Labuan Tax - LabuanTax.com

Why Need A Labuan Company?

A.	Maximum Tax : RM 20K ( USD 6,700 )
	Save tax. You will not be audited too

B.	Easier To Get Work Permit and Visa
	Help foreigners stay in Malaysia. Easy to get Dependence Visa too
	Not for high risk countries + Must have legitimate business

1. How To Achieve That?

a. You setup a Labuan Company ( 3 business days )

b. You open a Bank Account ( 14 business days )
You will do business and save tax

c. You apply for a Work Permit & Visa ( 30 business days )
You will stay in Malaysia, optional

d. Also, it depends on who your Labuan Company does business with. See examples below :

PASSED

FAILED

Case A

No trading activity

Investment holding company

Case B

1. Do business with non Malaysian company / foreign company, and

2. Do business in non Malaysian currency, Ringgit (RM)

Case C

1. Do business with another Labuan Company, and

2. Do business in non Malaysian currency, Ringgit (RM)

Case D

Do business with Malaysian and non Malaysian and Labuan Company

1. Transactions (with Non Malaysians / Labuan Company) pay max RM 20,000 tax

2. Transactions (with Malaysians) pay 26% Malaysian domestic tax

Case E

1. Do business 100% with Malaysians (Company / Individuals), or

2. Deal with clients in Malaysian currency, Ringgit (RM), or

3. Apply for Work Permit / Dependence Pass without a business purpose

2. Who Is Eligible?

Foreigner?	Yes
Malaysian?	Yes
Anyone?	Yes

3. Do You Know You Pay Tax Twice?

1. Corporate Tax - Your company pay corporate tax

2. Personal Income Tax - You pay income tax from salary derived from your company

Benefits

1. 100% Ownership and Control
Foreigners will totally own the Malaysian business

2. Minimum Requirement
1 same director + 1 same shareholder

3. Business Nature : Non Trading
Your Labuan Company will pay zero corporate tax

4. Director Fee
Foreigners will declare income as director fee and pay zero income tax

5. Labuan Legislation
The law is stable and will remain unchanged for many years

6. Double Taxation Agreements, DTAs
You are protected in avoidance of double taxation

7. Stay in Malaysia + Do Business
Cheaper method for foreigners to stay in Malaysia.
See Comparison : What is the cheapest method for foreigners to stay in Malaysia + Do business?

4. Diagram Summary
Labuan Company's Tax Structure

5. How Do I Verify These Information?
Check it with Malaysian Regulatory Body


Labuan Financial Services Authority, Labuan FSA Regulate / Register Labuan Company http://labuanfsa.gov.my	Inland Revenue Board of Malaysia, IRB Regulate tax system in Malaysia http://www.hasil.gov.my/index.php	Malaysia My Second Home Program, MM2H Promote foreigners to stay in Malaysia http://www.mm2h.gov.my

6. Schedule of Fees

Labuan Company
1. Business Nature ( Trading activities ) : Max tax is RM 20,000 ( est, USD 6700 )
2. Business Nature ( Non Trading activities ) : Max tax is zero ( est, USD 0.00 )
Non trading : Investment and holding companies

USD 3,000

Additional Services

Setup Bank Account 1. Bank Account : Foreign Currency. Eg, USD / EURO 2. Bank Account : Malaysian Ringgit, RM ( for admin expenses ) Note : Require deposits for each bank account Minimum Bank Deposit : USD Account : USD 5,000 MYR Account : MYR 10,000 GBP Account : GBP 3,000 AUD Account : AUD 7,000 EURO Account : EURO 4,000 Note : There is no minimum maintenance required	USD 550
Apply for Work Permit & Visa 1. Become Malaysian tax resident - Stay for more than 183 days 2. Easier to get a work permit, visa, dependence visa in Malaysia 3. Conduct oversea business from Malaysia - Go in and out freely	USD 500
Nominee Employee	USD 200 / mth
Other Services 1. Labuan Properties ( House / Office ) for sales and rent	Ask For Quote

Examples of Fees
Note : Annual renewal will be cheaper than below

Purpose : Do Business & Save Tax
1. Labuan Company	USD 3,000
2. Bank Account	USD 550
TOTAL	USD 3,550
If you wanted to stay in Malaysia
3. Work Permit, Visa	USD 500
4. Immigration Fee	Est, USD 450
TOTAL	USD 4,500

7. Contact Us

Tax Agent, LabuanTax.com

Contact Person : Gary Wong

Contact Number : +6 016 821 8171

Email : gary@labuantax.com

How To Start?

1. Fill in the form below

2. We recommend a good trust company to you

3. Make payment to the trust company directly

4. Get your Labuan Company in 3 business days

Someone Asked Questions

Malaysia, Charles

1. Can we have a Labuan company to charge management fee to a Papua New Guinea company? Any special requirement?
Yes, you can. No problem receiving income out of Malaysia

2. Do we need to have office, manpower, etc at Labuan?
Not neccesary

3. Is there any tax imposed on dividends to shareholder?
The shareholder will pay no personal income tax on dividends

United Kingdom, David

1. Can foreigners purchase properties in Malaysia?
Yes, foreigners can buy, rent, use the property in Malaysia.
a. West Malaysia ( Minimum Purchase ) : RM 250K
b. East Malaysia ( Minimum Purchase ) : RM 350K

Australia, Simon

We run a software company and manage our clients around the globe. Currently, we are considering the option of a Labuan Company. However, we will appreciate your assistance to our queries.

1. Can we live in Malaysia?
Yes, you can. You will apply for a work permit / dependence pass :-)

Appendix I : Foreigners Stays and Works From Malaysia
Appendix II : Malaysia My Second Home Program ( Requirement : Show Proof of Wealth )

2. Is my foreign income taxable? How much tax should we expect?
Yes, your foreign income is taxable.
Non trading business is zero.
Maximum corporate tax for trading business is RM 20,000. Anything lower than that is 3% tax and must be audited.

3. How long does it take for the whole thing?
a. Labuan Company - 3 working days
b. Bank Account - 14 working days after the setup of the Labuan Company
c. Expatriate Work Permit, Visa - 30 working days after the setup of the Labuan Company
Note : You must satisfy the documents required to achieve the above. Easy

Appendix I
Foreigners To Stay In Malaysia + Do Business

	Labuan Company	Local Company, Sdn Bhd	Malaysia My Second Home
Duration How long can a foreigner stay in Malaysia?	As long as the existence of your Labuan Company	Renewable	Maximum 10 years Renewable
Procedure How to achieve that?	1. Setup a Labuan Company 2. Apply for Expatriate Work Permit. ( Easy procedure )	1. Setup a Local Company 2. Apply for a Work Permit	Show evidence of wealth. See Appendix II : Malaysia My Second Home Program ( Requirement : Show Proof of Wealth )
Minimum Requirement	1. One same Director 2. One same Shareholder 3. Foreigner has 100% ownership of the company 4. No audit for non-trading business or, opt for RM 20K tax remittance for trading business (will not be audited)	1. At least 2 Directors 2. At least 2 Shareholders 3. Paid up capital RM 500,000 4. Must appoint a Malaysian Auditor	Show Evidence of Wealth : 1. Liquid Asset worth at least RM 350K 2. Offshore month income at least RM 10K, and 3. Fixed Deposit with Malaysian bank at least RM 150K
Dependence What about your spouse, son and or daughter?	Apply for Dependent Visa	Apply for Dependent Visa	Apply for Dependent Visa
Document Requirement	Easy	Many documents required, especially for accounting and tax purposes	A few documents + Medical Report + Medical Insurance
Pricing	Labuan Company Bank Account Work Permit, Visa USD 4,500	Company Formation alone RM 2,000, and above	RM 450K, and more ( est, USD 150,000 )
Do Business	Allowed	Allowed	Not Allowed
Recommendation What is your opinion?	Best . Cheapest	-	-

Appendix II
Malaysia My Second Home Program
Application Requirement : Show Proof of Wealth

Age : Below 50 years old

a. Liquid Asset worth RM 500,000, or more
b. Offshore Income RM 10,000 / mth, or more
c. Fixed Deposit with Malaysian bank RM 300,000 (Min maintenance : RM 150,000)
d. Or, buy a Malaysian property RM 1 million ( Fully Paid ) to reduce Fixed Deposit to RM 150,000

Age : 50 years old and above

a. Liquid asset worth RM 350,000, or more
b. Offshore income / pension RM 10,000 / mth, or more
c. Fixed deposit with Malaysian bank RM 150,000 (Min maintenance : RM 100,000)
d. Or, buy a Malaysian property RM 1 million ( Fully Paid ) to reduce Fixed Deposit to RM 100,000

DEFINITIONS

Labuan	: A low tax jurisdiction located in Malaysia - Beautiful island ( See : Labuan Tourism )
MYR / RM	: Malaysian Ringgit ( Malaysia Currency )
USD	: United States Dollar
Currency Conversion	: USD 1.00 = RM 3.40 ( Accurate Conversion : Google Currency Converter )
Tax	: Refer as Malaysian tax. Regulated by Inland Revenue Board of Malaysia, IRB
Withholding Tax	: Refer as tax withheld during fund transfer out of Malaysia. Regulated by Inland Revenue Board of Malaysia, IRB
Paid Up Capital	: The actual amount of capital contributed / paid to the company
Source of Income	: Where the income / money comes from. Eg, Foreign or domestic income source
Management and Control	: Where the business is managed / controlled from. Eg, Which nation
Labuan Company	: Considered as non domestic company
Non Trading Activities	: Consist of Labuan Company that is running business as Investment Company / Holding Company
Trading Activities	: Consist of Labuan Company that is running any business, apart from non trading activities
Trust Company	: A company that assists to incorporate a Labuan Company. It is mandatory to use a trust company
Holding Company	: A company that buys shares of another company
Investment Company	: A company that invests on behalf of its shareholders
Sdn Bhd	: Sendirian Berhad - Private Limited Company in Malaysia
Jurisdiction	: Refer as Labuan jurisdiction located in Malaysia
Offshore / Oversea	: Refer as non Malaysian jurisdiction
Malaysian Resident	: Malaysian citizen, permanent resident or foreigners - Stays more than 183 days in Malaysia
Foreigner	: Refer as non Malaysian resident - Staying less than 183 days in Malaysia
Dependence Visa	: Visa for foreigner's spouse and or children to stay in Malaysia
Work Permit	: A legal permit that allows foreigners to be employed in Malaysia. Or, called Employment Pass / Expatriate Work Permit
Labuan FSA	: Labuan Financial Services Authority - Regulate / Register business of Labuan Company
Labuan IBFC	: Labuan International Business and Financial Centre - A marketing body to sell Labuan's benefits
MM2H	: Malaysia My Second Home Program - Regulated by Ministry of Tourism Malaysia
IRB	: Inland Revenue Board of Malaysia - Regulate Malaysia and Labuan's tax system
LBATA	: Labuan Business Activity Tax Act 1990 (Act 445) - Max corporate tax : RM 20,000 for Labuan Company
ITA	: Income Tax Act 1967 - Max tax : 25% for source of income from Malaysia only
DTA / DTAs	: Double Taxation Agreement is an agreement between two countries seeking to avoid double taxation
DTA List	: Malaysia / Labuan has DTAs with 70 countries ( Accurate listing : Malaysia DTAs )
LCA	: Labuan Companies Act 1990 (Act 441) - The Act that governs Labuan Companies
LTA	: Labuan Trusts Act 1996 (Act 554) - The Act that governs Labuan Trusts
OECD	: Organisation for Economic Co-operation and Development - International organisation consists of members from a few countries

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