Labuan

„The Sabah version of Vegas“ is sometimes called a small island located off the coast of the Malaysian state of Sabah. The island is known for its picturesque fauna and flora, it is a paradise for all divers, sports fishermen and also entrepreneurs looking for a tax-free destination for their business. There are currently over 3,000 offshore companies in Labuan, and this relatively low number is due to the authorities' efforts to maintain a good reputation and thorough vetting of applicants.

Why Labuan is considered one of the most attractive areas for doing business in Asia

Labuan is one of the few financial offshore centers in Asia. For those who trade in or want to expand into Asian markets, this destination may be the first choice.

Labuan is a tax haven. The attractive tax regime attracts many foreign investors who set up offshore companies. In principle, companies in Labuan can choose to either pay a 3% corporate profit tax or pay a fixed amount of RM20,000 (approx. $7,000) depending on the type of your business. The good news is that there is zero capital gains tax and zero property transfer tax. The payment of dividends is exempt from withholding tax.

Another reason for the popularity of Labuan among foreign investors is the fact that by establishing a company, a foreigner gets the opportunity to receive a ten-year residence permit in Malaysia with the possibility of extension (it is enough to prove assets, permanent foreign income and deposit a minimum amount in an account maintained with a Malaysian bank).

Another bonus is that only one shareholder, one director is required to set up a company in Labuan, and both positions can be held by a single person who may or may not be a resident of Malaysia. The only requirement is a local secretary.

You do not need any large investments, as the minimum initial capital is one US dollar. Labuan gives you 100% anonymity! The company register is not publicly accessible, but for even greater anonymity we recommend using nominee services. Labuan is a signatory to many double taxation treaties.

A few downsides include the obligation to keep accounts and the fact that the company is subject to an audit. So you cannot completely avoid paperwork. Further details then depend on the nature of your business and the type of company you are setting up.

The taxes in Labuan themselves differ depending on whether the offshore company is a business or a non-business. A trading company can choose between a flat tax of MYR 20,000 or a 3% profit tax, with the profit to be determined by a Labuan auditor

Non-commercial companies do not pay any tax, while a non-commercial company is considered to be one that only holds shares, securities, business shares, deposits or has income from loans and real estate.

Overall, Labuan can be assessed as a stable jurisdiction that has a special charm, acceptable to both the Western world and Muslim countries.

Ke stažení

Back to the previous page

Latest blog posts

• Where are the best tax solutions in EU?
• 5 tips on how to overcome a business crisis
• How to smoothly transfer your company to your offspring and enjoy a peaceful retirement

Contact us