Labuan Entity can enjoy the following benefits:-

  Legislation Type of Income Tax Payable
1.1 Labuan Business Activity Tax Act 1990 (“LBATA”) Non-trading activities (Interest | investment returns including capital gains | dividends | royalty) Dividend payments | Trust distributions
No Tax

Labuan trading activities
Corporate tax rate of 3% of audited net profits
1.2 Under Income Tax Act 1967 (“ITA”) Payments to non-residents for interest | royalties | technical and management fees | rental payments for the use of movable property No withholding tax

Gross employment income of a non-citizen working in a managerial capacity in a Labuan financial institution until the year of assessment 2020 50% tax exemption

Housing allowance and Labuan Territory allowances received by the individual from exercising an employment in Labuan with Labuan entities until the year of assessment 2020 50% tax exemption

Director fees received by a non-citizen director of a Labuan financial institution, until the year of assessment 2020 100% exemption

Statutory income from Qualifying Professional Services provided by services providers (Accountants, Lawyers, Secretarial, Liquidators and Auditors) to Labuan entities 65% of the statutory income

Capital gains | foreign source income Pay no tax
1.3 Other Tax Benefits No Stamp duty No indirect taxes such as (i.e. Sales Tax | Service Tax | GST | VAT | Custom Duty) > No tax estimation i.e. no CP204 | no CP205

Other Benefits

  1. Double Taxation Avoidance Treaties (DTA) with more than 70 Countries. Original copy available upon request
  2. Investment Protection Agreement (IGA) with more than 50 Countries. Protect your investment in the event that it is being nationalized
  3. No Exchange Control Regulations – Free Flow of Funds. Stop Tax Haven Abuse Act does not apply in Labuan, Malaysia
  4. Access to Free Trade Agreements which are generally aimed at providing the means to achieve quicker and higher levels of liberalisation that would create effective market access between the participants of the FTA. Traditionally confined to trade in goods, with the establishment of the WTO, trade in services has been included in many FTAs.
    • Malaysia has established FTAs with Japan | Pakistan | New Zealand | India | Chile | Australia.
    • At the regional level, Malaysia and its ASEAN partners have established the ASEAN Free Trade Area. ASEAN has also concluded FTAs with China | Japan | Korea | India | Australia and New Zealand.

Malaysia ‘s Free Trade Agreements

Malaysia-Japan | Malaysia-Pakistan | Malaysia-New Zealand | Malaysia-India | Malaysia-Chile | Malaysia-Australia | ASEAN-China | ASEAN-Japan | ASEAN-Korea | ASEAN-India ASEAN-Australia and New Zealand

Free Trade Agreements under Negotiation

Malaysia-Turkey | Malaysia-European Union Free Trade Agreement (MEUFTA) | Trans-Pacific Partnership Agreement (TPP) | Trade Prefential System-Organisation of Islamic Conference (TPS-OIC) | Developing Eight (D-8) Preferential Tariff Agreement (PTA)

  1. Labuan, as part of Malaysia, is a member country to World Intellectual Properties Organisation (WIPO) and treaties administered by WIPO:- 

    WIPO Convention 1967 | Paris Convention 1883 | Berne Convention 1886 | Patent Cooperation Treaty 1970 | Nice Agreement 1957 | Vienna Agreement 1973 | WIPO Copyright Treaty 1996 (WCT) | WIPO Performances and Phonograms Treaty (WPPT) 1996
  2. No audit required except the Entity that opt to be taxed under ITA and the Labuan Trading Business
  3. Tax Residency Certificate available for Labuan Entity and Individual
  4. Immigration regulations are liberalized for offshore employees and directors
  5. Infrastructure – International Business Financial Centre (IBFC), Duty Free Status, Competitive Investment Cost, Low Operating Cost Environment, Strategic Location and Modern Infrastructure facilities (including medical, transport and telecommunications complete with a deep sea port), Professional support available for offshore development
  6. Full fledge banking i.e. Onshore and Offshore Banking | Opening of bank Accounts Nationwide, Singapore, Hong Kong, USA etc | Multiple Currencies Accounts with interest bearing | Fixed Deposit/Certificate of Deposit/Time Deposit (FD/CD/TD) | Current Account | Credit Card | ATM | Corporate Debit Card | Buy, deposit & withdraw Gold Bullion and other gold products | High security Internet Banking System | Letter of Credit and other trade facilities