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Why Labuan

    Tax Benefits

  • Tax exempted for a Labuan Non-Trading Activity (means holding of investments in securities, stock, shares, loans, deposits or any other properties by a Labuan entity on its own behalf)

  • Elect to be tax at 3% of its net profit as per audited accounts or payment of RM20,000.00 in lump sum annually for a Labuan Trading Activity (means banking, insurance, trading, management, shipping, licensing or any other activity which is not a Labuan non trading activity)

  • Tax exempted for dividends received by Labuan entities

  • Tax exempted for dividends received from Labuan entities which are paid, credited or distributed out of income derived from a Labuan business activity or income

  • Tax exempted for distributions received from Labuan trusts and foundations (including both Islamic) by the beneficiaries

  • Tax exempted for distributions of profits by Labuan partnerships (including Islamic partnerships)

  • Tax exempted for interest received by residents, non-residents or another Labuan entity from a Labuan entity

  • Tax exempted for royalties and fees for services, advices or assistance and other gains or profits under Section 4(f) of Income Tax Act 1967 received by a non-resident or another Labuan entity from a Labuan entity

  • Tax exempted on capital gains

  • Tax exempted on director fees received by a non-citizen director of a Labuan entity

  • Indirect taxes exempted such as sales tax, service tax, GST, VAT, Custom Duty

  • 50% tax exemption on gross income received by a non-citizen individual from exercising an employment with a Labuan entity in a managerial capacity, in Labuan or at its marketing or co-located offices approved by LFSA

  • 50% tax exemption on gross housing and Labuan Territory allowances received by a Malaysian citizen from exercising an employment in Labuan with a Labuan entity

  • 65% tax exemption on income of any person providing qualifying professional services such as legal, accounting, financial and secretarial services in Labuan to a Labuan entity

  • Stamp duty exempted on all instruments executed by a Labuan entity in connection with a Labuan business activity, on its constituent documents and on transfer of shares in a Labuan company

    Other Benefits

  • No Malaysian withholding tax is imposed on payments to non-residents for interest, royalties, fees for services, advice or assistance, or other gains or profits under Section 4(f) of Income Tax Act 1967 by a Labuan entity

  • No Malaysian withholding tax is imposed on payments to non-residents for use of moveable properties by a Labuan licensed leasing company

  • No need to submit tax computation and tax estimation to Authority

  • Audit requirements optional, except for Labuan companies opting to pay 3% tax per annum on audited net profits and licensed companies such as banks, insurance entities and trust companies

  • Malaysia has signed more than 70 Malaysia Double Tax Agreements (DTAs) with various countries. Labuan entities with tax residency in Malaysia can enjoy the benefits of the DTAs signed by Malaysia with its treaty partners unless it has been specifically excluded

  • Fast time scale for setting up new entities / companies with require of only one individual / corporate director (resident is optional) and shareholder

  • No exchange control restriction / free flow of fund

  • Appropriate degree of confidentiality

  • Tax residency certificate available for Labuan Entity and individual

  • Immigration regulations are liberalized for Labuan employees and directors

  • Political and economic stability

  • Low operation cost

  • Time zone for Asian Market, strategic location and proximity to several regional financial centres

  • English speaking work force and multi lingual work force

  • New and modern corporate legislation specifically designed to cater for international business and Labuan requirement

  • Advance and good infrastructure / communications system