In 2024, offshore jurisdictions are by far not your only option for establishing a trust, foundation, LLC, or foreign brokerage. In fact, this choice may sometimes complicate matters, particularly as far as account openings and activity reporting are concerned.
Consider Labuan, Malaysia. A secure and appealing hub for foreign entrepreneurs looking to launch their ventures, this Asian jurisdiction is praised for its safety and dependability, making it a preferred location for globally-owned companies. Labuan is a federal territory that is on the OECD white list. It allows nominee services while prohibiting bearer shares. Here, the confidentiality of shareholders, directors, and company founders is paramount. Access to their information is strictly controlled and requires the above persons’ consent.
Why Labuan attracts leading corporations
Labuan is a lively banking center and free trade zone with enticing opportunities for investors and international entrepreneurs. It holds particular appeal for businesses about to engage with Malaysia, Brunei, the Philippines, and other vital Asian markets.
The jurisdiction was established in 1990 as an international offshore center. However, Labuan’s official status changed in 2010 in response to worldwide initiatives against tax havens.
Recent studies indicate Labuan’s growing popularity. With the number of new subsidiaries outpacing those in Panama and the Isle of Man, it is poised to rival the likes of Guernsey and the Bahamas soon.
The region draws leading corporations with its economic resilience, advantageous tax policies, stringent privacy protocols, and adaptable business practices that are in line with the aspirations of foreign investors.
Transform your business with Labuan’s unique corporate advantages
Labuan is more than your traditional tax haven. The nation has transformed into a respected jurisdiction for international business registration. The Companies Act in Labuan offers significant advantages for offshore companies:
- Corporate Tax: A low industry-specific tax rate of either 0% or 3%.
- No Extra Taxes: There are no taxes on dividends or capital gains.
- Full Ownership: You will have complete ownership of your company with no need for Malaysian partners.
- Tax Benefits: Benefit from a 3% corporate tax for trading companies or 0% for holding and investment entities. Alternatively, a 24% local tax rate is available.
- Freedom of Currency: Operate with no currency controls or special licenses.
- Quick Registration: Register your company within a maximum of 7 days.
- License Exemption: For approved activities, conduct international business without a special license.
- Shelf Companies: Purchase ready-made companies legally.
- Minimal Capital: Start with as little as USD 1 in paid-up capital.
- Global Directors and Shareholders: Directors and shareholders can be from any country.
- No Capital Minimum: There’s no set minimum for authorized capital.
- Tax Exemptions: Enjoy exemptions from dividend, capital gains, inheritance taxes, withholding taxes, and stamp duties.
- Tax Rebate: Avail a 50% tax rebate on compensations and professional fees for foreign directors.
As you can see, company registration in Labuan provides benefits that are on par with those of other established global offshore centers.
Here’s what the process involves for non-resident founders aiming to incorporate in Labuan:
- Name Selection: Opt for a unique company name and secure the registrar’s approval.
- Documentation: Gather all necessary corporate documents, including articles of incorporation and memorandum, alongside identity verification for beneficiaries, directors, and shareholders.
- Office Space: Acquire a physical office space to establish a legal address in Labuan.
- Bank Account: Initiate the process of corporate bank account setup.
- Registration Application: Proceed with the application for company registration in Malaysia.
- Fee Payment: Pay the Labuan company registration fee.
- Local Hiring: In compliance with economic substance requirements, appoint a local resident as company secretary and hire the required number of office staff.
Labuan offers renewable visas for up to two years and facilitates access to Double Taxation Avoidance Agreements (DTAs) with more than 70 countries, which can significantly reduce your tax liabilities. An extra bonus is that offshore companies in Labuan that satisfy specific requirements are eligible for tax incentives on international business operations.
Labuan’s tax changes and what they mean for your business
Interested in establishing a company in Labuan? First, you should learn all you can about the tax regulations implemented by the local government for the years 2023 and 2024.
For your information, in Labuan’s offshore jurisdiction, tax payments are due in the year following the financial period, with the deadline being March 31.
As of January 1, 2019, Labuan, Malaysia has overhauled its tax system for foreign entities, abolishing the fixed MYR 20,000 tax and introducing variable tax rates for different business sectors. Now, both residents and non-residents can select a business category that is the right match for their operations to benefit from a profit tax rate of either 0% or 3%.
Labuan offers attractive tax rates for specific business sectors. This way, companies in leasing, fund management, and brokerage services enjoy a 3% profit tax, provided they:
- Operate from a physical office in Labuan with at least two local employees.
- Incur a minimum of MYR 100,000 in local expenses.
- Maintain accurate accounting records.
Consultancy and management firms benefit from a 3% profit tax and access to double taxation avoidance agreements, advantageous for non-resident owners. They must:
- Have a physical presence in Labuan with at least two local staff members.
- Conduct and document verified transactions in Labuan.
- Report profits and adhere to proper accounting practices.
Companies that hold investments in other businesses or assets are taxed at 0% if they are pure equity holdings or meet the economic substance requirements. Some may need a central management office in Labuan for eligibility.
Labuan’s 2024 business perks
With its low corporate tax rates and streamlined company registration in Malaysia, Labuan is an excellent choice for offshore businesses in 2024, let alone the other benefits it comes with:
- Forex Trading: The jurisdiction welcomes applications for Forex licenses, facilitating online currency trading.
- Fintech Support: There is strong support for fintech startups to encourage innovation and technological growth.
- Entrepreneurial Programs: Labuan provides a range of programs designed to aid budding entrepreneurs in acquiring knowledge and networking opportunities with fellow business owners.
Expert help with company registration in Malaysia and beyond
For more information about company registration in Malaysia and elsewhere, visit our website or reach out to International Wealth experts directly. We offer comprehensive support for offshore business registration, bank account setup, and multiple additional services, including licensing, accounting, tax reporting, and more.
