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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 common entities which are widely adopted by foreigners and this 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 requires permission from various local government departments and the local town council for various types of licenses to operate.

With effective from 1st January 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 for the comparison of Labuan Company and Malaysia Sdn Bhd for import, export, e-commerce, trader, consultancy and advisory business.

Target MarketMalaysiaInternational (Malaysia is permissible)
Paid Up Capitala. RM1 million  for 100% Foreign-Ownership with WRT license
b. RM400,000  for Joint Venture with Malaysian
Min. USD1 for 100% Foreign Ownership
RequirementMin. 1 Director (Resident) and 1 Shareholder (can be the same person), unlimited shareholders. Maximum: 50 for each capacityMin. 1 Director and 1 Shareholder (can be the same person), unlimited shareholders. Maximum: 50 for each capacity
Officers in OfficeIndividual or Corporate is permissibleIndividual or Corporate is permissible
Trade LicenseBusiness license and industry license category depends on business nature and requires local Malaysian participation, click here for more info!Business license required but most business activities do no need industry license, click here for more! 
Re-DomicileNot possibleCan be easily transferred to any jurisdiction which recognizes Labuan Company(ies)
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 0-30% tax rateAll Directors – 0% tax and Expatriate employment tax rebate 50% of 0-30% tax rate
Audit ReportingYes, unless it is a private exempt company or less than RM300,000 turnoverYes for trading companies. Dormant Labuan 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 reportingUSD 2,350 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 +6012-2889809 (Labuan Division) or email us at [email protected] 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!




    Product/Services You Intend to Sell

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    Malaysia OnlyWorldwide

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    100% Foreign-OwnedJoint-Venture with Malaysian

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