Labuan
Private company limited by shares
Legal
Country code – MY
Legal Basis – Common law
Legal framework – Labuan Companies Act (As amended)
Company form – Private company limited by shares (LTD)
Liability - The liability of the shareholders for the company is limited to the unpaid amount of their respective shareholdings.
Economic Substance - Companies carrying on a "Labuan Business Activity" must comply with economic substance requirements to qualify for a 3% corporate tax. Such substance requirements include being directed and managed in or from within Labuan, conduct the core income-generating activities in Labuan, have physical premises in Labuan and have an adequate number of Labuan employees and local Labuan expenditure - which is determined depending on the specific activity, starting at two employees and RM 50,000 minimum local expenditure.
Share capital – There are no minimum share capital requirements.
Shareholders – Labuan companies may be incorporated by one or more shareholders, who can be either natural or legal persons, residents or non-residents, without limitations. Details of shareholders are not available to the public.
Directors – A Labuan company must appoint at least 1 director who resides in Labuan. Directors may be a natural or legal persons, resident or non-resident (other than the resident director). Directors’ details are not disclosed in a public record.
Secretary – A resident secretary is required, who must be a trust officer of a trust company or a Labuan / Malaysian domestic company wholly-owned by a Labuan trust company
Registered Address – A company shall have a registered address and office in Labuan, provided by a Labuan trust company
General Meeting – Annual general meetings are mandatory but can be held anywhere. Meetings can be held by telephone or other electronic means; alternatively, directors, as well as shareholders, may vote by proxy.
Electronic Signature – Permitted.
Re-domiciliation – Inward and outward re-domiciliation is allowed.
Compliance – Companies are obliged to maintain accounting records for 7 years, as well as the supporting documentation.
Companies must file an annual return to the Labuan FSA and tax return to the Inland Revenue Board. Companies are required to file annually audited financial statements.
Appointment of an auditor and file audited financial statements is compulsory for all companies.
- Shareholders not disclosed
- Directors not disclosed
- Corporate shareholders permitted
- Corporate directors permitted
- Local director required
- Secretary required
- Local secretary required
- Annual general meetings required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- - Minimum issued capital
- - Minimum paid up capital
- USDAny Capital currency
- Anywhere Location of annual general meeting
- 2018 AEOI
Taxes
Corporate Income Tax – Taxes levied to a Labuan company largely depend on whether the company carries on a "Labuan Business Activity" or a "Non-Labuan Business Activity"
- 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 (tax exempt)
- Administrative, accounting and legal services including backroom processing, payroll services, talent management, agency services, insolvency related services and management services.
- with paid-up capital of 2.5 million Malaysian ringgit (MYR) or less, and gross income from business of not more than MYR 50 million.
- that does not control, directly or indirectly, another company that has paid-up capital of more than MYR 2.5 million, and
- is not controlled, directly or indirectly, by another company that has paid-up capital of more than MYR 2.5 million.
Withholding taxes – There are no withholding taxes in Labuan on dividends, interests, royalties or fees paid to non-residents.
Capital gains derived from the sale of securities are tax-exempt, those derived from the sale of real properties are subject to the Real Property Gains Tax at rates of 30% for properties held up to 3 years, 20% on the fourth year, 15% on the fifth year and 5% after 5 years.
There is an exemption of 50% of employment income in a managerial capacity with Labuan entity in Labuan, or in a co-located office of marketing office which may be located elsewhere in Malaysia to facilitate business meetings, but cannot be for exercising trading activities on behalf of Labuan entities.
A 100% exemption applies for non-citizens in respect of director’s fees from Labuan entities.
Other taxes – Labuan has a free-port status, hence indirect taxes do not apply. Stamp duty is exempted on all instruments executed by a Labuan entity in connection with its Labuan business activity.
Exchange controls do not apply to Labuan companies.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 3% Offshore Income Tax Rate
- 3% Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 15% Interests Withholding Tax Rate
- 10% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- Indefinitely Losses carryforward (years)
- FIFO Inventory methods permitted
- 11% Social Security Employee
- 13.00% Social Security Employer
- 28% Personal Income Tax Rate
- 6% VAT Rate
- 73 Tax Treaties
Country details
The Federal Territory of Labuan is a federal territory of Malaysia, which comprises the Labuan Island and six smaller islands. It is located off the coast of the state of Sabah in East Malaysia.
It is populated by about 96,800 inhabitants and its capital is Victoria.
Malaysia’s official currency is the Ringgit (MYR) and official languages is Malay, although English is widely spoken.
The island is administered by the federal government through the Ministry of Federal Territories. Labuan Corporation is the municipal government for the island and is headed by a chairman who is in charge of the development and administration of the island.
Labuan has one representative in each of the Lower and Upper Houses of Federal Parliament. Usually, the chairman of the Labuan corporation is the Labuan’s parliament current member.
Labuan is an offshore support hub for deepwater oil and gas activities in the region, as well as a tourist destination and an international financial center.
Labuan is a free trade zone with an export-oriented economy, mainly exporting crude oil, methanol, HBI, gas, flour, animal feed, sea products, and ceramic tiles, which are exported to mainland Malaysia or overseas.
Raw materials, parts, and equipment for industrial uses well as consumer products are imported.
Labuan is also a reputable financial center (Labuan International Business and Financial Centre, LIBFC), currently with more than 300 licensed financial institutions including major leading banks.
Labuan LIBFC is mainly comprised of holding companies, captive insurance, Shariah-compliant Islamic Finance structures, public and private funds, and wealth management.