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Labuan – Quick Facts
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Location
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8 km off the coast of Sabah, East Malaysia, on the island of Borneo
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Land area
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92 sq. km
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Time zone
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GMT + 8 hours
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Population
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75,000 comprising of a mix of Malays (50%), Chinese (40%), Indians and the indigenous people of Sabah & Sarawak, East Malaysia
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Human resources
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Well educated population, many of whom obtained their education overseas in the USA, Europe and Australia
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Languages
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Malay is the official language but English is commonly spoken. Other languages: Chinese and Hindi
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History
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Majapahit Empire in the 14th Century, then the Brunei Sultanate, British colony in 1849, lost its hold over Labuan to the Japanese in 1942, resumed power in 1945 and subsequently ceded the island to Sabah in 1963 when Sabah joined Malaysia. The administration of Labuan was handed to the Federal Government of Malaysia in 1984 and was declared an International Offshore Financial Centre in 1990
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Constitution
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Parliamentary democracy with a political system similar to that of the UK
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Legal system
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British legal system and English common law
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Currency
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Malaysian Ringgit
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Communications
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Excellent
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Accessibility
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Several daily flights to Kuala Lumpur, Kota Kinabalu and Brunei with connections to USA, Europe, Asia and Australia
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Economic sectors
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Oil and gas industry Business and financial services
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Background for Labuan Company Formation
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A Labuan Offshore Company (LOC) is regulated by the Offshore Companies Act, 1990. The other relating laws to the LOCs are as follows:
- Offshore Banking Act, 1990
- Offshore Insurance Act, 1990
- Labuan Offshore Business Activity Tax Act, 1990
- Labuan Offshore Trusts Act, 1997
- Labuan Offshore Limited Partnerships Act, 1998
- Labuan Offshore Securities Industry Act, 1998
The LOC can engage in a multitude of activities and can serve many purposes. The offshore companies are commonly used for the following:
- Offshore Holding
- Offshore Trading
- Offshore Banking and Finance Institution
- Offshore Insurance
- Offshore Broking
- Offshore Leasing
- Offshore Mutual Fund
As Labuan is a federal territory of Malaysia, the LOC can be used to benefit from the double tax treaty (DTA) network, which Malaysia has entered into with a number of countries. The LOC is therefore suited for all investments into countries with which Malaysia has signed a DTA resulting in reduced tax in dividends, interest or royalties. The LOC has been commonly used as an investment vehicle, particularly into China, Indonesia and Korea. It is also suited for cross border investment from Europe into Asia.
Key features of LOC
- Standard authorised capital of USD10,000 (or equivalent to USD10,000 in any currency, other than the Malaysian Ringgit)
- Capital denomination in any currency, other than the Malaysian Ringgit
- Memorandum & Articles of Association in English
- Use of words “Limited, Corp, BV, Pty Ltd, BHD” in the name
- Meetings can be held anywhere or by proxy
- Business confidentiality
- Migration and immigration allowed
- Not subjected to the Malaysian exchange controls
- Low and zero tax regime
- Good infrastructure for Trade Support services
- International credibility
More Information on Labuan Company Formation
Requirement for Labuan Offshore Companies
Taxation of Labuan Offshore Companies
Fee Schedules for Labuan Offshore Companies
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