Malaysia – The Best Offshore Company Jurisdiction
When talked about offshore company jurisdiction, Malaysia is not the big name that represents “the best offshore company jurisdiction”. However, Malaysia does have a near-secret haven for an offshore corporation – Labuan.
Labuan in Malaysia, has gained its traction as one of the few off-shore financial centers in Asia that attract many multi-national companies and investors across the globe by using Malaysia as their international business hub.
Where is Labuan?
Located at the northwest coast of Borneo, north of Brunei and south of Kota Kinabalu, Labuan is a small island and the capital of the state of Sabah. It comprises seven islands; Labuan, Kuraman, Daat, Rusukan Besar, Rusukan Kecil, Papan, Mayat and Burung. Labuan is a perfect location to establish an offshore company because it is a common law jurisdiction and not bound by any rule outside of Malaysia. In other words, it is provided wide latitude to govern its own affairs. In addition to this, the no-tax policy and low corporate structures for Asian and foreign companies have drawn in investment to the region.
Why Choose Malaysia (Labuan) for Your Offshore Company?
Labuan is a federal territory of Malaysia that is an independent state with its own 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.
Regardless of the Islamic impact in Malaysia, Labuan primarily uses common law, and non-Muslims are exempt to any Islamic financing dictates.
Labuan incorporation companies offer a full suite of cost-efficient back workplace services to totally staff operations with qualified employees.
Advantages of Having an Offshore Company in Malaysia (Labuan)
- 100% Foreign Owned – Incorporation of Labuan International Company is 100% foreign owned, without local Malaysia partner. The company can be formed by only one Director and one Shareholder, which can be corporate entities or an individual (There is no requirement of the nationality of any of the owners or shareholders).
- Low start-up capital requirement- The registration fees are very small (ranging from $300 to $1500 (U.S.) depending on the size of the company).
- It is a tax haven – Offshore Trading Companies in Labuan may pay a flat fee of RM 20,000 per annum or elect to pay a 3% income tax to the Inland Revenue Department, whichever is lower. However, Offshore Non-Trading Companies are not subject to taxation. Both trading and non-trading companies may choose to pay the maximum tax of RM 20,000 per annum and will consequently be devoid of the requirement to file financial declarations. In addition to this, there are no capital acquires taxes, agreement note tasks or exit levies.
- Double Tax Treaties – Malaysia has signed more than 60 double tax treaties where many of them have tax sparing provisions. Dividends paid from profits tax exempt in Labuan are deemed to be paid from the profits subject to taxation in Malaysia. This allows the beneficiary to claim tax credit at home.
Apart from the low taxes, low cost and easy banking, Labuan is a reputable offshore company jurisdiction that offers a vibrant business environment and investment opportunities to foreign investors. Furthermore, Labuan companies can set up management offices in the territory itself, with marketing offices in Malaysia’s capital city Kuala Lumpur or in the state of Johor. It might be one worth considering if you’re looking for an offshore company in Asia.