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malaysia (labuan)

Labuan, officially the Federal Territory of Labuan, is a federal territory of Malaysia. It is made up of the eponymous Labuan Island and six smaller islands and is located off the coast of the state of Sabah in East Malaysia. Labuan’s capital is Victoria and is best known as an offshore financial centre offering international financial and business services via Labuan IBFC since 1990 as well as being an offshore support hub for deepwater oil and gas activities in the region.

A Labuan company can deliver an array of positive results for you and your investment – provided it is structured in the most suitable way. Using the breadth of our knowledge, experience, and the ability for supporting businesses and high net-worth individuals in the international Trust sector, we will assist you with your Labuan company formation.

The Labuan Companies Act 1990 ensures high levels of confidentiality and a wealth of financial benefits, whether your Labuan Company is involved in trading or non-trading activities. We are able to advise you at the planning stage as well as actually help in the formation and ongoing promotion of your company in Labuan – and because of our services are tailored to each client, you’ll receive the most comprehensive, bespoke and cost-effective support from us.

The Labuan Companies Act 1990 provide for the establishment of companies in Labuan, opening up the jurisdiction to a range of overseas investors, and marking the beginning of its remarkable growth as a financial centre.

Labuan companies may carry out either trading or non-trading activities on or via the island through the Labuan IBFC.

A Labuan non-trading company holds investments in securities, stocks, shares, loans, deposits or other properties on its own behalf to make a profit. A Labuan trading company, on the other hand, makes a profit by buying and selling goods and services to international customers.

Examples of trading companies include:
• Banking and financial institutions
• Insurance companies
• Fund management companies
• Leasing companies
• Any other activity which would not be defined as a non-trading company

There are many benefits to setting up a company in Labuan. It is strategically located for carrying out business in the Asian market as it operates on the same time zone as a number of large Asian cities. Labuan IBFC is just a short flight from Kuala Lumpur and Kota Kinabalu and there are plenty of flights daily. Labuan also has an excellent infrastructure, and a pool of talented, experienced and multilingual professionals who can help you grow and develop your business.

Furthermore, your privacy is fully protected as a comprehensive regulatory framework ensures that Labuan complies with international standards of service, performance, and confidentiality. In addition to this Labuan is a ‘whitelisted’ jurisdiction and endorses the bilateral exchange of tax information with foreign authorities.

Labuan companies also benefit from:

  • Competitive operating costs which help keep overheads down
  • Excellent support services, including legal, accounting and management services
  • No nationality restrictions for shareholders or directors
  • A politically and economically stable environment
  • Minimal foreign exchange control regulations

All Labuan non-trading companies are totally exempt from tax, while Labuan trading companies pay tax on profits at a very reasonable rate of 3% of the net profit. In addition to this, there is no capital gains tax and no stamp duty on instruments related to business activities carried out through the Labuan IBFC.

Labuan companies are also exempt from withholding tax on the following:

  • Interest paid to a resident or non-resident who is not engaged in the business of banking,
    finance or insurance.
  • Dividend and Interest paid to a non-resident or other Labuan company.
  • Lease rental paid to a non-resident.
  • Technical or management fee paid to a non-resident or other Labuan company.
  • Royalty to a non-resident or other Labuan company.
  • Distributions made by an offshore trust to non-resident beneficiaries.

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