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When it comes to choosing a jurisdiction to set up your company, the procedure is never easy. You need to decide whether you need an offshore jurisdiction to reach your goals – or it will create too many problems, so a respected mid-shore will be better.
Labuan is not an offshore jurisdiction, and yet it offers many benefits you can take advantage of sufficient privacy standards, a low corporate tax rate, and a straightforward company registration procedure that can be completed remotely. So, if you have never heard of Labuan, you are welcome!
If you need more information about popular and less-known jurisdictions where you can set up a company, welcome to our portal internationalwealth.info/ where you will find a knowledgebase of articles written by our experts who know the ropes.
You can also book a session where our specialist will choose the best jurisdiction for your company at no charge by analyzing your business needs and preferences. We can also open a company for you online at a reasonable fee (all you will need to do is collect a package of documents according to our recommendations).
Labuan in a Nutshell
If you think that an offshore jurisdiction may be a good choice for your business, you can discuss it with our experts simply to have a second opinion. However, if an offshore is a definite no-no, let’s take a look at the Malaysian jurisdiction of Labuan. This is a reliable and attractive destination that will appeal to foreign entrepreneurs who need a really secure place to launch their undertaking.
The country is on the OECD white list, so you will be able to use nominee services here for enhanced confidentiality (which is an advantage), but you will not be able to issue bearer shares (which some of you may consider a disadvantage). Labuan’s authorities are very strict about confidentiality matters, and no one will have access to information about the company without the consent of its key executives.
If you are interested in Labuan’s taxation system, you will probably be happy to discover that the corporate tax rate is only 3%, you will not have to pay VAT or capital gains tax, and there are a lot of double taxation treaties you can benefit from.
Labuan is becoming more and more popular if we consider the number of branches opened here: it has now overtaken Panama and the Isle of Man by this indicator, and it will soon be a worthy rival to such popular destinations as Guernsey and the Bahamas.
Company Incorporation in Labuan: Peculiarities
Labuan will be especially interesting for entrepreneurs who intend to do business in key Asian regions.
Here are the tax incentives it offers:
- Investment activities come at a 0% tax rate (with the exception of intellectual property).
- The corporate tax rate is 3%.
- There is no sales tax/VAT.
- No capital gains tax is levied.
- You will not pay a withholding tax on technical/management services, interest, or royalty payments.
- If you pay a salary to a non-Malaysian director, you will be entitled to a 50% tax deduction.
The country imposes no currency control, which means that you will not have any issues with transactions in foreign currency or profit repatriation.
Mind that you need to comply with substance requirements in Labuan, or you will have to pay a profit tax of 24%. In other words, you must have a physical office in the country hire one or two local employees, and also provide proof that the company incurs minimum operational expenses every year. The costs will differ depending on the type of your business.
Here are some other benefits of Labuan for foreign entrepreneurs and investors:
- Personal data protection is very strong, and no information will be disclosed without the director’s (owner’s) written consent.
- You will not be penalized in case of delays in tax payments.
- Labuan’s business operational costs (office rent and salaries) are lower than in any large Asian city.
- The jurisdiction has an advantageous geographical location.
- English is widely used in business circles (though the official language is Bahasa), which ensures smooth communication with potential business partners.
Requirements and Documents
Here are the requirements for a company registered in Labuan:
- You will need at least one individual or legal entity who will be considered a company owner.
- The company is required to have at least 1 director and 1 shareholder. These positions can be combined by the company’s owner.
- If your company does not require a license for its activities, you can start it with an authorized capital of 1 US dollar if you want to. However, if you work under a license, a higher amount will be required.
- Companies in Labuan are required to keep financial records, have them audited, and submit them once a year to local authorities.
Interested in how long it takes to get a fully operational Labuan company? If you use the assistance of our experts, it will take from 7 to 15 working days after you submit the required package of documents to us.
Let’s look at the list of documents you will need to collect:
- All founders, directors, or shareholders who are individuals are required to provide passport copies.
- If the above persons (all or any of them) are legal entities, they are required to submit corporate documents and a resolution on Labuan company formation.
- The managers and beneficiaries are required to provide proof of their residence addresses.
- Receipt of fees and charges paid.
Be prepared to provide additional information on beneficiaries, as well as FATCA and KYC forms.
Online Company Formation in Labuan
Here is a step-by-step plan you can follow if you decide to use our assistance:
- Click on the above link to get in touch with our experts and discuss the prospects of your business registration in Labuan.
- Agree on the list of services you need (for example, we can also open a corporate account for your company).
- Pay for our services using a convenient method.
- Provide all the documents we will require to start the procedure.
All you need is to wait a little to start business operations.
If Labuan does not look like a suitable jurisdiction, contact us anyway for up-to-date best offers!