Malaysia · Labuan offshore
Offshore company registration in Malaysia
Labuan is Malaysia's offshore financial centre, with its own company law, a 3% or 0% tax regime, and 100% foreign ownership. We set up your Labuan company, help you meet the substance rules, and open the bank account, from start to finish.
Trusted by foreign companies operating in Malaysia
Overview
What a Labuan company is
Labuan is a federal territory off the coast of East Malaysia, and it is the country's only dedicated offshore financial centre, Labuan IBFC. It runs on its own commercial and tax framework under the Labuan Companies Act 1990, regulated by the Labuan Financial Services Authority (LFSA). Foreign investors use it mainly for international trade, investment holding, and wealth management.
A Labuan company keeps its tax-advantaged status by operating outside the domestic Malaysian market. In return, you get a simpler compliance regime, a preferential tax rate, and full foreign ownership, without the local-partner rules that apply onshore. At the same time, the company still sits inside a recognized and well-regulated Malaysian jurisdiction.
Why Labuan
Benefits of a Labuan offshore company
A low-tax, foreign-friendly base inside a credible jurisdiction.
A 3% or 0% tax regime
Trading activities are taxed at 3% of audited net profit, and pure investment holding at 0%, provided you meet the substance rules.
100% foreign ownership
One director and one shareholder of any nationality, with no local partner and no residency requirement.
Free flow of funds
No exchange controls when dealing with non-residents, and no withholding tax on dividends, interest, or royalties paid abroad.
Privacy and protection
The registrar does not make shareholder and management details public, and the structure helps ring-fence international assets.
Easy to transfer or exit
Ownership moves through a straightforward sale or transfer of shares, which suits holding structures and time-bound ventures.
A visa for you and family
A Labuan company can sponsor a two-year, multiple-entry visa for a director and dependents. It is renewable and valid for both Labuan and West Malaysia.
Tax
The Labuan tax regime
What you pay depends on your activity, and on meeting the substance rules.
| Activity | Tax rate |
|---|---|
| Labuan trading activity (trading, services, and similar) | 3% of audited net profit |
| Labuan non-trading activity (investment holding) | 0% |
| Substance requirements not met | 24% on net profit |
| Malaysian-source or mainland income | 24% (standard Malaysian rate) |
The old flat MYR 20,000 election was removed in 2019, so trading activity is now taxed purely at 3% of audited profit. Income from intellectual property and royalties sits outside the Labuan regime: it is taxed under the Malaysian Income Tax Act 1967, at the standard 24%. A Labuan company may also elect to be taxed under that Act if it suits the business. On most instruments, Labuan entities are exempt from stamp duty.
Substance
Substance requirements in Labuan
Substance is the condition for the 3% and 0% rates. To qualify, a Labuan entity must employ enough full-time staff in Labuan and spend enough on annual operating costs there. The thresholds are set per activity under the Labuan substance regulations, P.U.(A) 423/2021, as amended by P.U.(A) 325/2025. A company that does not meet them is taxed at 24%.
Trading and services
- At least two full-time employees based in Labuan
- At least MYR 50,000 in annual operating expenditure in Labuan
- Higher thresholds for some licensed activities
- Audited accounts, since trading income is taxed on audited profit
Pure investment holding
- No full-time employees required
- Managed and controlled from Labuan, with at least one board meeting in Labuan each year
- At least MYR 20,000 in annual operating expenditure in Labuan
Who counts as an employee: under the 2025 amendment, staff must be fit and proper and directly employed by the Labuan entity. Workers hired through an outsourcing agency, with no employment contract with the entity, do not count toward the requirement.
We help you meet substance the right way, from a Labuan office and local spend to staffing where it is needed. Talk to our team about the level your activity requires.
Requirements
What you need to set up a Labuan company
A Labuan company has no minimum capital, so setup turns on the structure and the local presence rather than the money you put in. Here is what each side covers.
The company
- A unique company name, vetted against LFSA standards, in Malay or English
- At least one director and one shareholder, who can be the same person
- Directors and shareholders of any nationality, individual or corporate, aged 18 or over
- No minimum paid-up capital, with share capital denominated in a major foreign currency
In Labuan
- A resident secretary, provided by a licensed Labuan trust company
- A registered office in Labuan, also through the trust company
- Statutory registers and a first board meeting to activate the entity
- Audited accounts where the company carries on trading activity
The process
How we register your Labuan company
Four stages, from name search to a working account.
Pre-incorporation
We reserve your name with the LFSA and check that your planned activities fit Labuan's substance requirements before anything is filed.
Registration and filing
We compile director and shareholder KYC, draft the Memorandum and Articles, file the statutory declarations, and pay the LFSA fees.
Post-incorporation setup
We formalise the resident secretary and registered office, then prepare the statutory registers and first board minutes.
Business readiness
We handle tax registration with the Inland Revenue Board (LHDN), open your corporate bank account, and arrange any licenses and visas.
Labuan or Sdn Bhd
Labuan company vs onshore Sdn Bhd
Which entity fits depends on where your customers are.
| Labuan company | Sdn Bhd (onshore) | |
|---|---|---|
| Foreign ownership | 100%, no local partner | 100% in most sectors, restricted in some |
| Tax on profit | 3% trading, 0% holding | 24% |
| Market | International, outside the domestic market | The domestic Malaysian market |
| Paid-up capital | No minimum | Low, but a real figure |
| Secretary and office | Licensed Labuan trust company | SSM-licensed secretary, Malaysian address |
| Best for | Holding, international trade, wealth management | Trading and operating inside Malaysia |
A Labuan company can hold shares in an onshore Sdn Bhd, so the two are often used together. If you are weighing Labuan against another hub, Singapore is the usual comparison, and our team can walk you through both.
Use cases
What a Labuan company is used for
The structures it suits best.
Investment holding
Hold shares, securities, loans, or assets at 0% tax, including controlling stakes in onshore companies.
International trade
Run cross-border trading and services from a low-tax base with no exchange controls.
IP and licensing
Hold and license intellectual property, keeping in mind that IP income is taxed under the Malaysian Income Tax Act rather than the Labuan regime.
Wealth and family office
Structure family wealth and succession through Labuan companies, foundations, and trusts.
Common questions
Offshore company questions
What foreign founders ask before setting up in Labuan.
Can foreigners register a company in Labuan?
Yes. A Labuan company allows 100% foreign ownership with no local partner. You need only one director and one shareholder, who can be the same person and of any nationality.
Do I need to live in Malaysia to run a Labuan company?
No. There is no residency requirement for directors or shareholders. The company does need a resident secretary and a registered office in Labuan, both provided by a licensed Labuan trust company, which we arrange. A Labuan company can also sponsor a work and residence visa for you and your dependents if you do want to relocate.
What is the difference between an Sdn Bhd and a Labuan company?
An Sdn Bhd is an onshore Malaysian company that trades inside the domestic market and pays the standard 24% corporate tax. A Labuan company operates internationally, outside the domestic market, and is taxed at 3% on trading profit or 0% on pure holding, provided it meets the substance rules. The two are often used together, with a Labuan company holding shares in an Sdn Bhd.
What are the main tax benefits of a Labuan company?
Trading activity is taxed at 3% of audited net profit, and pure investment holding at 0%. There are no exchange controls on dealings with non-residents and no withholding tax on dividends, interest, or royalties paid abroad. These benefits depend on meeting the substance requirements; otherwise the rate is 24%.
What are the substance requirements for the incentives?
For a non-licensed trading entity, at least two full-time employees in Labuan and at least MYR 50,000 in annual operating expenditure there. For a pure equity holding company, no employees are required, but the company must be managed and controlled from Labuan, including a yearly board meeting there, and spend at least MYR 20,000 a year. Under the 2025 amendment, employees must be directly employed and fit and proper, so outsourced agency workers do not count.
What documents are needed to register a Labuan company?
For each director and shareholder, a passport copy, proof of address, and a CV or professional profile. For corporate shareholders, the constitutional documents and a register of directors and shareholders. We provide the full checklist once we know your structure, and we prepare every document filed with the LFSA.
On the ground in Kuala Lumpur
Talk to our Malaysia team
Tell us your planned activities and three preferred names. Our Kuala Lumpur team will confirm whether Labuan fits, set up the company through the Labuan FSA, help you meet the substance rules, and open your bank account.
Emailmalaysia@emerhub.com
Phone / WhatsApp+60 17 684 9718
OfficeC-18-6, KL Trillion
Kampung Datuk Keramat
50400 Kuala Lumpur, Malaysia
Kampung Datuk Keramat
50400 Kuala Lumpur, Malaysia