A foreign company shall not have a place of business in Labuan or carry on business in Labuan unless it is registered as a foreign Labuan company (“Labuan Branch”) under the Labuan Companies Act 1990 (“LCA”). This write-up does not apply to a foreign company registered under the Malaysian Companies Act 2016. The LCA requires the engagement of services of a Labuan IBFC registered trust company to act as its registration agent.
Kensington Trust Labuan Limited is a licensed trust company in Labuan and may assist you with the registration and administration of your Labuan Branch.
NAME OF LABUAN BRANCH
The Labuan Branch shall have the same name as its foreign company and advisable to have the additional words “Labuan Branch” behind its name. Eg. XYZ Limited, Labuan Branch.
REGISTERED OFFICE OF LABUAN BRANCH
It is mandatory for the Labuan Branch to have a registered office in Labuan, which office shall be the principal office of a Labuan trust company.
The registered office of Kensington Trust Labuan Limited will be the registered office of the Labuan Branch.
The Labuan Branch does not have its own share capital. A prescribed fee is payable to the Labuan Financial Services Authority (“Labuan FSA”) upon registration of the Labuan Branch based on share capital of its foreign company.
- Annual Return: Lodge annual return once in each calendar year not later than thirty (30) days prior to the anniversary of the date of its registration.
- Annual Government Fee: Pay annual fee of such amount as may be prescribed not later than thirty (30) days from each anniversary of the date of its registration.
- Annual Tax Filing: Annual tax return needs to be filed with the Malaysian Director General of Inland Revenue by 31 March of that year of assessment. Normally, an extension of time for filing is allowed by the Inland Revenue Board of Malaysia.
CERTIFICATE OF REGISTRATION
Upon lodgement of complete documentation and payment of fees as well as clearance from the due-diligence process conducted by the Labuan FSA, a certificate of registration of a foreign Labuan company will be issued. The certificate shall be conclusive evidence that the requirements as to registration have been complied with.
LABUAN IBFC TAX SYSTEM
Labuan Business Activity Tax Act 1990 (“LBATA”) governs the imposition, assessment and collection of tax on a Labuan business activity carried on in, from or through Labuan.
Labuan entities that carry on a non-Labuan business activity are subject to the provisions of the Malaysian Income Tax Act, 1967 (ITA).
“Labuan business activity” means:
- a Labuan trading or a Labuan non-trading activity carried on in, from or through Labuan,
- excluding any activity which is an offence under any written law
SUBSTANCE REQUIREMENT UNDER LBATA (with effect from 1st January 2019)
Pursuant to section 2B(1) (b) of LBATA, the Labuan entities shall, for the purpose of the Labuan business activity, have :-
- an adequate number of full time employees in Labuan; and
- an adequate amount of annual operating expenditure in Labuan, as prescribed by the Minister by regulations made under this Act.
Normally, in Labuan, branches are set up for licensed banks, insurance and insurance related entities as well as for Other Trading activities. Therefore, the Substance Requirements are as follows:
Minimum Full Time Employees
Expenses in Labuan (RM)
Insurance and Insurance related activities
Other Trading Activities