Frequently Asked Questions

A Labuan company is a versatile business entity incorporated under the Labuan Companies Act 1990. It offers a strategic domicile in the heart of Asia and operates within the same time zone as major regional financial hubs.

No. One of the primary advantages of a Labuan company is that 100% foreign ownership is permitted. There are no nationality restrictions on shareholders or directors.

A minimum of one shareholder and one director is required (they may be the same person). A resident secretary is mandatory, and this role is typically fulfilled by a licensed Labuan trust company, such as Allied Trust Limited.

A minimum of one share is required. There is no minimum paid-up capital requirement. Labuan companies may issue shares of different classes with varying rights; however, bearer shares are not permitted. Shares may be denominated in any currency except Malaysian Ringgit (MYR).

The minimum number of shareholders for a Labuan company is one (1). Shareholders may be individuals, corporations, or trust companies holding shares as nominees or on trust.

The standard incorporation process typically takes between 7 and 10 working days.

No. Most engagements, including incorporation and initial due diligence, can be completed remotely through At-Tijarah Labuan Trust Ltd (ATL).

Labuan offers a preferential tax system. A tax rate of 3% applies to audited net profits from trading activities, while non-trading activities are subject to a 0% tax rate, provided the Labuan entity complies with substance requirements.

Yes. Tax incentives under the Labuan IBFC apply to all Labuan entities as prescribed under the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018.

In addition to the tax incentives available under the Labuan IBFC, key features of the Labuan tax regime include:
• Reduced tax filing obligations;
• No estimation of income or bi-monthly tax instalments;
• Availability of tax exemptions; and
• Access to Malaysia’s Double Taxation Agreements (DTAs), subject to compliance.
• Labuan entities may also invest in domestic Malaysian companies while enjoying applicable Labuan tax incentives.

Trading activities involve active business operations such as banking, insurance, management, licensing, and shipping. Non-trading activities generally involve passive holding of investments, including securities, shares, real estate, or deposits held on the company’s own behalf.

Yes. To qualify for preferential tax treatment, Labuan entities must demonstrate economic substance. This includes maintaining a physical office in Labuan, employing an adequate number of full-time staff as required by LFSA and LHDN, and meeting minimum annual operating expenditure thresholds. ATL provides advisory support on substance compliance.

Yes. A Labuan company may open bank accounts with banks in Labuan or overseas. The bank account must be opened in the name of the Labuan company.

Yes. Qualifying Labuan entities that meet substance requirements may access Malaysia’s extensive DTA network of over 70 treaties, subject to approval.

Transactions conducted within the Labuan IBFC involving non-residents are exempt from Malaysian exchange control regulations, allowing for currency flexibility in international operations.

An Incentive Foundation is a Labuan Private Foundation where distributions are linked to predefined merit-based milestones (e.g. completing a postgraduate degree or submitting an approved business plan), designed to address entitlement risks.

A Labuan PTC is a bespoke company established to act as trustee for a specific family or group of related trusts, enabling families to retain greater control over governance and investment decisions.

Labuan LPs offer flexible profit distribution arrangements and pass-through tax treatment, supporting up to 50 partners, making them suitable for venture capital and private equity structures.

Yes. A Labuan foundation may be established with an initial endowment as low as USD 1.00, allowing it to hold assets such as shares or intellectual property with minimal initial capital.

A trust is a fiduciary relationship governed by common law, whereas a foundation is a separate legal entity with its own legal personality under civil law. Trusts are not publicly registered and offer greater privacy, while foundations must be registered with the Labuan FSA.

Issued in July 2024, LiST is a classification framework that categorises economic activities as Green (Sustainable), Yellow (Transitioning), or Red (Non-Sustainable) based on environmental and social impact.

Yes. Labuan International Commodity Trading Companies (LITCs) may acquire and trade carbon credits through over-the-counter transactions, supporting capital mobilisation for renewable and sustainability projects.

ATL ensures full compliance with the Labuan Trust (Amendment) Bill 2024 by maintaining accurate Beneficial Ownership registers and lodging required information with the Labuan FSA.

Yes. ATL facilitates participation in the Islamic Digital Asset Centre (IDAC) and supports the issuance of RAMZ (security tokens) backed by real-world assets.

Under the Labuan Companies Act, every Labuan company must appoint a licensed Labuan trust company as its incorporation agent. ATL provides registered office services, resident secretary services, and manages all statutory filings with the Labuan FSA.

Beyond incorporation, ATL offers back-office administration, accounting support, nominee services, payroll and work permit services, and strategic advisory to assist with international tax and substance compliance.