Labuan in Comparison - Labuan Company Incorporation

An objective comparison between Labuan company & other business forms in Malaysia
	General	Sdn Bhd Co.	Representative Office/Regional Office	Branch of foreign Co.	Labuan Company
	Who can use?	Local and foreign	By foreign corporation only	By foreign corporation only	Local and foreign
	What business can be conducted?	Can be used to in the local business in Malaysia, for example consulting, manufacturing, restaurant, travel agency, telecommunication, etc. Can be 100% foreign owned subsidiary.	Not allowed to conduct business in Malaysia. Only suitable for foreign company intending to study Malaysian market before actually investing in full, to co-ordinate business activities, to identify source of raw material, etc.	Can do most type of local business through the branch.	1)Conduct types of business as listed in here 2)May trade with Malaysian residents or non-residents. 3)May trade in any currency. 4)Tax: 0% for investment holding income and 3% for trading income (provided that economic substance regulation is complied)
	Entity	Private limited company	Non-entity	Branch	Private limited company
1	What is the Registering Body?	Company Commission of Malaysia	Ministry of International Trade & Industry	Company Commission of Malaysia	Labuan FSA
2	Who do I see to register?	Company secretary	Can register on your own or appoint consultant	Company secretary	Trust company in Labuan
3	How long does it take to register?	1 day	A few weeks	2-3 days	1 day
	How long is duration?	No limit	Usually approval is given for 2 years only	No limit	No limit
4	What is the minimum number of director?	Min 2	N/A	N/A but may appoint local director	Min 1
5	What is the minimum number of shareholder?	Min 2	N/A	N/A	Min 1
6	Local shareholder?	No required unless when doing business with government or government controlled companies	N/A	N/A	No
7	Local director?	No, but if all directors are foreign, must have local addresses in Malaysia	N/A	May appoint local branch director	No
8	Can I do business with Malaysian residents?	Yes	NO	Yes	NO
9	Size of paid up capital required?	No unless applying for employment pass, in which case min is MYR500k	N/A but to qualify to apply, foreign co MUST have at least MYR2m annual turn over	N/A	No unless applying for employment pass, in which case min is MYR250k
10	Is physical office required?	Yes	Yes	Yes	NO
11	Employment of local	Not required	Not required	Not required	Not necessary
12	Opening of FX a/c	Yes	Yes, expenses only	Yes	Yes
13	Opening of RM a/c	Yes	Yes, expenses only	Yes	Yes
14	Buy or acquire lease of property in Malaysia?	Yes	No	Yes	Yes, but only for own use
	Taxation	accounting & audit
15	Who is the Tax Authority?	Inland Revenue Board of Malaysia	Not subject to tax	Inland Revenue Board of Malaysia	Inland Revenue Board of Malaysia
16	Corporate tax rate	Varies with year of assessment and company’s paid up capital	NA	26% of branch profit	3% of audited net profits for trading activity and zero percent for non-trading activity (provided that the tax substantial activity requirements is complied)
17	Taxation basis	Current year basis	N/A	Current year	Preceding year basis
18	Accounting and audit	Mandatory	N/A	Mandatory	Mandatory
	Costs
19	Professional fee 1st year	MYR3500-MYR7000	MYR5000 min	MYR5000 min	USD3500
20	Annual maintenance	MYR2000 excluding accounting, audit and tax compliance	N/A	MYR2000 excluding accounting, audit and tax compliance	Min USD1850 excluding accounting, audit and tax compliance