Labuan Offshore Company Registration

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LABUAN OFFSHORE COMPANY REGISTRATION
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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.

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

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:

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

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

Top uses of a Labuan IBC

Key Corporate Features of a Labuan Offshore Company

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Requirements for Incorporation of a Labuan Offshore Company

To incorporate a Labuan Offshore Company, the following documents must be submitted to the Registry:

In addition, a Labuan offshore company must register with the following government agencies:

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:

Anonymity, Confidentiality and Disclosure

There is a high degree of confidentiality for Labuan Offshore Company owners and offshore ac-count 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

No

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:

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;

TOTAL FEES INCLUSIVE OF GOVERNMENT FEES $13865