Labuan Investment Holding Company in Malaysia

Setting Up a Labuan Investment Holding Company in Malaysia

Labuan, an island territory of Malaysia, has emerged as a preferred destination for setting up investment holding companies. The favourable regulatory framework and tax benefits make it an attractive option for businesses and investors.

Here, we provide a detailed guide on the benefits, steps, and requirements for setting up a Labuan Investment Holding Company.

Advantages of Setting Up a Labuan Investment Holding Company

1. Favorable Tax Regime:

  • Non-Trading Income: Income from investment holding activities is tax-exempt (0% Tax).
  • Trading Activities: Income from trading activities (if applicable) is taxed at 3% of net audited profits.

2. Corporate Benefits:

  • No Withholding Tax: On dividends, interest, royalties, service fees, and lease payments to non-residents.
  • Exemption from Stamp Duty: On all instruments executed by Labuan entities.
  • 100% Foreign Ownership: Full foreign ownership is permitted.
  • Access to Malaysia’s Double Taxation Agreements (DTAs): Labuan companies can benefit from Malaysia’s extensive network of DTAs, providing relief from double taxation.
  • No Foreign Exchange Controls: Labuan companies enjoy the freedom of capital movements without currency restrictions.

3. Business Environment:

  • Strategic Location: Labuan is well-placed within the Asia-Pacific region, offering access to major markets.
  • Ease of Doing Business: Labuan provides a business-friendly environment with a well-developed infrastructure and a skilled workforce.
  • Legal and Regulatory Framework: Governed by robust regulations administered by the Labuan Financial Services Authority (LFSA).

Steps to Set Up a Labuan Investment Holding Company in Malaysia

1. Choose a Company Type:

  • Labuan Company: Incorporated in Labuan, may be limited by shares or guarantees.
  • Labuan Foreign Company: A branch of a foreign company registered in Labuan.
  • Labuan Protected Cell Company: For specific activities such as insurance and mutual funds.

2. Incorporation Requirements:

  • Share Capital: Can be in any currency with no minimum par value.
  • Directors: At least one director (can be a resident or non-resident).
  • Company Secretary: Must appoint a Labuan Trust Company as the secretary.
  • Registered Office: Must be located at a Labuan Trust Company.

3. Economic Substance Requirements:

  • Must have a minimum number of employees and incur a minimum annual operating expenditure in Labuan based on the specific activity undertaken.

4. Incorporation Fees:

  • Incorporation of Labuan Company: USD 5,400.00
  • Provision of Registered Office & Secretarial Services: USD 5,400
  • Incorporation Fees Payable to Labuan LFSA: USD 900.00
  • Application of Tax Reference: USD 450.00
  • Disbursement: USD 900.00
  • Due Diligence and World-Check: USD 450
  • Establishment Of Bank Account: USD 1,500.00
  • Total: USD 15,000.00

5. Ongoing Compliance:

  • Annual Fees: USD 7,200.00 for the renewal of the company.
  • Audited Accounts: Required for tax filing purposes.

Types of Business Activities for Labuan Investment Holding Company

Labuan investment holding companies typically engage in the following activities:

  • Holding Investments: Managing and holding investments in securities, stocks, shares, loans, deposits, or other properties situated in Labuan.
  • Managing Subsidiaries: Overseeing and managing subsidiary companies and their operations.
  • Providing Financing: Offering intra-group financing to related companies.
  • Licensing and Franchising: Licensing and franchising intellectual properties and business models.

For more information about setting up an investment holding company in Labuan or to get started, details can be submitted through this form. This assistance will help navigate the process and ensure the business is established successfully.

Do You Need Assistance from Rentaka?

WhatsApp Us: +60 11-1218 6031