A quick look at Labuan, Malaysia
Labuan is one of the three federal territories of Malaysia located off the north-east coast of Borneo in East Malaysia (Borneo Island comprises of territories belonging to three sovereign nations – Brunei, Indonesia and Malaysia).
The territory of Labuan consists of 7 small islands of which Labuan Island is the largest. The weather is tropical with the main island benefits from its nice beaches and excellent hotel facilities making it an ideal place for business and pleasure. The population of approximately 100,000 and the people are mostly bilingual with Malay language is the national language, but English is the main language of business.
Labuan is in the heart of the ASEAN community and the main island is accessible from Kuala Lumpur, Kota Kinabalu (the capital of Sabah, a northern state in the Malaysian Borneo) and Brunei.
Important Features of a Labuan Company
All Labuan companies are governed by the Labuan Companies Act 1990 and companies incorporated in Labuan carrying out either trading or investment holding (“non-trading”) activity. Labuan Financial Services Authority (Labuan FSA) is the statutory body responsible to regulate and supervise international businesses and financial services industry in Labuan. Type of Labuan business activities: Trading and Non-Trading (“investment activities”) Permitted Activities: May carry out any business that is lawful in Malaysia either in, from or through Labuan – - can conduct business activities with residents of Malaysia; - can transact in Ringgit Malaysia (RM); - relevant activities including holding companies are subject to economic substance requirements in Labuan; - royalty and other income derived from IP rights are subject to tax under the domestic Income Tax Act 1967; - banking, insurance, trust companies, leasing, fund management and other financial services and activities require licensing from Labuan FSA Main Legislations: 1. Labuan Companies Act 1990; 2. Labuan Business Activity Tax Act 1990 (and its amendments); and 3. Labuan Financial Services and Securities Act 2010 Taxation: - Labuan trading companies listed under the schedule are subject to 3% tax of net audited profit - Labuan non-trading companies benefit from 0% tax - All Labuan companies that are in scope will be subject to ‘economic substance requirements’ under the Labuan tax regime, and will benefit from the preferential tax rates mentioned above - Labuan companies that do not comply with the ESR will be taxed at a flat rate of 24% - All Labuan companies receive Tax Identification Number (TIN) Registered Agent/Office: Required Incorporation Time: Minimum 2 business days Annual Fees Payable to Labuan FSA: - 1st year capital registration – USD300 for paid-up capital not exceeding RM50,000 (approx. USD10K) - Annual – USD800 Confidentiality: Yes Bearer Shares: Not permitted Minimum Capital: 1 share Currency of Capital: Any currency except Ringgit Malaysia (RM or MYR) Shareholders: Minimum 1, corporate shareholder is allowed Directors: Minimum 1. If corporate director is appointed the composition must have a minimum of two directors with at least 1 director is a natural person and designated as "resident director". Company Secretary: Resident secretary is mandatory Registered Office: Registered office address in Labuan is mandatory Public Records: No, However, 3rd party can now do search at the Registry provided written consent from a director is obtained Location of Meetings: Anywhere Common Seal: Yes Company Accounts: Yes Audited Accounts: Required Annual Return: Yes Change in Domicile: Yes
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