax), depending on the type of offshore company formed.
- Partial access to Malaysia’s wide network of Double Taxation Avoidance Treaties (DTAs), as well as its tariff reductions in the ASEAN Free Trade Area (AFTA).
- Incorporation can be completed within 2 - 7 days.
- Registration and licensing fees are low, and there is effectively no minimum issued share capital requirements.
- There is a high degree of confidentiality for offshore company and offshore account hold-ers.
- The Malaysian Federal Government cannot access banking information, and there are min-imal disclosure requirements for offshore companies. The names of shareholders and di-rectors are not publicly available, nor are the accounting statements of the company.
- The Labuan jurisdiction is in an ideal location which offers access to both Middle Eastern and Asian markets.
- The infrastructure is conducive for successful corporate setup, which includes access to a well-qualified work-force and advanced telecommunication system.
- Labuan is a “free port” which means there are no import or export duties on traded goods, and no sales taxes are levied.
- English is widely spoken in Labuan, and corporate documents and legislation are usually written in English.
- It is easy to obtain a two-year, renewable work visa in Labuan.
Top uses of a Labuan IBC
- International trading and access to top Asian markets
- Asset protection
- Minimization of taxes
- Protection and ownership of intellectual property
- Estate planning
- Confidentiality
- Investment holding
Key Corporate Features of a Labuan Offshore Company
| Labuan IBC Company Corporate Details | |
| General | |
| Type of Entity | Labuan International Business Company (either trading or non-trading) |
| Type of Law | British Common Law |
| Governed by | Labuan Companies Act of 2010 |
| Registered Office in Labuan | Required |
| Shelf company availability | Not available |
| Our time to establish a new company | 5 days |
| Minimum government fees (excluding taxation) | Registration fees of RM 6,050 (approx. USD 1,400) |
| Corporate Taxation | For trading companies: 3% of net audited profit or a lump sum of RM 20,000 (approx. USD 4,700) For non-trading companies: zero taxation |
| Access to Double Taxation Treaties | Yes |
| Share capital or equiva-lent | |
| Standard currency | US Dollar, $ |
| Permitted currencies | All except Malaysian Ringgit, RM |
| Minimum paid up | $1 |
| Usual authorized | $10,000 |
| Bearer shares allowed | No |
| No par value shares allowed | No |
| Directors | |
| Minimum number | One |
| Local required | No |
| Publicly accessible records | No |
| Location of meetings | Anywhere |
| Corporate directorship allowed | Yes |
| Shareholders | |
| Minimum number | One |
| Publicly accessible records | No |
| Corporate shareholder allowed | Yes |
| Location of meetings | Anywhere |
| Company Secretary | |
| Required | Yes |
| Local or qualified | No requirement |
| Accounts | |
| Requirements to prepare | Yes |
| Audit requirements | Depends on company type (Only for trading companies paying the 3% corporate tax rate) |
| Requirements to file accounts | Yes |
| Publicly accessible accounts | No |
| Recurring Government Costs | |
| Minimum Annual Tax / License Fee | There is an annual maintenance fee of RM 5,300 (approx. USD 1,200) |
| Annual Return Filing Fee | No |
| Other | |
| Requirement to file annual return | Yes |
| Migration of domicile permitted | Yes |
Requirements for Incorporation of a Labuan Offshore Company
To incorporate a Labuan Offshore Company, the following documents must be submitted to the Registry:
- Memorandum and Articles of Association
- Consent form from the director
- Statutory Declaration of Compliance with the Companies Act
- Identity Certificate
- Incorporation/registration fee
In addition, a Labuan offshore company must register with the following government agencies:
- Labuan Company Formation Authority
- Malaysia Immigration Department
- Inland Revenue Authority
- Central Bank of Malaysia
Taxation of a Labuan Offshore Company
Trading companies pay only 3% corporate tax on their audited net profit up to a maximum tax of RM 20,000 per year (about 4,700 USD). Companies which choose to pay the RM 20,000 lump sum tax are not required to file audited reports. Non-trading offshore companies are tax exempt.
In addition, there is NO:
- Tax on Dividend payouts
- Stamp Duty
- Withholding Tax
- Capital Gains Tax and Inheritance Tax
- Personal Tax for Foreign Directors’ Fees
Anonymity, Confidentiality and Disclosure
There is a high degree of confidentiality for Labuan Offshore Company owners and offshore account holders. The Malaysian Federal Government cannot access banking information, and there are no imposed disclosure requirements for offshore companies.
This means that the names of directors and shareholders are not publicly available. Furthermore, there is no public register of trusts and private foundations which are registered in Labuan.
Company Shares
The following classes of shares are permitted: preference shares, registered shares with par value, shares with no voting rights and redeemable shares. Labuan International Companies are not al-lowed to issue bearer shares.
Required Capital
Minimum standard authorised capital is USD 10,000 which is usually divided into 10,000 shares with a par value of USD 1 each. However, the minimum issued capital is only one share with a val-ue of USD 1, so in practice start-up capital requirements are negligible.
Annual Fees
Annual fees are quite high compared to other offshore jurisdictions: Labuan offshore companies usually pay fees of about 5,300 Ringgit per year (equal to around 1,200 USD at the time of writing).
Directors
A minimum of one director is required. The director/s can be any natural person or corporation of any nationality. There is no requirement for local directors.
Shareholders
A minimum of one shareholder is required. The shareholder/s can also be any natural person or corporation of any nationality. The shareholder and the director can be the same legal entity.
Trading Restrictions
There are restrictions and limitations on trade with Malaysian companies and residents: besides some exceptions, Labuan International Companies should not engage in business with Malaysian companies and residents.
Principal Corporate Legislation
The Labuan Financial Services Authority (LOFSA) is the governing body that oversees Labuan’s cor-porate laws.
In 1990, the first Offshore Companies Act was laid out which set the foundation for Labuan’s off-shore corporate laws. Later, the Labuan Companies Act of 2010 took over, which currently governs the formation, taxation and activities of Labuan International Companies.
Type of Law
The legal system in Malaysia is based upon British Common Law, and as Labuan Island is a part of Malaysian territory, it falls under the same type of law.
Powers of the Company
A Labuan Offshore Company is regarded as a separate legal entity from its shareholders and di-rectors. As such, it has all the same powers as a natural person.
Local Presence Requirements
Labuan International Companies are required to maintain a local registered office address.
Trading companies must also have so-called physical “commercial substance” in Labuan. This re-quirement can be fulfilled in various ways, such as by holding a Labuan bank account, employing staff in Labuan, or simply holding an annual board meeting in Labuan.
Company Meetings
Meetings are not required and can be held anywhere, although having an annual board meeting in Labuan is one easy way to fulfill the physical “commercial substance” requirement.
Company Secretary
The company must appoint at least one secretary, who can reside anywhere. If there is more than one secretary, at least one must be a local resident.
Language of legislation and Corporate Documents
Although the official language is Malay, many pieces of legislation and corporate documents are written in English, including the legislation pertaining to Labuan Offshore Companies.
Official Language
The official language in Labuan is Malay, but English is widely spoken. This is especially the case in the corporate arena.
Audit Requirements
There are no audit requirements for investment holding companies and other types of non-trading companies whose only source of income is from outside of Malaysia.
International Trading Companies who pay the standard corporate tax of 3% of audited net profits are required to appoint an auditor and file audited financial statements.
Those trading companies who instead opt to pay a lump sum tax of RM 20,000 (USD 4,700) are not required to file audited financial statements.
Annual Reporting Requirements
Companies are required to file an annual report containing a statement of their accounting rec-ords, which must be kept in Labuan.
Exchange Controls
Labuan Offshore Trading Companies are not allowed to trade in the Malaysian Ringgit, nor can share capital be denominated in the Ringgit.
Trade is permitted in most other currencies, with the USD being the most common currency used.
Shelf Companies available
YES-Terms and Conditions apply
Time required to form a company
A Labuan Offshore Company can be registered in 2 – 7 days.
Company Name Requirements and Restrictions
The name must be unique and should not:
- Resemble any other Malaysian company’s name
- Suggest Royal or Government affiliation
- Be considered undesirable by the Registrar
In addition, certain names require special consent or license, such as: bank, insurance, trust, Uni-versity and so forth.
The name can be in any language which uses the Latin alphabet. The name must end with one of the following words or suffixes: “Labuan”, “Limited”, “Co,Ltd”, “Inc.”, “Ltd”, or “LLC”.
Access to Double Tax Treaties
Malaysia has an extensive network of Double Taxation Treaty Agreements (DTAs) of 74 DTAs. Many of these agreements also extend to Labuan, except for the following countries which do not consider Labuan as part of the benefits applicable under the double tax treaties signed with Ma-laysia: Australia, Chile, Germany, Indonesia, India, Japan, Luxembourg, the Netherlands, Sey-chelles, South Africa, South Korea, Spain, Sweden, the United Kingdom.
A Labuan company can gain access to the advantages of all of Malaysia’s DTAs by irrevocably electing to be taxed under the Malaysian Income Tax Act of 1967. This type of company is known as a Labuan Charged Company
Documents required from customers for the procedures align with the incorporation of the Offshore company and Bank Account opening in the selected jurisdiction;
- Certified Passport of each shareholder/beneficial owner and director
- Certified Proof of residential address of each director and shareholder (Must be in English or certified translation version)
- Bank References letter for bankers for each shareholder/beneficial owner and director
- Three proposed company names
- The issued share capital and par value of shares
- A brief Business plan about your proposed line of business
- Together with Guidance Notes for applicant fully completed by the client
Note that our incorporation and annual fees are all “all-included fees”, and cover all the required services, duties, disbursements, and procedures to incorporate a Labuan company, and keep it in good standing (excluding annual audited accounts, if required)
- All Applicable Government and Registration Fees (Labuan Financial Services Authority)
- Preparing and filing the Memorandum and Articles of Association with the LFSA
- Providing the Certificate of Incorporation and LFSA-filed M&AA
- Preparing the Directors’ Declaration and Consent Letters
- Preparing the Shareholders’ Declaration Letters
- preparing the share certificate(s)
- Preparing and executing the Subscriber Declaration of allotted share capital
- Preparing the First Board Resolution resolving the Appointment of Directors, Registered Office, and other corporate matters
- Preparing and executing a Certificate of Incumbency for bank account opening
- Bank Account opening in Multi Currencies with Debit and Credit Cards on your Labuan Company name.
- Providing Resident Corporate Secretary Services for one year
- Providing Registered Office Address for one year
- Preparing and filing the Annual Return of the Company
- Updating and lodging all directors and shareholders to the LFSA
- Forwarding via email correspondence received from LFSA, Inland Revenue, and other related government bodies.
- Preparing and Delivering Certified Copies of the Corporate Documents via Courier, inclusive of Courier fees
Time to form the company
Generally, it takes us 2 to 3 days to prepare all the pre-incorporation documents which need to be printed and signed by the proposed Shareholders and Directors of the proposed company. Once we receive the original signed pre-incorporation documents, we will file the company with the LFSA. At that point, it will take 3 to 5 business days for the LFSA to issue the Certificate of Incorporation and release the stamped M&AA.
BASIC FEES INCLUSIVE OF GOVERNMENT FEES as from USD $10865/=
Please contact us for further more information’s in regard with the Labuan company registration process on : offshore@aajpglobal.com
