Since 1989, Labuan’s reputation as a tax haven in Southeast Asia has made it a top location for foreign-owned business across the world. This trend only continues to grow, as the 2022 Market Report from the Labuan International Business and Financial Centre recorded a 17% increase in total new incorporations in 2022 compared to 2021, of which:
The report also highlighted impressive growth in revenue across certain key Labuan industries such as insurance, banking, and commodities trading.
In light of the continuous interest in Labuan as an offshore business destination, MISHU thought it would be useful to compile the nine most commonly asked questions we receive from prospects about the Pearl of Borneo.
Or you can always check out our Labuan Incorporation page to get in touch.
List of FAQsThis is probably the top question we get, and we’re happy to answer that there are numerous benefits that make Labuan an attractive offshore destination for international businesses:
Note that this tax rate is only granted for Labuan companies that comply with tax substance requirements (minimum number of full-time employees and annual operating expenditure).
In addition to attractive corporate tax rates, Labuan offshore companies also enjoy:
Labuan respects the need for personal and corporate confidentiality. The registrar will not disclose important information such as the shareholders, directors, or beneficiaries of the company, nor will they be publicly published unless with your permission.
A minimum of one share is required and there is no minimum capital requirement.
The minimum number of shareholders in an offshore company is also just one, and the shareholder may be an individual, a corporation or a trust company holding the shares as a nominee, or on trust. Additionally, the sole shareholder can be a foreigner residing overseas.
Incorporating a company in Labuan entitles you to a Labuan Employment Pass which allows travel to Malaysia. Foreign business owners thus get to enjoy entry privildges under Labuans relaxed paid up capital requirements.
Contact us to take full advantage of what Labuan has to offer.
While specific requirements vary depending on business type, across the board, these are basic requirements for a foreign business in Labuan:
Yes, all Labuan companies must conduct an annual audit and maintain proper accounting records which are to be kept at the registered office of the company, and open for inspection at all times.
At a high level, there are three types of foreign companies that can open in Labuan.
Keep in mind this list of service companies is not exhaustive, so contact us to find out if Labuan is a good fit for your company.
The average Labuan incorporation takes about 14 days from the moment you engage a Labuan Trust Company due to the following pre-incorporation preparatory steps.
All Labuan company incorporations in Labuan IBFC must be done through a Labuan Trust Company, a list of which can be found here.
However, keep in mind a Labuan Trust Company can help you obtain the necessary licenses for specific businesses to operate.
Note: Activities that require licensing must have prior approval to conduct such business before incorporation. For a list of Labuan business-specific licenses, click here.
As of now, the Labuan FSA authorities charge USD2,000 to register a foreign company in Labuan, not including various other professional service fees.
Business owners have the freedom to choose any name, including abbreviations or words from other languages, so long as an official and accurate English translation is provided. Bear in mind, however, that Labuan FSA has the authority to reject a name at their discretion.
The fee to reserve a name is RM50 and approval is within 24 hours, after which the name will be reserved for three months.
Once an application to incorporate has been submitted, approval only takes 24 hours.
For a complete overview, check out our guide to offshore Labuan company registration here!
There are no real drawbacks specific to Labuan, but here are a couple of disadvantages of offshore companies in general:
The high degree of privacy and confidentiality afforded could make it difficult for potential investors and business partners to run a background check on your business or yourself.
Additionally, in cases where it becomes in the owner’s best interests to publicly declare ownership, proving this can be a time and resource consuming process.
Operating within Labuan’s jurisdiction may impose limitations on specific activities or advantages that would otherwise be available in the company’s home country, such as specific tax rebates or deductions.
That said, Labuan offers some pretty stellar tax advantages, so unless you’re already based in another tax haven, this is unlikely.
The Labuan Financial Services Authority charges a company registration fee of USD 1,500 for a local Labuan company, and USD 2,000 for a foreign Labuan company, which doesn’t include various additional professional service and license application fees.
Also, once you start operating, there will be an annual fee of USD800 for local companies and USD 1,500 for foreign companies.
Yes, Labuan Companies can open both onshore and offshore accounts, and a Labuan Trust Company can advise you on which banks are more suitable for your nature of business.
Nope – just get in touch with MISHU and we’ll handle everything for you, speaking of which, we think it’s time for the sales pitch!
