Labuan (Offshore Company)
Formation of an Offshore Company in Labuan
An offshore company formation in Labuan (Malaysia) requires a minimum paid-up capital of only $1, and offers various corporate tax benefits including no sales, VAT or personal income tax, and numerous double tax avoidance treaties.
Labuanese companies are mainly used for conducting business in Asia, as well as for Islamic finance, e-commerce, and consultancy businesses.
FACTS & INFO
The Labuan Companies Act of 1990 (LCA) (formerly the Offshore Companies Act) provides for the establishment of offshore companies and the registration of foreign offshore companies in Labuan. In addition, a foreign company incorporated under the laws of another country may also apply to be registered as being continued in Labuan. Every offshore company may be a company limited by shares or by guarantee. The above mentioned companies may participate in offshore activities and enjoy the attractive tax treatment provided under the Labuan Business Activity Tax Act 1990.
An offshore company is only permitted to carry on business in, from or through Labuan. An offshore company may not: carry on business with a resident of Malaysia except as permitted by the Financial Services and Securities Act of 2010; carry on the business of banking or insurance or such similar business unless it is licensed so to do under the Financial Services and Securities Act; carry on business in the Malaysian currency except for defraying its administrative and statutory expenses; carry on business of shipping or petroleum operations in Malaysia, or carry on business as a trust company.
The Labuan Companies Act was amended recently to allow Malaysians to own offshore companies, as well as to permit foreign-owned offshore companies to invest in Malaysia subject to certain conditions.
Offshore companies are allowed to have names in a foreign language, provided they use the Latin alphabet. The words: "bank", "building society", "insurance", "assurance", "reinsurance", "fund management", "investment fund", "trust", "trustees", "Chamber of Commerce", "university", "municipal", or their foreign language equivalents, require approval. To denote limited liability, any of the following are permitted: "Corporation", "Incorporated", "Limited", "Sociètè Anonyme", or "Sociedad Anonima", or the relevant abbreviations. If the Malaysian word "Berhad" is used, then it must be preceded by '(L)' to denote that the company is incorporated in Labuan.
MEMORANDUM AND ARTICLES OF ASSOCIATION
Offshore companies in Labuan are incorporated by submission to the IBFC of the memorandum and articles of association, the consent to act as a director form, the statutory declaration of compliance, and the payment of the requisite fees. An annual fee of RM2,600 is payable 30 days after the anniversary date of incorporation to renew the registration of the company for another 12 months.
A minimum of one shareholder is required which may be an individual or a corporate body. The details of the company beneficial owners and shareholders are not part of the public records.
There is no minimum authorised share capital requirement; however, standard company formations include an authorised share capital of $10,000 of ordinary shares at a nominal value of $1 per share for which one share is required to be issued. Share capital can be held in any currency other than the Malaysian ringgit. Registered shares of par value, preference shares, redeemable shares and shares with no voting rights are all permitted. Bearer shares are not permitted.
There must be at least one director, which can be either a corporate body or an individual. The director may be a non-resident or resident of Malaysia. A trust company may be appointed to be a nominee resident director of the Labuan offshore company. Particulars of the directors must be filed with the IBFC.
It is a requirement under the LCA that an offshore company must employ the services of a trust company, which is a company incorporated under the Companies Act 1965 and registered under the Labuan Trusts Act 1996, to provide trust company services to offshore companies. The trust company provides the registered office and resident secretary, and performs the secretarial duties of the offshore company, such as lodgment of any documents required under the LCA, and also makes available any of its trust officers for appointment as resident director.
All companies must hold a members meeting to receive the accounts (audited or unaudited) no more than 9 months from the date of closing the accounts.
Incorporation usually takes between 7 to 14 working days.
RECURRING MAINTENANCE FEES
As from the second year, there are recurring maintenance fees of $2,600. These include:
- Provision of registered office, registered address, annual return, filing tax return
- Provision of company secretary and registered agent
- Payment of annual government fee
Labuan offshore companies that are engaged in offshore trading activities are subject to corporate profits tax, which will be levied at 3% on assessable net profits as per the audited accounts. A return and a statutory declaration are required to be submitted.
Alternatively, the companies can elect to pay a flat tax of RM20,000. In this case, a statutory declaration and a prescribed from is required to be submitted.
For offshore companies who are engaged in non-trading activities, no tax shall be payable for income earned through these activities. In such cases only a statutory declaration is required to be submitted.
AUDIT AND ACCOUNTING
A Labuan offshore company needs to have an audit performed by an approved auditor if the company is engaged in offshore trading activities and does not elect to pay the flat tax of RM20,000. An annual return must be filed 30 days prior to the company's anniversary date of incorporation. A set of accounting records must be kept in Labuan.
Our Services & Requirements
OUR SERVICES INCLUDE:
- Name check and approval
- Filling incorporation documents with the IBFC
- A standard set of original corporate documents
- Payment of the government fee
- Provision of registered office and registered agent for one year
- Provision of company secretary for one year
- Rubber stamp
Please note: If applying for a corporate bank account you will need to order a full set of legalized company documents when the account is opened outside of Labuan. Please contact us if you need assistance with documents legalization.
Please provide the following documents for all directors, shareholders, beneficial owners, and authorised signatories:
- Notarized copy of valid passport.
- Original or Certified copy of utility bill / bank statement (as verification of residential address, dated within three months).
- Original or certified copy of Banker’s reference letter (dated within three months).
- In cases where shareholders and/or directors are corporate bodies, full apostilled set of corporate documents and certificate of good standing (for companies registered more than one year).
IMPORTANT NOTE: LICENSABLE BUSINESS ACTIVITIES
If you conduct any activity without the required license or authorisation granted by a relevant authority in any jurisdiction, Starting Business will not be able to assist you with the company formation or bank account opening related to such unlicensed activity.
Licensable activities include, but are not limited to: provision of financial services involving trading/brokerage in foreign exchange, financial and commodity-based derivative instruments and other securities; offering investment advice to public; insurance and banking; operation and administration of collective investment schemes and mutual funds; payment processing services; money exchange, money transmission or money brokering; asset management; safe custody services; gaming, gambling and lotteries.
Please contact us if you need assistance in the licensing of your financial, Forex brokerage or gambling company.
Shipping of corporate documents or banking kits to your destination requires an extra charge and will be automatically added to your order during checkout. Shipping costs for international courier services are set automatically depending on geographic zones.