With a low attractive text regime, Labuan is one of the few offshore financial centers in Asia. It is also politically stable and economically strong. Hence, Labuan company benefits
attract many foreign investors to set up a company in Labuan. If you are deciding whether to start a company in Labuan, it is important to understand the advantages of doing so. In this article, our team at Tetra Consultants has highlighted 6 Labuan company benefits you should know to help you with deciding whether to register company in Labuan.
1. Attractive tax regime:
The low tax in Labuan allows Labuan to remain attractive for foreign investors to start a business. The corporate tax rate is 3% on annual net profits or fixed at RM20,000 for trading companies. This is relatively lower than the Worldwide Average Statutory Corporate Income Tax Rate of approximately 24%. There are zero taxes for non-trading offshore companies. In addition, there is no sales tax, value-added tax (VAT), custom duties and stamp duties. There are no withholding taxes on dividends, royalties and interest payments.
The directors of the company who are non-residents of Labuan are not required to pay personal income tax in directors’ fees as well.
The presence of the double tax avoidance treaties with 68 countries including Singapore, India, China, the United States and Canada enables the companies to be able to avoid taxes in their residential country. Without the presence of the double tax avoidance treaties, through the remittance and distribution of assets and income, you may be subjected to taxation. Hence, this would defeat the purpose of setting up your company in a low tax regime.
2. Emerging Asian Fintech Centre:
As an emerging Asian Fintech Centre, Fintech businesses can leverage on this benefit, Hence, businesses can capitalize on the increasing demand for payments and currencies, financial software, platforms and data analytics in Labuan. In an effort to be choices for investors to start a fintech business in Asia, the government is working towards creating a business-friendly environment and streamlined licensing procedures. Therefore, if you are looking at starting a Fintech business, Labuan would be an ideal place to do so.
3. Free port regime:
Situated on the major shipping and air routes of the Asian Region, Labuan allows for access to the Asia market. In addition, it is an applicable free port regime and thus no special tariffs are imposed on reading companies carrying out import and exports activities. Hence, its ideal geographical position and characteristic of a free port regime attract foreign investors to start a trading company.
4. Easier compliance:
In Labuan, trade licenses are not required for trading, e-commerce, import, export and consulting business. Hence, one can save taxes that are associated with these special permits and licenses.
Additionally, companies operating solely for investment holding purposes will not be subjected to tax and audit reports. Generally, there is less tax filing obligation in Labuan.
5. Privacy and anonymity:
The laws in Labuan offer privacy and anonymity of the members of the company, which is a huge advantage that attracts foreign investors. The board members and business members are not obliged to disclose their identity if they are unwilling to do so.
Furthermore, business owners have the authority not to disclose information such as profits, losses, and major financial transactions. The respect given to individuals and corporations in terms of privacy laws attracts global investments. With the option of not disclosing their information, individuals are able to separate themselves from the corporation. The enhanced confidentiality acts as protection to individual assets and financial security.
6. Ease of company formation:
The registration of an offshore company in Labuan is relatively simple and fast. The most popular incorporation method for Labuan company registration is the International Business Company (IBC). It requires a low capital and shareholding requirement. There is only the requirement of one director and one shareholder and does not need to be a resident of Malaysia. In addition, minimum paid-up capital, filing annual returns, public disclosure of directors, shareholders, charges, loans or agreements are all not required. However, a local registered address is required.
Furthermore, the registration requires minimal documents and can be done online. Apart from the tax exemption, the incorporation costs and the operating expenses are relatively affordable. Operation costs are low due to affordable labour.
This translates to lower costs for both establishing and maintaining an offshore company. Hence, starting a business in Labuan is more viable than in other countries due to its ease and affordability.
There are many Labuan company benefits. However, to fully understand whether it is suitable for your business, you may wish to engage Tetra Consultants for advice. With Tetra Consultants by your side, the registration process of your business in Labuan will be smooth and hassle-free. Our comprehensive service package includes planning and strategizing with our clients to select a suitable business entity, completing the registration process, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations.
Contact us to find out more on how to register company in Labuan and our dedicated and experienced team will revert within the next 24 hours.