TAX PLANNING CREDENTIALS
The key benefit of selecting Labuan as a corporate base is that it benefits from a very favorable tax regime whereby either a company can be taxed on the basis of a tax rate of only 3% (which also requires the submission of annual audited accounts) or pay a flat rate tax of 20,000 Ringgit (Approximately €4,125.00) per annum and which doesn’t require the submission of annual audited accounts. However, the most important tax planning benefit of Labuan is that it is considered a part of the Malaysian tax system for tax treaty purposes, which means that despite the very beneficial tax regimes, it can* fully-benefit from the extensive tax treaty network Malaysia has with over 60 countries worldwide.
* It should be noted that both Switzerland and the Netherlands do exclude Labuan from their key tax treaty provisions but much more importantly China and all other East Asian countries do not.
- No corporate taxes for ‘passive’ trading companies: No tax is imposed on the income of offshore companies in Labuan which are non-trading companies carrying on offshore non-trading activities such as the holding of shares, immovable property (i.e. a house or office), taking loans and/or placing deposits. Non-trading companies must maintain proper company books and accounts but do not need to have their accounts audited;
- Internationally Trading need pay only 3% corporate tax or a flat rate tax of 20,000 Ringgit: Where companies are trading outside of Labuan they will be subject to a tax rate of 3% on their world-wide profits or a maximum annual payment of approximately €4,125.00 depending on the fiscal election. The accounts of trading companies must not only be properly maintained but are also subject to an annual audit;
- Tax Treaties are inclusive: With the exception of Switzerland and the Netherlands both trading and non-trading companies may benefit from Malaysia’s 60 plus double taxation treaties either directly or by using domestic company conduits;
- No withholding taxes – There are no withholding taxes on dividends paid by Labuan offshore trading or non-trading companies;
- No inheritance, death or estate taxes – There is no inheritance, death or estate taxes;
- Tax concessions for foreign workers – Foreign employees of Labuan offshore companies can enjoy a series of personal tax concessions whilst resident in Labuan including up to a 50% discount on the custom and excise duty payable for personal vehicles;
- Confidentiality guaranteed by law – Confidentiality is guaranteed under the Offshore Companies Act 1990 and the disclosure of information is strictly prohibited unless pursuant to a court order;
- No minimum capital requirements – There are no minimum capital requirements unless a company is acting as a bank, insurance company or fund manager;
- Public share issues permitted – The issue of shares and debentures to the public is allowed subject to the approval of Labuan Offshore Financial Services Authority (LOFSA);
- No director/shareholder restrictions – There are no nationality restrictions for either directors or shareholders;
- Corporate directors permitted – Directors and shareholders can be corporate bodies;
- Multi-denominational share capital – Shares can be denominated in any currency save the Malaysian Ringgit;
- Different share classes available – Shares of different classes are allowed;
- Annual General Meetings (AGM’s) – Company AGM’s may be held outside of Malaysia and, if required, by electronic method;
- International banks located in Labuan – There is a comprehensive range of international and local banks available in Labuan;
- Well educated professionals – Labuan has well educated professionals mostly educated at UK universities;
- English is the business language – English is the dominant language in commerce throughout Labuan;
- The legal system is mostly common law based – For business purposes, the Malaysian legal system is mostly common law based but Sharia law also applies in certain circumstances normally in respect to personal matters where Muslims are involved.
Double Taxation Treaty Network
The Malaysian double taxation treaty network is one of the largest in south-east Asia and Labuan (with the exceptions of the Netherlands and Switzerland) has become in particular a favored business location especially for those wishing to benefit from the Malaysian/Chinese tax treaty provisions.
ADMINISTRATION & ACCOUNTANCY SERVICES
Managed Malaysia Labuan Companies
The key service offered by the SCF Accountancy & Law is that of a fully managed Labuan company where-by we can register your Company, act as the daily legal and accountancy administrators, liaise on your behalf with LOFSA and the other regulatory bodies, maintain the registered office, company minutes and in fact everything necessary to provide you with a fully functional Labuan company including online banking, management and meeting rooms etc. – In fact, our Labaun services are totally bespoke according to your needs.
Set-Up & Annual Maintenance Fees
Please see separate SCF Accountancy & Law Malaysia Labuan Fee Quotation
For more information on Malaysia Labuan companies please contact a SCF Consultant.