The tax advantages of Labuan companies at a glance:
- Labuan Trading Company Tax rate of 3% on Audited Net Profits
- Labuan Holding Company pays Zero Corporate Tax except for Investment Activities in Intellectual Property.
- Zero Sales Tax and No Government Service Tax for Labuan Company.
- Zero Goods & Service Tax (GST) or Value Added Tax (VAT) for Labuan Company.
- Zero Capital Gain Tax.
- Zero Withholding Tax for payment of Royalty, Lease Rental, Interest Income, Technical Services or Management Fee for Labuan Offshore Company.
- Zero tax on dividend remitted back to home countries.
- Zero Stamp Duty for the execution of all instruments related to the operations of Labuan Company such as M&A and Share Transfer Form.
- Zero Personal Income Tax on Director Fee received from Labuan Company by Non-Malaysian Citizen Director.
- 50% Exemption on Gross Employment Income received from Labuan Company by Non-Malaysian Citizen in Managerial capacity in Labuan.
- 50% Exemption on Gross Housing Allowance and Labuan Territory Allowance received by Malaysia Resident exercising employment in Labuan for a Labuan Company.
Income Tax Exemption Order for Labuan Company
Income Tax (Exemption) (No.6) Order 2011 [P.U. (A) 418/2011]
65% of the statutory income derived by any person form the provision of qualifying professional services (i.e. legal, accounting, financial or secretarial services) rendered in Labuan to a Labuan entity (as specified in the Schedule to Labuan Business Activity Tax Act 1990 [Act 445]), is exempted from income tax from year of assessment (YA) 2011 to YA 2010.
Income Tax (Exemption) (No.7) Order 2011 [P.U.(A) 491/2011]
Fees received by an individual non-Malaysian citizen as a director of a Labuan entity are exempted from income tax from YA 2011 to YA 2020.
Income Tax (Exemption) (No.8) Order 2011 [P.U (A) 420/2011]
50% of the gross employment income received by an individual non-Malaysian citizen in a managerial capacity with a Labuan entity in Labuan.
Income Tax (Exemption) (No.9) Order 2011 [P.U. (A) 421/2011]
50% of the gross housing allowance and gross Labuan Territory allowance received by an individual Malaysian citizen from exercising an employment in Labuan with a Labuan entity is exempted from income tax from YA 2011 to YA 2020.
Labuan Tax Information & Labuan Corporate Tax Structure
- The financial year end for Labuan companies is 31st December every year.
- We will assist the Labuan Company to open corporate tax file (Form C)
- The Labuan Company will appoint the Labua Trust Company as the TAx Agent
- We will assist the Labuan Company to file their yearly tax filing with Inland Revenue Board (IRB) or Lembaga Hasil Dalam Negeri (LHDN)
- The dateline for Labuan Tax submission is 31st March annually after the year end of previous year ended 31 December and will normally be automatically extendable by IRB to 31st May
- A written request may be granted to the Labuan Company to 31st July (subject to IRB’s approval).