Frequently Ask Questions

What is a Labuan company?

A Labuan company is a legal entity incorporated under the Labuan Companies Act 1990 in Labuan, Malaysia. It is commonly used for international trading, investment holding, fintech, and wealth management due to its tax-efficient and business-friendly environment.

Can foreigners fully own a Labuan company?

Yes, Labuan companies allow 100% foreign ownership. Foreigners can serve as both directors and shareholders without any local equity requirement.

Is physical presence in Labuan required to incorporate a company?

No, the entire incorporation process can be completed remotely through a licensed Labuan trust company.

How long does the incorporation process take?

Typically, it takes about 7–14 business days to incorporate a Labuan company, provided all required documents are complete and verified.

Is a registered office in Labuan mandatory?

Yes, every Labuan company must maintain a registered office in Labuan, which is typically provided by a Labuan-licensed trust company.

What is the tax rate for Labuan companies?
  • Trading companies: 3% of audited net profits (with substance requirements fulfilled)
  • Non-trading/holding companies: 0% tax (must submit management accounts annually)
  • Failure to meet substance requirements may result in a 24% tax under Malaysian Income Tax Act.
Which business activities qualify for the 3% Labuan tax rate?

The following activities qualify, provided substance requirements are met:

  • Administrative services
  • Legal, accounting, and payroll services
  • Backroom processing
  • Management and agency services
  • Insolvency-related services
  • Talent management
What happens if a company doesn’t meet substance requirements?

If a company does not fall under qualifying business activities or fails to meet the substance criteria, it will be taxed at the standard Malaysian corporate rate of 24%.

What are the benefits of setting up a company in Labuan?
  • Full foreign ownership
  • Low tax regime (3% or 0%)
  • No capital gains, inheritance tax, VAT, GST, or SST
  • No foreign exchange controls
  • Easy profit repatriation
  • Fast incorporation
  • Access to over 70 double tax treaties (case-by-case basis)
  • Confidentiality of beneficial ownership
  • No withholding tax on dividends or interest to non-residents
Can a Labuan company open a bank account remotely?

Most traditional banks require in-person identity verification. However, some fintech providers like Airwallex may allow remote account opening for Labuan entities.

What is the role of a company secretary in a Labuan company?

A company secretary ensures regulatory compliance, maintains statutory records, and handles necessary filings with Labuan FSA on behalf of the company.

What is a business license in Malaysia?

A business license is a legal permit authorizing operations within Malaysia. Depending on the nature and location of the business, this may include a premise license, signboard license, and sector-specific approvals.

Why do companies choose Labuan for incorporation?

Labuan offers a strategic location in Asia, a favorable tax regime, fast incorporation, and high confidentiality standards—making it ideal for international trading, holding structures, fintech, investment funds, and cross-border businesses.

Where is Labuan located?

Labuan is a Federal Territory of Malaysia, situated off the northwest coast of Borneo in the South China Sea. It lies close to the state of Sabah and is easily accessible by flights from Kuala Lumpur and Kota Kinabalu.

What is a money broking business?

Money broking involves arranging deals between buyers and sellers in financial instruments, with the broker acting as an intermediary and earning brokerage fees. It does not include trading foreign currencies as a principal.

Are there any restrictions on money broking in Labuan IBFC?

Yes. Transactions can only be conducted in foreign currencies. Dealings in Malaysian Ringgit are limited to covering administrative and statutory expenses. Money brokers also cannot transact with Malaysian residents, except with authorised dealers under the Exchange Control Act 195

What are the tax implications for Labuan money broking companies?

 Labuan money brokers are subject to a tax of 3% on audited net profits.