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Company Formation Labuan



Establish a Subsidiary in Labuan

Updated on Tuesday 26th November 2019

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Companies from abroad can easily set up subsidiaries in Labuan as local Malaysian companies in respect to the rules and regulations of the Offshore Companies Act 1990. Being independent entities, subsidiaries in Labuan can operate as partnerships or as limited companies, public or private. The registration procedure of a subsidiary in Labuan, an important offshore jurisdiction, is simple and less bureaucratic, but for avoiding any misunderstandings or the language barrier, we invite you to talk to our team of  Labuan company formation agents for complete assistance at the time of company registration.

How can I register a subsidiary in Labuan?

The registration of a subsidiary in Labuan starts with the Regional Registrar of Companies in Labuan and a particular form which comprises information about the parent company that intends to set such entity in Malaysia, the name of the representative with establishments in this country and details about the company’s main activities must be filed. Also, the Articles of Association stands at the base of subsidiary formation and consists of the following information:
  • •    the name of the subsidiary which can be different from the parent company;
  • •    the name of the foreign owners of the subsidiary and the country of residence;
  • •    the business address for the subsidiary established in Labuan;
  • •    the board of managers and the name of the representative agent of the company;
  • •    the activities of the subsidiary as established by the company from abroad.
Labuan company formation is an easy process which can be entirely explained by our team of company incorporation specialists in Labuan.

Who can establish subsidiaries in Labuan?

Any foreigner who wants to do business in Labuan can set up a subsidiary, an independent entity that respects the company’s rules and activities, and also the laws in Malaysia. This needs to receive the approval of the Companies Commission of Malaysia.
The most commonly used business form by those who wish to open a company in Labuan is the Sdn Bhd Co., because this business form can be used by foreign investors, it can serve as a fully owned foreign subsidiary and can be used to engage in business activities in Malaysia. some limitations do apply on the types of businesses that can be conducted and these include the telecommunications sector as well as the manufacturing sector. One of agents can provide more information about the businesses that can be conducted under a business form incorporated in Labuan.
The main benefits of starting a subsidiary in Labuan.png

Can a subsidiary have a different name in Labuan?

Yes, subsidiaries in Malaysia are independent and can be established under a different name. This structure needs to respect the local incorporation and the tax reporting conditions.
The limitations of the branch determine many investors to open a subsidiary in Labuan. The foreign company will not directly control the subsidiary, as in the case of the branch, but it will own shares, which will allow it to retain a certain level of control. The subsidiary can be partly or wholly foreign owned. 

Conditions for subsidiaries in Labuan

The subsidiary is incorporated just as a locally registered company. This is applicable in many other jurisdictions and, in Labuan, it means that the company will benefit fully from the advantages that are available to businesses here. Below, our team of Labuan company formation agents lists some of the important conditions for the subsidiary: 
  • Capital: investors who open a company in Labuan that will serve as a subsidiary will only pay a capital of 1 US$.
  • Taxation: this structure needs to respect the local incorporation and the tax reporting conditions; it will be taxed as trading or non-trading, as applicable.
  • Office: the company will need to have a physical presence in Labuan, the registered office which is required for incorporation.
  • License: the subsidiary will function based on a license for its activities, either for business or industrial.
The taxation regime is particularly advantageous in Labuan and it can be divided according to the type of activity the subsidiary undertakes:
  • - for a trading company: there is a 3% tax on trading profits and a 14% tax on intellectual property and royalty income;
  • - for the non-trading company: the tax is 0% for holding activities and 24% for rental income.
Investors should know that the trading activities include banking, insurance, shipping, while the non-trading ones include securities investment holdings, stocks holdings and others. In practice, the non-trading company will be a holding company in most cases. One of our agents specialized in Labuan company formation can provide you with more details according to the specific type of business activity in which the company will be involved. 

Additional information

As seen above, there are many advantages related to company formation in Labuan, making it suitable for subsidiary incorporation. In addition to paying attention to the applicable tax regime, and following the annual audit obligations (only for trading companies), the company can be incorporated with only one director and one shareholder, with no requirements for nationality (they can be foreigners).
The subsidiary, like any other Labuan company, will be subject to annual fees. We list some of these below:
  • - 15 US$: the application for the company name reservation.
  • - 300 US$: the fee when the company has a paid-up share capital of 50,000 RMN and below this amount.
  • - 1,500 US$: when the company has a paid up capital of 1 million RMN and above this amount.
  • - 2,000 US$: the registration fee for a foreign Labuan company.
  • - 1,500 US$: the annual fee for a foreign Labuan company.
  • - 800 US$: the annual fee for a Labuan company.
As seen from this list of applicable fees, it can be more advantageous to set up a Labuan company compared to a foreign Labuan company. One of our agents who specialize in Labuan offshore company formation can provide investors with more details. Understanding the types of regulations applicable to different legal entity types is important before incorporating the business. This is why our team provides complete services that will also include assistance for selecting the most suitable business form when a foreign company wishes to enter the Labuan market by opening a subsidiary. 
Investors should also know that financial services providers in Labuan are subject to the regulations set forth by the Labuan Financial Services Authority. Our team can provide detailed information on the applicable legislation and guidance for the companies subject to regulation from this authority. 
Offshore company formation in Labuan can present many advantages, however, it is advisable to understand the conditions as the limitations, in some cases, for offshore legal entities.
For a better understanding of how subsidiaries are registered in Labuan please feel free to contact our team of company formation consultants in Labuan.


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