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Q：
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What is the main difference between a Malaysia and Labuan Companies?
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A：
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Malaysia and Labuan companies operate under distinct legal frameworks. Malaysia companies are registered under the Companies Act 2016, whereas Labuan Companies are governed by the Labuan Companies Act 1990.
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Q：
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What are the requirements on director for Malaysia and Labuan Companies?
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For Malaysia companies, a minimum of 1 director must be a natural person who resides in Malaysia, while such requirement does not apply to Labuan companies. A Labuan company is required to have at least 1 resident director, who can be a natural person reside at any place in the world. Corporate director can also be appointed to the board in addition to the said resident director.
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Q：
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What are the share capital requirements for setting up Malaysia and Labuan Companies?
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A Malaysia company can be incorporated with a paid up share capital of RM1.00. In contrast, a Labuan company is required to have at least 1 share and the share capital may be denominated in any currency except Malaysian Ringgit. Shares issued by both Malaysia and Labuan companies have no par or nominal value.
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Q：
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What types of business activities are permitted for Malaysia and Labuan Companies?
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Malaysia companies can undertake a wide range of lawful business activities, but certain sectors are regulated. To enjoy the preferential tax rate according to Labuan Business Activity Tax Act 1990, Labuan companies have to carry out Labuan Business Activities which further classified into Labuan Trading Activities and Labuan Non Trading Activities. Labuan companies that carry out Non Labuan Business Activities will be taxed under the Malaysian Income Tax Act 1967.
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How is the taxation system apply in Malaysia and Labuan companies?
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The standard corporate tax rate for Malaysia companies is 24% on chargeable income. However, small and medium enterprises are taxed at scale rates from 15% to 24%.
Labuan companies are taxed under the Labuan Business Activity Tax Act 1990. This act provides a favourable tax regime for Labuan companies, allowing them to benefit from lower tax rates or even tax exemptions, depending on their business activities. Companies engaged in Labuan Trading Activities may be taxed at a flat rate of 3% on net profits or may opt for a tax exemption if the companies carried out Labuan Non Trading Activities, provided the said companies fulfil the economic substance requirements.
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FAQ
