Malaysia is one of the most dynamic and vibrant countries in Southeast Asia is a perfect business centre for global investors.
With Labuan as its heart, the jurisdiction has been progressing as one of the ideal mid-shore. The land presents an opportunity to the business owners to incorporate both onshore and offshore businesses to maximize their business growth and wealth.
This guide entirely focuses on the offshore moves focusing on the tips and tricks to be followed to incorporate an offshore company in the tax paradise.
Malaysian Offshore Company Formation
Going offshore allows an individual to conduct business operations remotely and perform banking functions at ease. With a high-end tax exemption, this becomes a straightforward approach to lead international business transactions.
Labuan, the capital, has gained a lot of traction over the years. It is the ultimate ground that provides a suitable climate for offshore business. As a Federal Territory of the Federation of Malaysia, the Malaysian government has been taking necessary steps to establish the ground as tax-free.
In the 1990s, new tax laws have been imposed to strengthen Labuan as an International Financial Centre. Apart from the Offshore Companies Act, the centre also has the Offshore Banking Act of 1990. It has become a hotbed for offshore investors as the expatriates get leverage on the low tax regime both professionally and personally. Labuan Offshore Financial Services Authority (LOFSA) is the sole regulatory body that looks into the whole matter of offshore registration.
Today, starting an offshore company in Malaysia is one of the strategic and profitable moves that investors make to mitigate potential risks and earn higher profits.
Malaysian Tax System
Understanding the tax system before one proceeds to invest offshore is at utmost priority. Incorporated under the Labuan Companies Act, the business entities are entitled to follow the Labuan Business Activity Tax Act (LBATA).
The established offshore companies are not required to pay personal tax. The corporate tax stands at 3% for the in-house companies and must declare their income to the relevant tax authority.
The concept of ZERO-tax also gets implemented to the business investors looking forward to proceeding for investment holding business.
Benefits of Malaysian Labuan International Offshore Company
Incorporation of a Malaysian offshore company in the tax-haven allows the business investor to enjoy numerous benefits that include:
- Malaysia is placed in the heart of ASEAN and gives more than 600 million people a getaway to the international markets.
- Politically stable country
- Ease of operation, maintenance, and control of the business entity
- High-end anonymity and confidentiality
- The foreigners get to enjoy 100% ownership of the established business
- There is no requirement of trade license for most of the business activities
- Complete flexibility to hold an offshore bank account
Thus, the full set of benefits mentioned above provide the business investors with the complete flexibility to take a step ahead and incorporate an offshore business.
How to Start a Labuan Offshore Company?
The procedure to register your business in Malaysia involves two different steps -
In Malaysia, companies set up under the Business Registration Act (ROBA), 1956. One corporation may be incorporated in Malaysia as follows:
- Decide on a company name, and try to confirm its availability. Refer to the Government Gazette to test if a name is available for the business considered. If unique, you can reserve a name by applying the availability of the name:
- Upload the name application form to the Companies Commission of Malaysia or Suruhanjaya Syarikat Malaysia (SSM) with the proposed name.
- Make a specified fee payable for the name applied
- The application will be reviewed and processed by SSM, and if the proposed name filed is valid, SSM approves it. The name is set aside for three months from the date of approval.
- Send company incorporation documents to SSM within three months of the date the company name is approved. Failure to do so would allow the applicant to send a new application to SSM for a name check.
- Get the required approvals from the offshore registered agent that is essential to incorporate an offshore entity.
- Lastly, make sure to open an offshore bank account, which can be done in the same or other popular offshore jurisdictions.
Documents Required for Labuan Offshore Company Registration
In Malaysia, business registration includes documents including but not limited to:
- Request form duly filled in and signed
- Initial Copies of Association Memorandum and Papers (MAA)
- The pattern of shareholding of each shareholder
- The initial copy of the Conformity Argument
- The initial copy of the Director's Legislative Statements
- Copies of shareholders', executives, and business secretary's passport
- Blueprint of the business
- List of the activities that are to be carried out in the entity incorporated
- CVs of the shareholders and investors
The most common method of incorporation of an offshore company in Malaysia is to employ a consultant. We at Business Setup Worldwide, an offshore company in Malaysia, can register for you.
Right from company name approval to registering your offshore business and opening an offshore bank account, our experts will assist you in every move.
We will also assist you by opening a bank account, obtaining business licenses, obtaining a relocation visa, and managing ongoing business administration and enforcement. Contact us today to learn more.