Frequently Asked Questions
FAQs about Labuan international company |
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What is a Labuan Company?
- A Labuan company is a company incorporated under the Labuan Companies Act 1990 (LCA 1990), which may be a Labuan company limited by shares.
- Residents and non-residents of Malaysia are permitted to incorporate Labuan companies.
- Labuan companies that meet the Labuan substance requirements would be taxed at the preferential tax rates ( 3% tax / zero tax ).
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How to incorporate a Labuan Company?
Labuan Company Incorporation :
- Fill in Labuan incorporation forms and send documents required to us
- Remit payments
Checklist to incorporate a Labuan company :
- If the applicant is an individual, please provide :
Certified passport, certified proof of address, resume, reference letter issued by professionals
- If the applicant is a company, please provide :
Certified proof of incorporation, shareholding, directorship, and documents related to each individual as above
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What is a Labuan holding company?
A Labuan Investment Holding Company (IHC) holds long terms investments.
One of the key reasons many Labuan business owners acquire overseas businesses, company stocks and even securities while enjoying ZERO tax. Long term stocks holding will also be zero tax on its capital gain.
- Pure Equity Holding
- Receive income as dividends or capital gains, by holding shares of a subsidiary
- Spend RM 20,000 + Visit Labuan once a year = Zero Labuan company tax
- Non-Pure Equity Holding
- Receive passive income from long term investments
- Eg, Shares, interests, royalties, bonds, debt instruments, securities
- Spend RM 20,000 in Labuan + Hire 1 staff in Labuan = Zero Labuan company tax
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What is "Code 23" Labuan business?
Code 23 is a Labuan business category ("Also known as Labuan other-trading")
Labuan entity that carries on any one or more of the following Labuan business activities :
- Administrative services
- Administrative services mean Labuan services pertaining to employee management, payroll management, property management, human resource management, financial planning, contract or subcontract management, facilities management or proposal management.
- Accounting services
- Accounting services mean Labuan services pertaining to recording, analysing, summarizing or classifying financial, commercial and business transactions and information of a person or business.
- Legal services
- Legal services mean Labuan business activities related to :
(a) conveyancing services;
(b) legal advisory services;
(c) litigation or legal representation services in any proceedings before any court, tribunal or other authority; or
(d) legal dispute resolution services including alternative dispute resolution.
- Backroom processing services
- Backroom processing services are Labuan services relating to settlements of receivables and payables, clearance, record maintenance, regulatory compliance or information technology (IT) related services which are usually performed by administration and support personnel who do not deal directly with client.
- Payroll services
- Payroll services mean Labuan services relating to :
(a) processing, calculation, payment and deduction of remuneration, benefits, tax and statutory payment; or
(b) issuance of payslip and tax statement.
- Talent Management Services
- Talent management services mean the provision of human resource services to attract, onboard, develop, motivate, and retain employees.
- Agency services
- Agency services mean the provision of specific services on behalf of another group, business, or person pursuant to an agency agreement between the agent and its client.
- Insolvency related services
- Insolvency related service mean Labuan services related to administering company liquidations or winding up, or personal bankruptcy.
- Management services
- Management services cover the organization and coordination of activities of a business in order to provide services to the clients and usually consist of organizing, supervising, monitoring, planning, controlling and directing business's resources such as human, financial and technology.
For avoidance of doubt, Labuan management services exclude company management as defined in section 129 of the Labuan Financial Services and Securities Act 2010
Code 23 is exclusive of Labuan activities that are similar to services pertaining to Malaysian intellectual property (IP), trader, wholesaler.
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Do we need office and staff in Labuan?
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Can I be the only director and shareholder?
- Yes. Both Malaysians and foreigners can setup Labuan company
- Only 1 director
- Only 1 shareholder
- Only USD 1.00 paid up capital
- Nominee director is not needed
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Dividend - What tax rate for Malaysian dividend?
- Dividend - Zero income tax, if paid by the Labuan company to Labuan shareholder
- Dividend - Zero withholding tax, if paid by Labuan company to Labuan shareholder
- Salary - Zero withholding tax, if paid by Labuan company to Malaysian resident
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Labuan capital gains - What is the tax rate?
- Capital gains of Labuan company is subject to zero tax (0% tax) - Eg, Disposal of shares
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What is the tax deductible expenditure paid to Labuan company, for Sdn Bhd / resident? |
Note : Sdn Bhd = Malaysian resident local company
Interest :
- Interest is 25% non-deductible expenses for Sdn Bhd / Residents
- Including all payments in connection with financing in respect of commission, facility fee and advance fee
- 75% is tax-deductible
| 25% |
Leasee's Rental :
- Rental is 25% non-deductible expenses for Sdn Bhd / Residents
- 75% is tax-deductible
- Labuan Leasing
Applicable to leasing rental income for a Labuan leasing business
- What is a Labuan leasing business?
| 25% |
Other payments :
- Other payments are 97% non-deductible expenses for Sdn Bhd / Residents
- 3% is tax-deductible
| 97% |
Special Exemption (Non-Deductible expenses)
Payments to LITC / GIFT :
- LITC / GIFT - Labuan company that conducts Labuan commodity trading business.
What is a Labuan LITC GIFT business?
- Malaysian Resident that pays to LITC GIFT is exempted from non-deductible expenses
- Exempted until 31 Dec 2025
| Zero |
Labuan leasing - What is the withholding tax?
- Dividend / interest transferred :
- From Labuan company to Sdn Bhd / Malaysian individual
- If operated from Labuan
- Zero withholding tax
- Dividend / interest transferred :
- From Labuan company to other countries / jurisdictions
- If operated from Labuan
- Zero withholding tax
- Rental / leased fee transferred :
- From Sdn Bhd to Labuan company
- Zero withholding tax
Note : Sdn Bhd = Malaysian resident local company
What is a Labuan leasing business?
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Can we run online business from Labuan?
- Yes. Labuan company is suitable for online business
Digital marketing agency, sales commissions, software management that is not related to intellectual property, system integration management,
Telecommunication management, website management, clickbank agency, ads agency, education portal management, infomercial agency, amazon referral agency, affiliate agency, lifestyle promotor agency,
Business management, wedding management, product sourcing agency, sales and marketing agent, coaching management, etc
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Can i do Fintech business in Labuan?
- Labuan company must first be approved by the Labuan Authority to conduct Labuan Innovative Financial Services (Labuan IFS) before operating any of these activities. Also, the approval normally comes in a bundle with the Labuan licensing such as Credit Token Licensee.
Labuan IFS allows you to do Labuan business related to fintech, insurtech, blockchain, bitcoin, cryptocurrency
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How to live in Malaysia using a Labuan company?
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Do you know anything about MM2H visa?
- MM2H application - Below 50 years old
- Liquid asset worth RM 500,000, or more
- Offshore income RM 10,000 / month, or more
- Fixed deposit in Malaysian bank RM 300,000
- Buy a Malaysian property RM 1 million (fully paid) to reduce fixed deposit to RM 150,000
- MM2H application - 50 years old or above
- Liquid asset worth RM 350,000, or more
- Offshore income / pension RM 10,000 / month, or more
- Fixed deposit in Malaysian bank RM 150,000
- Buy a Malaysian property RM 1 million (fully paid) to reduce fixed deposit to RM 100,000
Malaysian My Second Home visa - MM2H is a 10 years resident visa. Renewable
Sabah MM2H, Sarawak MM2H and Peninsula MM2H may varies from one another. Subject to changes from time to time
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Who is eligible for Labuan company registration?
Eligible for Labuan company registration
- Malaysian
- Foreigner
- Dealing with companies in other countries
- Dealing with another Labuan company
- Dealing in foreign currency
- Elect to pay tax under Malaysian local tax (ITA Act)
Not suitable for Labuan company registration
- Dealing with Malaysian resident
- Dealing in Malaysian currency, Ringgit (MYR)
- Dealing with very high risk business activities
- Dealing from sanctioned / blacklisted / high risk countries
- Apply for work permit without business purpose
- Holding investment - If annual expenditure in Labuan is below RM 20,000
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What if I still have more questions?
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Labuan licensing
What business licenses are available in Labuan? |
Labuan leasing
- Labuan leasing is a business of renting out assets like machinery / vessels related to aviation, shipping such as aircrafts, ships, more. Charter on a bare boat basis
- Minimum Labuan staff : 2 staff for first 10 companies. Add 1 staff for next 10 companies
- Minimum spending in Labuan : RM 100,000 per company
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Labuan insurance broker
- Labuan insurance broker is a person who arranges insurance business activities on behalf of policy owners. And, arrange reinsurance business on behalf of insurer
- Minimum Labuan staff : 2 staff
- Minimum spending in Labuan : RM 100,000
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Labuan insurance company / reinsurance company
- Labuan insurance issuer is in the business of providing general insurance / life insurance. Reinsurer provides insurance services to insurance issuer / another reinsurer
- Minimum Labuan staff : 3 staff
- Minimum spending in Labuan : RM 200,000
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Labuan fund manager
- Labuan fund manager is a person who provides investment advice and securities services
- Minimum Labuan staff : 2 staff
- Minimum spending in Labuan : RM 100,000
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Labuan securities licensee
- Labuan securities licensee is a person who provides advice for securities
- Minimum Labuan staff : 2 staff
- Minimum spending in Labuan : RM 100,000
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Labuan commodity trading - LITC / GIFT
- LITC - Labuan International Commodity Trading is for traders that use Malaysia as their base. (GIFT - Global Incentives for Trading)
- LITC Product - Petroleum-related products, LNG liquefied natural gas, minerals, agriculture products, refined raw materials, chemicals, base minerals, or coal
- Minimum staff in Malaysia : 3 staff (including staff in Labuan)
- Minimum staff in Labuan : 2 staff (for first 5 companies). Add 1 staff for next 5 companies
- Minimum spending in Malaysia : RM 3 millions / year (include Labuan spending)
- Minimum spending in Labuan : RM 100,000 / company
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Contact Us
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Our Customer's Testimonies |
Vanni Torelli - Gluon Inc 
I learned about LabuanTax.com from a common friend. Being from country A, living in country B and working for clients in country C, I knew I needed a "one-stop shop" business arrangement that could work for me, give me the least amount of management burden and be sustainable in the long run. Labuan Tax treats me the way you would expect from a friend, not an accountant. He took me through all the necessary steps to register a Labuan business company and set up the required banking and accounting processes with minimal supervision and hassle from me.
I can safely say that Gary and Ms Chai have provided me with timely, impeccable service, even at short notice and when urgent action was needed. Everything they said or did showed genuine care for their clients, no matter how small their business footprint or revenues. Perhaps most importantly, they have always been one messenger chat away for any query or doubt I had.
I continue to view Labuan Tax as an effective business ally and friends, and I am certain, so does everybody who has been using or will use their services. There is no doubt that Labuan is one of the world's best offshore business platforms for SMEs. There is also no doubt that Labuan Tax is the best gateway to create and help run it.
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Garrie Cox - TerraTorque Inc 
Trust Labuan Tax Inc helped us set up a Labuan company several years ago. They are very professional and thorough and made the process quite easy to understand. He provided us with guidance every step of the way to ensure that we got our Labuan company up and running quickly and efficiently.
In the years following establishment of our business, Mr. Wong has kept us informed of all our options and all updates regarding Labuan companies. They have assisted us in our yearly company matters. Their personnel are knowledgeable, honest and straightforward and have always operated with our best interests in mind.
They have made operating a Labuan company quite easy, and I am confident you will be very pleased should you elect to use their services. I would not hesitate to recommend Trust Labuan Tax Inc and their team to anyone considering setting up a Labuan company.
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Chee Hoong - Velofinity Inc 
They are very dedicated and professional consultant with deep off-shore company formation knowledge in a variety of aspects like finance, company administration, penalty and etc. They always went the extra mile to bring value to both their client's business and company administration.
Their relentless customer focus and solution-oriented attitude, complimented by the friendly and easy-going personalities have always made it a true pleasure for me to get consultation and services from. I can recommend Labuan Tax very highly.
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Alex - Silverberry Inc 
It is with great pleasure to write a testimony for Trust Labuan Tax Inc. They provided corporate secretarial services for my Labuan company registration in Malaysia
Over the years, I have known them to be an extremely dedicated, efficient and trustworthy persons. They have good and serious attitude towards their works, and they treat all his clients with great respect and professionalism.
I am certain that you will find them to be a worthy asset to have in your company should you engage their corporate secretarial services. For any information that you may need regarding this recommendation, please do not hesitate to contact me.
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Definitions |
| Labuan trust company |
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Trust Labuan Tax Inc is a licensed trust company in Labuan to provide company secretarial services from company formation, bank account opening, work permit application, and Labuan licensing application |
| Labuan company |
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A company incorporated at Labuan international business financial center, Labuan IBFC. Considered non resident in Malaysia |
| Labuan |
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A low tax jurisdiction located in Malaysia, either subject to zero tax or 3% tax |
| Withholding tax |
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A tax rate that is withheld during fund transfer out of Labuan. Withholding tax rate is usually lower, if there is a double taxation agreement signed between Malaysia and intended countries |
| Paid up capital |
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The amount of share capital fully paid up into the Labuan company |
| Source of income |
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Jurisdiction where income is mainly earned from. Eg, Foreign income source (overseas) / domestic income source (Malaysia) |
| Management and control |
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Jurisdiction where core business activities are mainly performed and decisions are made |
| Labuan non trading activities |
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Labuan non trading activity consists of pure equity holding, and non pure equity holding |
| Non trading - Pure equity holding |
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Labuan pure equity holds the shares of a subsidiary company |
| Non trading - Non pure equity holding |
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Labuan non-pure equity holds long term investments. Eg, shares, securities, stocks, bonds, debts |
| Labuan business activities |
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Labuan company that conducts licensed business activities, or activities that are permitted under Labuan Companies Act 1990 (LCA). And subject to Labuan Business Activity Tax Act 1990 (LBATA) |
| Holding company |
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A Labuan company that buys (holds) shares of another company (subsidiary), or holds long term investments that generate passive income. Eg, shares, securities, stocks, bonds, debts |
| Audit in Labuan |
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Labuan company must be audited (and must appoint an auditor), except for non-trading activities conducted |
| Sdn Bhd |
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Sendirian Berhad, Private Limited in Malaysia - A Malaysian local company |
| Jurisdiction |
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Jurisdiction here refers to Labuan, Malaysia |
| Offshore |
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Offshore company here refers to company formation in countries like Singapore, Hong Kong, UK, BVI, Cayman, Seychelles |
| Malaysian resident |
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Malaysian citizen, permanent resident or foreigners that stays more than 183 days in Malaysia |
| Foreigner |
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Non Malaysian resident that stays less than 183 days in Malaysia |
| Work permit |
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A legal permit that allows foreigners to work and reside in Malaysia. Sometimes also known as Employment Pass / Expatriate Work Pass |
| Dependent visa |
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Visa for work permit holder's spouse, children or parents to stay in Malaysia |
| Labuan IBFC |
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Labuan International Business and Financial Centre. A marketing arm that promotes Labuan's benefits |
| LBATA 1990 |
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Labuan Business Activity Tax Act 1990 - Labuan corporate tax (3% tax if substance are fulfilled, 24% tax if substance are not fulfilled) |
| ITA Act |
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Income Tax Act 1967 - 24% corporate tax, if source of income is derived from Malaysia |
| DTA / DTAs |
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Double Taxation Agreement is an agreement between two countries seeking to avoid double taxation |
| LCA |
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Labuan Companies Act 1990 (Act 441) - The Act that governs Labuan companies and its business activities |
| OECD |
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Organisation for Economic Co-operation and Development - International organisation that consists of members from several countries |
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Company Registration
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Labuan Company Guides
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Disclaimers :
1. Content posted on the website is not intended for tax advice or financial advice
2. We make no claim of its accuracy
3. Use the content posted at your own risk
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