Offshore Company Guide in Malaysia

When we talk about offshore company jurisdiction, Malaysia is not the big name that represents “the best offshore company jurisdiction”. Labuan in Malaysia gained its traction as one of the few offshore financial centres in Asia that attracts multinational companies and investors across the globe by using Malaysia as their international business hub. Labuan turned into an International Offshore Finance Centre by the Malaysian government in 1989. Then the Offshore Companies Act was formed in 1990 to create offshore corporate laws. Also, the Offshore Banking Act 1990 was created, along with the Labuan Trust Companies Act 1990.

Labuan is located at the northwest coast of Borneo, north of Brunei and south of Kota Kinabalu, Labuan is a tiny island and the capital of the state Sabah. Labuan is an ideal location to establish an offshore company because it is a common-law jurisdiction and not constrained by any rule outside of Malaysia. In other words, it provided wide latitude to govern its affairs.

Why Choose Malaysia (Labuan) for Offshore Company?

Labuan, a federal territory of Malaysia, is an independent state with its laws but protected by the sovereignty of Malaysia. Just like many other low tax jurisdictions, Labuan imposes no-tax regime for the majority of companies with non-Malaysian sourced income. Malaysia’s strategic location presents an excellent opportunity for investors looking for company registration in Malaysia.

Regardless of the Islamic impact in Malaysia, Labuan primarily uses common law, and non-Muslims are exempt to any Islamic financing dictates. Labuan incorporation offshore companies offer a full suite of cost-efficient back workplace services to staff operations with qualified employees. Check here for more information about how to start an offshore company in Malaysia.

Malaysia Offshore Company Requirement for Registration

The registration requirements to establish an offshore company include:

  • One director (minimum)
  • One secretary
  • One shareholder (minimum)
  • A registered office address in Labuan

The minimum deposit for the bank account opening will vary depending on the bank you choose. It recommended that you set up your bank account outside Malaysia, this is because Malaysia has capital control, and having a bank account within Malaysia would defeat the purpose of having an offshore company.

The formation of an offshore company will complete within a week. The opening of a bank account will take approximately the same time since the banks must conduct due diligence checks. Also need to fulfil the following requirements:

  • Determine your company name and identity. You must prepare at least three names to submit for approval.
  • Determine the nature of your business and company structure align with compliance and tax.
  • Determine the suffix for your company name. Your options include Co. Ltd, Limited, Ltd, LLC, Labuan or Inc.
  • Determine the ownership portion for your shareholders.
  • Prepare the minimum authorized capital
  • Complete your bank account opening
  • Prepare the registration fee
  • Foreigners will be eligible for a two-year multiple-entry business visa. This visa can extend to include dependents. With that visa, you can choose to reside anywhere else in West Malaysia if you desire.

Why Labuan is Malaysia’s Best Offshore Jurisdiction?

Malaysia’s Labuan offshore company incorporation has gain attraction over the years as an international business hub. It is one of the top choices of countries for offshore incorporation. It has become prominent as among the few offshore financial centres in Asia, attracting multinational businesses from all over the world. Because of its common-law offshore jurisdiction, it is the ideal location to form an offshore company. The advantages of a Labuan offshore have over other locations are:

  • Labuan has no tax-policies in place for any Asian and foreign company which draws investment into the region.
  • 100% foreign ownership for foreigners.
  • Can trade with a Malaysian company at a low tax rate of 25%, provided the transaction reported to the Labuan Authority.
  • Investment holding companies don’t require audits. They are not taxed either.
  • It not bounded by rules outside Malaysia gives it more freedom to govern its affairs.
  • A properly structured offshore company is legitimately tax-exempt from several areas of business, which include investment holding, trust management, insurance, fund management and offshore banking.
  • Despite being an independent state with its set of laws, Labuan still protected by Malaysia’s sovereignty.
  • Corporate tax rates as low as 3%.
  • Director’s fees and dividends are not taxed.
  • No trade licenses requirement for most business.
  • Investors families are eligible for a 2-year business visa.
  • The flexibility of trading in Ringgit Malaysia or foreign currency bank accounts.
  • The Labuan Legislation law will remain unchanged and stable for the foreseeable future.
  • Protected from double taxation, gratitude to Malaysia’s Double Taxation Agreements with several countries.

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