Labuan - Asia Pacific's Midshore International Business and Financial Centre

Labuan International Business and Financial Centre (Labuan IBFC), Malaysia, through our internationally recognized yet business-friendly legal framework, is the preferred international hub in Asia regulated by the Labuan Financial Services Authority (Labuan FSA). 

Being strategically located as a midshore jurisdiction in the heart of Asia, it boasts a cost-efficient substance-enabling environment making it an ideal location for businesses looking at penetrating the Asian market or aiming to go global.

The backbone of Labuan IBFC is its wide array of business structures and investment solutions – available in conventional, digital, and shariah-compliant forms – for cross-border transactions and international businesses including fintech or digital-related solutions.

See Also

Labuan Company as your International Business Structure
Comparison of Labuan with Other Jurisdictions
FAQs on Labuan Companies & Compliances

Why Choose Labuan

Strategic location to tap into the Asia Pacific market

Shared time zone with major Asian cities for seamless interaction

Excellent infrastructure and regulations within the Labuan IBFC

OECD whitelist jurisdiction status

Recognised by prominent exchanges for entity listing (such as Hong Kong, Singapore, Malaysia, Australia, and Dubai Exchanges)

100% foreign ownership with a minimum requirement of 1 shareholder and 2 directors

Low corporate tax rate of 3%

Absence of withholding tax, stamp duty, GST, import duty, sales or service tax, capital gains tax, inheritance tax

Void of tax on dividends to shareholders

Void of tax on director fees for foreign directors

Incorporation of a Labuan Investment Holding Company

In general, a Labuan investment holding company undertakes non-trading activities relating to the holding of investments in securities, stocks, shares, loans, deposits, or any other properties situated in Labuan by a Labuan entity on its own behalf.

According to the Second Schedule of P.U.(A) 423/2021, a holding company has been classified to:

  1. Pure equity holding activities
  2. Other than pure equity holding activities

[wptb id=987815]

If you need advice on the category and establishment of your investment holding company and procedures applicable to each type of investment, FinArk Asia team can help you.

Ready to find out more?

Drop us an enquiry today and our consultant will be in touch with you!
Contact Us

Tax Framework of a Labuan Investment Holding Company

The favorable investment and tax regime in Labuan IBFC, coupled with Malaysia’s extensive Double Tax Agreement (DTA) network and a modern approach to company law, make the jurisdiction an attractive location to hold investments. Its well-established banking and financial system, modern communication, and infrastructure make it an attractive location to establish a holding company.

A Labuan holding company that derives its income from non-trading activities is not subject to tax under LBATA.

[wptb id=987816]

They are also not subject to withholding tax on amounts paid or credited to non-residents, capital gains tax, and stamp duty. There are no indirect taxes in Labuan including sales and services tax, import duties, and excise duties.

Labuan Investment Holding Company Structure

A typical holding company structure, using a Labuan entity and its corresponding tax profile is shown in the diagram below.

202a.Labuan Investment Holding Company Structure

Tax Advantages from this structure:

  • Income derived from investments is exempted from tax in Labuan.
  • No withholding tax on dividends, interests, or royalty payments from the Labuan holding company to the foreign parent company.
  • Liberal exchange control environment in Labuan.
  • No stamp duties on instruments executed by the Labuan holding company.
  • Access to double tax treaties with more than 70 countries via a Labuan company.
FA Advisory offers one-stop application solutions for your Labuan Investment Holding Company, encompassing:
  • Consultation on eligibility and procedural guidance tailored to your profile.
  • Profiling, due diligence and guidance on documentation preparation.
  • Preparation of Business Plan, Financial Forecast and Operation Manuals.
  • Submission and supervision of the application process until approval.
  • Acting as your liaison and contact point with LFSA, arranging for interviews (if any).
  • Tracking the license approval and handling all queries from LFSA.
  • Advisory services on the appropriate company structure post-approval.
  • Assistance in setting up onshore and offshore bank accounts.
  • Assistance in establishing operational and marketing or co-located offices.
  • Staff provision and office space rental.
  • Internal audit and compliance advisory.

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