When we talk about the offshore jurisdictions, Malaysia is not the big name that represents one of the best offshore countries; however, Malaysia does have a near-secret haven for an offshore establishment – Labuan.
Labuan in Malaysia has extended its traction as one of the few offshore financial centres in Asia that attracts many multi-national companies and investors across the globe by using Malaysia as their international business hub. Labuan is a part of Malaysia. As a Federal Territory of the Federation of Malaya, laws of Malaysia government which is built on the British standard law system applies on Labuan. However, Labuan is one of the tax-free islands in the nation. All the goods sold in Labuan is free of tax. New commercial laws have been passed giving strength to Labuan as an international financial centre since the 1990s. Nowadays, Labuan is a doorway to the market of more magnificent Malaysia and the hub of international business.
What is a Labuan Offshore Company?
A Labuan offshore company is a non-resident Malaysian entity that is usually used as a tax-optimized trading or holding vehicle by international investors. The offshore companies in Labuan are allowed to conduct business with both Malaysian resident and non-resident companies, carry on shipping operations to anywhere including Malaysia, transact in all currencies, and offer products and services in non-regulated industries.
Benefits of Offshore Company Formation in Malaysia
- A foreigner can own 100% of the company without having a local partner
- No audit report required
- One can set up a company brokerage account for equities and forex trading
- Two-year renewable multiple-entry business visa is available for you and your family with children age below 21 to stay in West Malaysia and Labuan
- Placing assets in an offshore company and incorporated legal structure provides a secure layer of protection from future liabilities for a more stable policy
- Lack of other taxes like no sales tax, no VAT, no customs duties and no stamp duty
- No corporate tax needed. This only applies to a select group of businesses known as non-trading companies, such as holding companies
- The flexibility of trading in Ringgit Malaysia or foreign currency bank accounts
- Directors’ fees and dividends are not taxed
- Protection from double-taxation, thanks to Malaysia’s Double Taxation Agreements with several countries
- No requirement of trade license for most businesses
Procedure to Start an Offshore Company in Malaysia
While the government of Malaysia warmly welcomes foreigners to set up their international business in Malaysia to enjoy low tax benefits and 100% company ownership via Labuan offshore company, all the business owners are expected to keep their companies to comply with the following relevant activities fully –
- Labuan Company Formation Authority
- Inland Revenue Authority
- Malaysia Immigration Department
- Central Bank of Malaysia
Once you are aware of these departments, you can start the registration process.
- The first step is to decide on the business nature and structure of the company to align with tax and compliance
- Decide on the business identity, i.e. to decide on the business name which is not similar to the name of any other established company in Malaysia
- Decide on the paid-up capital
- Finalising the type of bank account needed
- Decide if you need two years multiple entry work visas for yourself, partner or family members
- Register your offshore company in pay fees
We at Business Setup Worldwide can help you start your offshore business in Malaysia. Our services include business incorporation, business license, accounting and bookkeeping, corporate secretarial services, and much more. To get more information, contact us today – we’d be happy to help you.