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What makes Labuan different from other jurisdictions for Asian investors? Labuan is part of Malaysia and is closer to Asian countries than many other jurisdictions. It has tax treaties with China, Hong Kong and Taiwan.
What types of companies can be incorporated? The preferred company type is a company limited by shares, the Labuan Company. Protected Cell Companies, Limited Partnerships, Foundations and Trusts are also provided for.
What are the basic requirements for company formation in Labuan? A company must have at least one(1) shareholder and at least one(1) director. Both of these may be resident outside of Labuan and Malaysia, and both can be corporate entities. There is no minimum capital requirement and shares have no par value.
What is the rate of tax imposed on Labuan business activities? The rate of tax imposed is 3% of audited net profits for trading activity and zero percent for non-trading activity, provided that the Labuan entities are in compliance with the tax substantial activity requirements.
Can Labuan company open bank accounts? Labuan company can open foreign accounts with any banks in Labuan or outside Labuan. However, the account name must be the Labuan company name.
What is so unique about Labuan tax regime? In addition to the numerous tax incentives, the unique features of Labuan tax regime are: 1. Less tax filing obligations 2. No estimation of income and bi-monthly deductions 3. Perpetual tax exemptions 4. Labuan entities may access benefits under the Malaysia Double Tax Treaties.
Can the regulatory authorities request information about the background and identity of company officers, or company accounting details? The authorities are aware of the registered shareholders and the directors. Nominee arrangements are possible. The Financial Statements don’t have to be filed with the authorities, unless they are audited.
Are there any audit requirements? A Labuan company is required to maintain proper accounting and other records in Labuan, and those proper accounting and other records shall be kept at the registered office of the company or other places in Labuan. Such accounting and other records shall be open at all times for inspection by a director of the offshore company.
Is there any Double Tax Treaties in Labuan? Malaysia has signed around 70 tax treaties, including treaties with China, Taiwan and recently Hong Kong. China, Taiwan and more explicitly Hong Kong accept Labuan entities as counterparties that can fully benefit from the relevant double tax treaties these countries have signed with Malaysia. Some countries like Japan and the UK have excluded Labuan entities from the treaty benefits.
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Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice. |
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