Dealing with Malaysia Residents for Labuan Company
The Malaysian Government has continued to update its rules and regulations governing the Labuan International Financial Centre to be more business friendly and in line with the development in other international off shore financial centre. With effect from 1st Jan 2019, all Labuan entities are allowed to deal with Malaysia residents. The residents here are in reference to Individuals as well as corporate residences as defined below for your convenience. These changes are made while keeping the very attractive low tax rate of 3% for all Labuan business entities.
Malaysia residents defined as follows:
- Malaysia registered companies and entities;
- Malaysian individuals;
- Malaysia permanent residents.
However, if the same nature businesses ie Crypto Exchange or ICO or fundraising prevail in domestic and Labuan, the domestic ruling shall prevail over the Labuan legislation. Local residents dealing with Labuan entities may not be able to enjoy full claim on the payments made to the Labuan entity. Please refer to this link for more information on latest Labuan tax law.
8 business activities which do not require to report to Labuan FSA:
- Labuan company which wholly own Malaysia domestic entities
- Labuan company carries on any licensed activity with a resident under the Labuan Financial Services and Securities Act 2010 or the Labuan Islamic Financial Services and Securities Act 2010
- Labuan company makes or maintains deposits with a person carrying on a business within Malaysia
- Labuan company makes or maintains professional contact with any counsel, attorney, accountant, bookkeeper, Labuan Trust company or a corporation wholly owned by a Labuan Trust company made available by the Labuan Trust company to act or be appointed as a resident director or a resident secretary of a Labuan company, management company, investment adviser or other similar person carrying on business with Malaysia
- Labuan company prepares or maintains books and records within Malaysia
- Labuan company holds within Malaysia meetings of its directors or members
- Labuan company acquires or holds any lease of any property for the purpose of its operations or as accommodation for its officers or employees
- A resident of Malaysia holds shares in that Labuan company.
Except the above, other transactions would require reporting to Labuan FSA for such activities within 10 working days from the date of contract or invoice of non-Ringgit transactions including the acquisition of Malaysia real estates with Sales and Purchase Agreement. With the introduction of new LBATA 2019, lodgement to Labuan FSA on dealing with Malaysians will be abolished too.
For lodgement to Labuan FSA for Dealing with Malaysia Resident for Labuan Company, the following documents required:
- An original copy of the Dealing with Malaysia Resident Form duly completed;
- A copy of the contract/invoice of the transaction (involving Malaysian Residents);
- A copy of the Malaysia company information search from Company Commission Malaysia (CCM) or for an individual- a copy of Malaysia ID/Passport.
Please note that uncompleted Dealing with Malaysia Resident Form will be rejected, hence it is advisable to provide the required information as detail as possible. There will be a lodgement processing fee for our service to submit such transactional details.
Please note that Labuan FSA will penalize for late submission, the fee payable minimum RM300 or more. All transactions dealing with the Malaysia residents will be subjected to auditing standard by licensed and approved auditor within the financial year accounts, regardless if it is a profit or a loss. If there is profit, the Company will be taxed at a rate of 24%.
The above service is only available for our existing clients, email us at [email protected] to assist you when you have Dealing with Malaysia Resident transaction. Our One Labuan Platform easy to elevate your Labuan operation efficiently!
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