Comparison of Labuan Company and Malaysia Sdn Bhd

Often most foreigners confuse the type of business entity in Malaysia they should own when starting a business in Malaysia. Basically, there are two commons entities which widely adopted by foreigners and this also depends on the nature of their business for license eligibility. For those intending to set-up shops, restaurants in Malaysia, setting up the local Malaysia Sdn Bhd company is ideal as this type of business nature required permission from various local government departments and the local town council for various types of licenses to operate.

With effective 1st Jan 2019, the new tax rate will be 3% for Labuan Trading Company trading with Malaysia companies or residents with the requirement to report the transactions with the Labuan Authority. Pure investment holding company, the tax rate remains unchanged at zero while investment holding company on Intellectual Property attracts a new tax rate of 24%.

Below is the table of information outlined in the comparison of Labuan Company and Malaysia Sdn Bhd for import, export, advisory, trader, consultancy and advisory business.

ItemMALAYSIA SDN BHD COMPANYLABUAN INTERNATIONAL COMPANY
Target MarketMalaysiaInternational (Malaysia is permissible)
Paid Up Capitala.RM1 million  for 100% Foreign-Owned with WRT license
b.RM400,000  for Joint Venture with Malaysian
Min. USD1 for 100% Foreign Owned
RequirementMin. 1 Director and 1 Shareholder, unlimited shareholders (can be the same person) Maximum: 50 for each capacityMin. 1 Director and 1 Shareholder, unlimited shareholders (can be the same person). Maximum: 50 for each capacity
Officers in OfficeIndividual or Corporate is permissible for all officers Individual or Corporate is permissible for all officers 
Trade LicenseBusiness license and industry license category, depends on business nature and required local Malaysian participation, click here for more info!Business license required but most business activities no need industry license, click here for more! 
Re-DomicileNot possibleEasily can be transferred to any jurisdictions who recognize Labuan Company
Local InvestmentCan hold shares in Labuan Company and any form of investmentsCan hold shares of Malaysia Sdn Bhd and any form of investments
Corporate Tax24% for both local or international market for 100% foreign-owned or company with paid-up more than RM 2.5 mil. 3%  
Personal TaxAll expatriates employment including directors with 0-28% tax rateAll Directors – 0% tax and Expatriate employment tax rebate  50% of 0-28% tax rate
Audit ReportingYes, unless it is a private exempt company or less than RM300,000 turnoverYes for trading companies. Investment holding company is exempted
Operation Office Set-UpYes It is recommended for tax proofing due to CRS
Yearly maintenance costUSD 1,500 to USD1,800 for secretarial, audit and tax agent. Audit and tax agent fee varies depends on the volume and complexities of financial reportingUSD2,350 for LFSA and secretarial fee. Audit fee depends on the volume and complexities of the financial reporting
ConfidentialityAll information including financial accounts are searchable, without permissionStrictly confidential unless permission allowed by the owner/officers of the Labuan Company

The above clearly outlined the advantages of both entities of Malaysia Sdn Bhd and Labuan company. Feel free to contact us at +603-2783 9191 (Labuan Division) or email to better advise you to meet your objectives in Malaysia. Send us your inquiry today! Our One Labuan Platform easy to elevate your Labuan operation efficiently!

Name

Email

Nationality

Product/Services You Intend to Sell

Target Market
Malaysia OnlyWorldwide

Capital Amount

Company Structure (present or intended)
100% Foreign-OwnedJoint-Venture with Malaysian

Do You Intend to Set Up Physical Office/Shop in Malaysia?
YesNo

Do You or Your company Require Expatriate Visas?
YesNo

Other Info You Need Us To Know

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