Company Incorporation in Labuan
If you’re like me, you might be wondering, where is Labuan? Is it a place located in Brunei? Surprise, surprise! It actually belongs to the federal territory of Malaysia!
Yes, for Malaysian entrepreneurs or overseas entrepreneurs, you have the choice to choose to incorp the normal way, or you can choose to Incorp in Labuan. Read on to know the difference!
What is a Labuan Company?
Incorporating a company in Labuan is the same concept as incorporating your company in Malaysia. However, the company will be regulated under the Labuan Companies Act 1990 (LCA 1990).
If you incorp a Labuan Company, you will be able to carry out your business activities through or in Labuan, aka the Tax heaven.
How many types of Labuan companies are there?
- An Unlimited Company
- A Company (limited by shares)
- A Company (limited by guarantee)
Why incorp in Labuan instead of Malaysia?
Why would you even want to consider choosing to incorp in Labuan instead of the normal incorporation? Well, the most popular reason will be:
Tax haven
Depending on the nature of your business (which will be stated later, you will only need to pay a 0% to a maximum of 3% tax rate!
Better confidentiality / Privacy
Information such as shareholders, directors or beneficial owners can only be disclosed by the owner of the company. Your company will stay anonymous unless you commit suspicious activities.
Does not require Nominee Director
Requires only one shareholder and one director. Both doesn’t need to be a resident in Malaysia.
Lower Paid-up Capital for 100% Foreign Ownership
Foreign entrepreneurs will just need to pay a minimum amount of 1 USD to start their own Labuan Company.
Who is suitable to incorp their business in Labuan?
You might think with all these benefits, why won’t every entrepreneur start their own Labuan Company? That’s because…
Labuan Company is not for everyone!
You can only start your own Labuan Company only if you are conducting these business activities
- Administrative, accounting, backroom processing, payroll service, agency services, management services, talent management and Insolvency related services.
- Administrative, accounting, backroom processing, payroll service, agency services, management services, talent management and Insolvency related services.
- Insurance company, money broker, fund manager, banks, securities licensee or investment banks
- Investing or holding shares in a company.
Labuan Company vs Malaysia Company (Sdn Bhd)
I’m sure you’re curious about the detailed differences between a Labuan Company and an Malaysia Sdn Bhd. If so, look at the table below
Labuan Company | Malaysia Company (Sdn Bhd) | |
Regulation | Labuan Companies Act 1990 | Companies Act 2016 |
Corporate Tax | 0% to up to 3% | 17% to up to 24% |
Privacy | All information are private and confidential unless authorized by the owner of the Labuan Company. | All information is available to the public and information such as financial accounts can be checked without any authorization. |
Target Audience | International customers | Customers within Malaysia |
Expatriate Income Tax | 50% rebate on taxable income | 0 – 28% with no rebate |
Contact us to know more! | ||
FAQs
Frequently Asked Questions
Is a Labuan company legal?
Yes, starting a Labuan company is legal. We wouldn’t promote illegal incorporation methods, would we? 😆
What is the process of incorporation in Labuan?
The process is similar to starting a company in Malaysia. If you’re interested to start your own Labuan Company, contact us to know more!
Is Labuan Tax-free?
It depends on the nature of your business. However, even if you are required to pay tax, you will only need to pay 3% which is drastically lower than a normal company in Malaysia.
Tell me one disadvantage of Labuan Company.
Well, the privacy that a Labuan company offers might make it harder for potential investors or partners to conduct a due diligence on your company.
I am a foreign entrepreneur, am I eligible to start my own Labuan Company?
Both Malaysians and foreign entrepreneurs are welcome to start their own Labuan Company.
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