Labuan Offshore Company Formation, Registration & Incorporation
We at Indah Trust Limited are always ready to provide assistance for services regarding setting up of Labuan entities such as Labuan offshore company formation and incorporation. Our vast experience in this industry allows us to provide useful advice regarding Labuan offshore company registration costs and the relevant Labuan offshore financial services authorities.
We understand the different needs of individuals for wealth planning, with the flexibility of selecting the ideal structure for both wealth creation and preservation. Let us assist you in growing, managing, protecting your wealth with our services.
Take advantage of our experience and expertise in utilizing the range of wealth management vehicles offered in Labuan to achieve your desired goals. See our range of other corporate services in Labuan.
Common purpose of setting up a Labuan Offshore Company
In general, Labuan offshore companies are great as wealth management entities for the purpose of :
- Wealth planning
- Wealth creation
- Wealth preservation
Understand better about Labuan Company, click on any of the links below
Usage and purpose for offshore companies
Businesses today are becoming more cross-border with transnational operations to expand their business areas. By incorporating offshore companies, this allows companies to go global, enhance their corporate image and conduct multinational business transactions. Here are some common purpose and usage of offshore companies
- Using offshore companies to conduct cross-border transactions with lesser or minimal restrictions
- Ability to open offshore bank accounts to receive offshore transactions, which can minimize tax
- Can issue, receive or transfer letter of credit for transaction convenience and reliability
- An offshore company as the holding company, opens up the opportunity for unlimited investment financing
- An offshore company can hold on to intangible and invaluable assets like intellectual properties (patent, trademarks and copyrights)
- Using the offshore company to purchase real estate property to enjoy tax benefit, protect the asset and minimize probate
- Using the offshore company as a personal property trust for personal income tax benefit
- An offshore company as estate planning to avoid inheritance tax
Some of the usage mentioned above may or may not be applicable to different people’s needs because different people may have different situations.
It would be best to contact us and tell us what you wish to achieve and your situation and we can help to advise you on the best way you can achieve your goals by using a Labuan offshore company. Talk to us today for a free consultation.
Advantages of setting up an offshore company in Labuan
Why should you consider setting up a company in Labuan ?
Straightforward and advantageous tax system
- Minimum tax on Labuan trading company upon election annually:
- 3% of net profits as per audited accounts；or
- RM20,000 (USD5,000)
- 0% tax on Labuan Non-Trading activities (Investment Activities)
- Double Tax Agreements (Treaties) with over 70 countries
- Withholding tax exemption on payments made to non-residents
- No import duty / sales tax / capital gain tax
- 50% tax abatement for expatriate professionals and managers employed under Labuan companies
Asset Protection and Risk Diversification
- Business owners can transfer their assets to their offshore company to protect them
- It is commonly used as a vehicle to hold intellectual property and investments
- Assets in an individual’s name can be easily found through record searches. Assets that are transferred to an offshore company are no longer tied to the individual’s name, protecting it from legal opponents, judges and court rulings and unwanted seizures.
- Assets and bank account owned offshore companies are difficult to be found, even with professional asset search due to privacy and confidentiality protection from offshore jurisdictions such as Labuan.
- Control over the assets is retained not through own individual’s name but through your offshore company.
- A common saying is “Own nothing, control everything.”
- This protects you from unwanted lawsuits from parties who are possibly jealous of your success and wealth such as divorce suits, professional negligence suits, damage suits or even nuisance suits.
- After forming a Labuan offshore company, the assets placed in it becomes incredibly difficult to find, even during professional asset search, creating a high level of financial privacy.
- This privacy creates a protective barrier against future liabilities and litigation claims.
- Offshore jurisdiction like Labuan enforce confidentiality and information regarding your identity, account information and transactions are guarded stringently.
- However, the exception to this privacy is an investigation into criminal activities such as money laundering, drug trafficking, terrorism and other illicit purposes.
- No stamp duty on all instruments relating to offshore business activities including share transfer
- 100% exemption for director’s fees received by non-citizen directors of Labuan companies
- No foreign exchange controls
- Strategically situated in the Asia Pacific region and sharing a common time zone with many large Asian cities
Characteristic of Labuan Offshore Company
Understand the characteristic of a Labuan Company
Permitted Currencies : In any foreign currencies except Malaysian Ringgit
Minimum share issue : One share in any denomination in foreign currency
Minimum number : One (either individual or corporate entity)
Residency requirements : Resident director is optional
Corporate directors : Allowed
Meetings/frequency : As Per Articles of Association
Bearer shares : Not allowed
Minimum number : One (either individual or corporate entity)
Public share registry : There are no public records of Labuan companies
Meetings/frequency : Yes, at least one annually
Annual return : Filed annually not later than 30 days from the anniversary of the date of the incorporation of the Labuan company
Audit requirements : Optional, but required for Licensed Labuan Companies and Labuan Companies opting to pay 3% tax per annum on audited net profits
Registered Office : Yes, must be in Labuan, which shall be the principal office of a Labuan trust company
Domicile : Change in domicile is permitted
Structure of a Labuan Offshore Company
There are 2 common types of Labuan company structure
These are some examples of typical company structure using a Labuan entity will look like and its corresponding tax profile.
Labuan Holding Company
Labuan Trading Company
Frequently Asked Questions (FAQ) about Labuan Offshore Companies
How to set up a Labuan company in Labuan International Business Financial Centre?
A Labuan company can be incorporation in Labuan IBFC but it must be done via a Labuan trust company.
Besides the payment of relevant fees (based on paid-up capital), the official documents that should be submitted together with the application are the Memorandum and Article of Association of proposed company, consent letter to act as director and the statutory declaration of compliance by the trust company.
What is the definition and difference of trading and non-trading activities?
Non-trading activities are those activities relating to investment holdings in form of securities, stocks, shares, loans, deposits or any other properties by a Labuan entity on its own behalf.
On the other hand, trading activities under Labuan IBFC definition include trading, management, licensing, shipping operations, banking, insurance or any other activity which is not a Labuan non-trading activity.
What is the definition of business activities in Labuan IBFC?
According to Labuan IBFC, Labuan business activities is defined as Labuan trading or non-trading activity, transacted in non-Ringgit, carried out with residents or non-residents.
What will be the tax rate for business activities in Labuan?
Labuan companies involved in trading activities will be imposed with tax rate of 3% of audited net profits or fixed rate of RM20,000.
Which Labuan entities can apply for Labuan IBFC tax incentives?
All types of Labuan entities registered under Labuan IBFC get to enjoy the tax incentives.
What is unique and attractive about the Labuan IBFC tax system?
Apart from the numerous tax incentives for Labuan entities, here are some other unique features of the Labuan tax system
- Fewer tax filing requirements
- Perpetual tax exemptions
- No estimation of income and bi-monthly deductions
- Labuan entities may take advantage of Malaysia’s Double Taxation Agreement (DTA)
- Labuan entities can Invest in domestic companies while enjoying tax exemptions accorded in Labuan IBFC
What is the difference between Labuan trading company and Labuan investment company?
Investment companies are usually incorporated to hold assets or shares in companies that are located in other jurisdictions.
Trading companies, on the other hand, are companies that carry out business operations on a day to day basis.
Any requirements on minimum capital and shareholding?
One share is required as the minimum. There are no other minimum capital requirements. Labuan companies may issue shares of different classes or rights except for bearer shares, which is not allowed. The shares can be denominated in any currency EXCEPT Malaysian Ringgit.
An offshore company is required to have at least one shareholder, who may be an individual, a corporation or a trust company holding the shares as a nominee, or on trust.
Can the Labuan company issue share capital in Malaysian currency?
No. The share capital for the Labuan company must be issued in foreign currency (other than Malaysian currency).
Any audit requirements?
Labuan company must maintain proper accounting and other records in Labuan and it is to be kept at the registered office of the company in Labuan. Such accounting and other records are to be kept open and available at all times for inspection purposes by a directory of the company.
What is the purpose of setting up a Labuan company?
You can read about some of the common reasons why people choose to set up a Labuan company
What is the number of directors required to establish a Labuan company?
For a Labuan company, there must be at least one director who can fill in the role as both the resident director and resident secretary. Can be either an individual or a corporate entity.
What is the number of shareholders required to establish a Labuan company?
For a Labuan company, there must be at least one shareholder. Can be either an individual or a corporate entity.
Is it a requirement to appoint a Malaysia director?
There is no requirement for a Labuan company to appoint a Malaysian local director.
Can the same person be the director and the shareholder?
What is the "ultimate beneficial owner"?
This refers to the person who actually owns the Labuan company.
Will the information regarding the ultimate beneficial owner be published or made available publicly?
No. All details regarding the ultimate beneficial owner of the Labuan company will be kept strictly confidentially. Such information will not be available or open to the public.
Does a Labuan company need to be physically present in Labuan?
No. However, they are required to engage the services of a Labuan trust company, which will serve as their registered office in Labuan instead.
Can bank accounts be opened using a Labuan company?
Yes. Labuan company can be used to open foreign accounts and with banks in and outside of Labuan.
Is the Labuan IBFC subjected to exchange control?
No. Labuan companies and its operations are free from exchange control regulations when dealing with non-residents.
What is the governing legislation for companies in Labuan IBFC
Labuan Companies Act 1996
What are the fees payable to register a Labuan company in Labuan IBFC?
How long does it roughly take to incorporate a Labuan company?
Firstly, due diligence documents must be sbumitted. Upon satisfactory of that, the Labuan company may be incorporated within two or three working days.