Generally, an offshore company is known as the business opened in a foreign country. To start a business in a foreign country there are certain procedures. Some of the procedures are tax-free trading, asset protection, privacy, financial statements, etc. When all these procedures are present it means that you need to start an offshore business.
Offshore businesses are considered to be the best type of business. This type of business is recommended since there are minimum rules and regulations. It is also preferable since it has the opportunity to distribute multi-national companies.
History of offshore company in Malaysia:
- In 1989, the Malaysian government decided Labuan into an Offshore International Financial Center.
- In 1990, the offshore company act created the offshore corporate laws. The 2 acts created are;
- Offshore Banking Act 1990
- Labuan Trust Companies Act 1990
- Labuan Companies Act 2010 has recently proceeded with the formation, activities and taxation of Labuan International Company.
- Labuan offshore Financial Services Authority (LOFSA) is the sole regulatory agency overseeing the laws.
- In 1980’s, Malaysia had a competition with Hong Kong for offshore business entity
- For non-Malaysians it is totally tax free
- Air Asia Airlines are under the operation of Labuan in order to avoid tax. This allows them to charge less for bigger airlines.
- Labuan offshore had more than $550 billion USD for the period 2015-2017.
About Labuan offshore company in Malaysia:
In Malaysia there is a place name Labuan. “Labuan” is a place where the British law system implies. The British law system implies on the federal territory of the Federation of Malaya. Currently Labuan is a three tax free islands in the country, all things sold by Labuan are tax free. There are new laws stating that from 1990 Labuan is an international financial centre.
Now currently, Labuan is the pathway to the best market in Malaysia. Labuan is also the leading way to international business.
Labuan International Business and Financial Centre in short known as Labuan IBFC. It is a name of a brand which is to advertise the Labuan’s offshore financial services. Labuan IBFC is functioned under the management of Labuan government. Labuan IBFC does not have a permanent address.
Requirements for an offshore company in Malaysia:
- In a company at least it is required to have 1 director and 1 shareholder
- It is required that the director and shareholder is to be the same person
- Corporate directors and shareholders are allowed
- There are no restrictions in the nationality of a director(s) and shareholder(s).
Registration of Labuan offshore company:
Labuan Company name:
- A company cannot have the similar name of another company.
- The company name can also be named in another language.
- The company name is required to end with the following terms such as Labuan, Limited, Co Ltd, Inc and LLC.
Documents: Registration requires a submission of various of documents. some of them include;
- Memorandum of Association
- Articles of Association
- Consent form from company director
- Statutory declaration of compliance
- Exhibiting of fee required
Govt. approvals: To set up a company in Labuan state, it is required to register from 4 government agencies in Malaysia, the following 4 are;
- Labuan Company Formation Authority
- Malaysia Immigration Department
- Inland Revenue Authority
- Central Bank of Malaysia
Shareholders: They can be from any country. There are some details to be required about the shareholder such as the registered shares, voting rights and shares redeemed.
Directors and officers: It is necessary to have at least 1 director. They can either be a normal person or in a corporation.
Registered office and secretary: every companies needs to maintain their office which is locally registered. It is also required to hire a secretary.
Authorized Capital: The minimum capital required is US$ 10,000 which is to be divided for shareholders. The value of shareholders is US$ 1 per share.
Accounts and Taxes for Labuan company:
The government expects an annual report along with the account statements. All financial records must be kept in Labuan.
There are tax options for International Labuan company. The following are;
- Investment holding company where there is no necessity to show tax and audits
- Trading, importing and exporting company where 3% of the net profits to be provided to audit report.
- Trading company can choose to pay RM 20,000 (US$ 5,000) without an audit. This can be chosen instead of the 3% tax profit.
- Non-Trading Company id where the tax is not owned by anyone. It is not necessary to show the audit documents for the company.
Services provided for Labuan offshore company:
- Labuan Investing Holding company incorporation
- Labuan Trading company incorporation
- Labuan incorporation handling
- Accounting and taxation optimization relating Hong Kong company
- Service fee depends on the time spent and expertise of service required.
Advantages of Labuan company formation:
- Tax incentives
- 100% ownership
- Easy to manage
- Low cost set-up
- Tax flexibility
- Lesser tax and also no tac
- Low registration fee
- Flexibility of work visa
- Availability of International banks
- One shareholder can also be a director of the company
- Good location
- Asia monetary markets
- Corporate infrastructure
- Free port
- English is a widely spoken language
Why set up a Labuan offshore company in Malaysia?
- Foreigners prefer to follow the Labuan company using the formal term ‘Labuan International Company’.
- Labuan company is chosen since it provides 100% of foreign ownership.
- The tax is lesser compared to other companies.
Can any foreigner apply for Labuan offshore company?
Yes! foreign citizens can start a company in Labuan state.
Is offshore companies available in any other places of Malaysia other than Labuan state?
No, only Labuan has offshore companies in Malaysia.
How long does it take to start the Labuan offshore company?
It takes about a week to complete the setup.