In order to compete with Hong Kong, which was the leading offshore destination in Asia back in the 1980s, Labuan was declared as an offshore jurisdiction to attract maximum business in the country. Since 23 years, Malaysia’s Labuan region has been attracting businesses quietly to set-up in this lucrative country. Today, Malaysia is a leading offshore centre for many big international corporations. One of the key reasons why setting up an offshore company in Malaysia can be beneficial is the strategic placement of Labuan. While it is an autonomous region that governs its own affairs, it also includes the tax benefits of Malaysian sovereignty.
Setting up an Offshore Company
It is extremely quick and easy to set up an offshore company in Labuan. You just need one director and a shareholder, and both can be foreigners. You can easily open a bank account in any of the familiar banks as Labuan is known to be a serious financial centre. Having a company in Labuan will give an ideal window to target Asia and Asia pacific regions effectively. Labuan offers a very attractive tax rate for offshore companies with excellent infrastructure facilities. Multi lingual workforce is available for companies who wish to market their services and provide support in local languages. Labuan also offers high standard of living with a pleasant tropical climate.
All About Taxes
Malaysia offers excellent tax benefits for both onshore and offshore companies. Companies that hold fixed assets or royalties and dividends don’t need to pay any tax on earnings outside the country. Since there are no superfluous fees or taxes, companies get to keep their earnings and this makes it ideal to start an offshore company here. Plus, for companies that trade using the internet or with the public, Malaysia allows you to choose the best option for tax every year. Either you can pay 3% tax or 20,000 Malaysian Ringgit, depending on your business income. Very few countries give businessmen the chance to revise their taxes every year and this feature makes Malaysia a highly sought after destination for an offshore company in Asia.
Formalities & Restrictions
You will need to pay an annual fee to the government for your offshore company. Also, you must file a statement and annual report of your accounts as per the government laws. The only restriction you must follow is that you can’t settle transactions in Ringgit and conduct business within Malaysia without prior approval from LFSA.
Having an offshore company in Malaysia offers a lot of flexibility and tax benefits compared to the US or other Asian countries and thus, many business owners are now considering Labuan as a profitable business destination.
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