Numerous factors may prompt individuals and businesses to consider redomiciling their company to another jurisdiction, such as Labuan. These reasons encompass tax advantages, a more conducive regulatory environment, access to new markets, and heightened privacy and confidentiality. Moreover, redomiciliation can serve as a safeguard against political instability or economic uncertainty in the current jurisdiction. Ultimately, the decision to redomicile a company hinges on a variety of considerations and should be approached carefully with guidance from legal and financial professionals.
What is Re-domiciliation?
Re-domiciliation, also referred to as company migration, denotes the process whereby a company undergoes a relocation process from one jurisdiction to another while retaining its legal identity.
This process obviates the need for company liquidation to circumvent potential tax and statutory implications in the country of origin, as well as the transfer of assets and liabilities to a newly incorporated entity.
Re-domiciliation Checklist
Before re-domiciling to Labuan, it is imperative to conduct comprehensive research and grasp the rationale behind this move, along with its legal implications. Key considerations include:-
- The business nature of your company
- The reason for selecting Labuan
- The tax substance requirements to fulfill
- The company's existing statutory and compliance obligations
- The requisite documentation for re-domiciliation
Labuan Financial Services Authority (LFSA) generally accepts re-domiciled businesses from most of the prominent jurisdictions such as the British Virgin Islands (BVI), Cayman Islands, Hong Kong, and Singapore. Feel free to consult our professional advisors regarding your business objectives, and we can assist you in a seamless re-domiciliation to Labuan..
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Why Choose Labuan
- Labuan is a midshore jurisdiction that allows you to target domestic and international markets while providing a tax rate of 3% for trading companies and 0% for investment holding companies.
- Labuan is strategically located within ASEAN and shares common time zones with the majority of the countries of Asia.
- Labuan has relatively lower operating and maintenance costs as compared to other jurisdictions such as the BVI, Cayman, Hong Kong, and Singapore.
- Labuan is a common reporting standard (CRS)-compliant and white-listed jurisdiction by the Organization for Economic Cooperation and Development (OECD). Labuan also has a complete infrastructure supported by West Malaysia to assist your business growth and allow you to easily create affordable substance for your business continuity and expansion.
- Labuan has a robust regulatory framework with a full range of legislation and acts passed by the Parliament of Malaysia and regulated by the LFSA.
- Labuan provides a complete range of business solutions and entities from trading businesses, investment structures for cross-border activities, and international transactions to private wealth management tools, for you to choose from.
- Labuan provides both conventional and Islamic Shariah compliances and tools to suit your needs.
- Labuan does not impose withholding taxes on payments to non-residents for payments of dividends, interest, and directors' fees.
- Malaysia is one of the widest countries with access to more than 70 tax treaty partners to enable tax savings.
Is Labuan the Right Choice for You?
Labuan presents a more favorable tax regime compared to jurisdictions like BVI or Cayman, featuring lower corporate tax rates and no withholding tax on dividends. Moreover, Labuan is well-regulated by the LFSA and has a stable political climate, making it a reliable and secure destination for business endeavours.
Additionally, Labuan offers an array of business-friendly incentives, including flexible company structures and streamlined incorporation processes. In essence, redomiciling your company to Labuan could yield significant financial and operational advantages.
What Comes Next?
Suppose, after careful consideration, you have opted to re-domicile your company to Labuan with our assistance as your appointed resident secretary.
The re-domiciliation process consists of the following steps:-
- Secure an approval from the current jurisdiction of the company to be re-domiciled by fulfilling their existing statutory obligations (such as corporate filings, tax returns, shareholder consent, etc.).
- Appoint a Labuan trust company to act on the company’s behalf for the domicile application in Labuan.
- Obtain approval from LFSA to establish a presence in Labuan, typically within 30-45 days, provided the company complies with regulations and substance requirements.
- Notify all shareholders and creditors about the re-domiciliation and update all relevant legal documents accordingly.
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About FAA Advisory Limited
Comprising a team of seasoned professionals well-versed in Labuan's business landscape, FAA Advisory Limited extends a comprehensive suite of services covering corporate services, private wealth management, and licensing compliance administration, all tailored to meet the unique needs of our clients.
At FAA Advisory Limited, our expertise lies in delivering Labuan insights that facilitate business expansion, simplifying intricate processes, and offering valuable information to guide you through various facets of your journey.
Choose FAA Advisory as your trusted partner in navigating the dynamic business landscape of Asia. With our commitment, we are your gateway to success in Labuan and beyond.
Email: advisory@finarkasia.com | Phone number: +6010-931 6678