Labuan provides suitable market conditions for the registration of a cryptocurrency company, and this also involves the tax system applicable to this business activity. Investors who want to open a cryptocurrency company in Labuan must know that they can also obtain various tax exemptions.
You can rely on our team of consultants in company registration in Labuan if you need legal representation in the process of incorporating a cryptocurrency business.
| Quick Facts | |
|---|---|
| What classifies as a Crypto Company in Labuan? | A cryptocurrency company refers to any type of business that has as a main activity mining, trading, exchanging cryptocurrencies, such as Bitcoin or Ethereum. |
|
Taxes paid by cryptocurrency companies in Labuan |
– corporate tax (3%), – employment taxes |
|
Tax exemptions (if applicable) |
Many tax exemptions are available, such as: – the withholding tax on interest and royalties, – the technical fee, – the stamp duty, – the GST, – the import duty, – the capital gains tax, – the inheritance tax, – the services tax, – the tax on the dividends obtained by shareholders. |
| License necessary (yes/no) | Yes |
| Activities with cryptocurrency license requirements |
– crypto exchange companies, – digital assets exchange businesses, – cryptocurrency providers, – any other type of cryptocurrency businesses dealing with the transaction of such currencies |
| Timeframe to obtain the cryptocurrency license |
– 30-60 days (the pre-approval procedure); – overall, it can increase to 4-6 months |
| Minimum capital required for crypto businesses |
RM 500,000 |
| Foreign owernship rules |
Foreign investors are allowed to own 100% of the company’s shares, they do not need a local partner. |
| Immigration requirements for foreign investors |
Foreign investors are required to apply for suitable visas in order to live here and develop their business activities. |
| Company incorporation procedure for crypto companies | A cryptocurrency company in Labuan follows the same incorporation steps as required for any other business activity (prepare the statutory documents, obtain certificates and licenses from the local institutions, register for taxes, etc.) |
| Main regulatory institution |
Labuan Financial Services Authority |
| Documents for the issuance of the crypto license |
– a business plan for the company that will operate in Labuan, – personal information on the shareholders and directors and their qualifications in the field, – when the applicant is a corporate entity, the audited accounts of the company are necessary, – specific documentation concerning cryptocurrency procedures (such as the Anti-Money Laundering rules). |
| Yearly fee applicable for the crypto license (yes/no) |
Yes |
| Regulations and laws applicable to crypto companies |
– Anti-Money Laundering, – Know Your Customer (KYC), – operations procedures, – Financial Services Act, etc. |
| Open a physical place of business/ open a corporate bank account required (yes/no) | Yes, for both |
How to set up a cryptocurrency company in Labuan?
Opening a cryptocurrency company in Labuan should follow the next steps:
- Choose the type of company: private limited company, partnership, or sole proprietorship.
- Register the company: submit the required documents and register the company, according to the Labuan Companies Act 1990.
- Obtain a license and the necessary permits: In order to set up a cryptocurrency company in Labuan you will need to apply for a license. You can do this through the Labuan Financial Services Authority (Labuan FSA).
- Open a bank account with a bank in Labuan.
- Pay your taxes.
It is important to note that this process can differ from one company to another. In order to have access to all the information related to opening a company in Labuan and about the current regulations that apply to your situation, we encourage you to contact one of our specialists in opening a cryptocurrency company in Labuan
What are the advantages of opening a cryptocurrency company in Labuan?
Labuan is becoming more and more popular in the cryptocurrency industry. An increasing number of legal entities are looking to set up a cryptocurrency company in Labuan. Some of the reasons include:
- Advantageous regulations: There are beneficial regulations for setting up cryptocurrency companies in Labuan. The legal directives are decided and implemented by The Labuan Financial Services Authority (Labuan FSA).
- Tax exemptions: When opening a company in Labuan you can benefit from certain tax exemptions and incentives.
- Location: Labuan is located at the crossroads of Asia, being thus the perfect place for companies that want to expand on the nearby markets.
- Affordable workforce
- English is the official language, which makes it easier for foreign companies to find employees and communicate with them, and deal with local administrative activities.
Is it important to take into account that the cryptocurrency market is changing rapidly. This means that the regulations around it are also in constant transformation. This being said, for company incorporation, it is recommended to contact one of our specialists in opening a cryptocurrency company in Labuan.
What are the tax benefits for cryptocurrency companies in Labuan?
Local and foreign investors can obtain many tax benefits, offered in the form of tax exemptions or low taxes. First of all, it must be observed that one needs to apply for a Labuan crypto exchange license when dealing with cryptocurrency exchange operations.
From the start, foreign investors must know that they are not required to pay the following taxes:
- the withholding tax on interest, royalties or management fees;
- the stamp duty;
- the value-added tax (goods and services tax);
- the capital gains tax;
- the withholding tax on dividends.
Thus, investors who will set up a cryptocurrency company in Labuan will avoid the payment of numerous taxes, which can be imposed in other jurisdictions, this being one of the main reasons for choosing this jurisdiction for setting up a business as a foreign investor.
Although there are many tax exemptions applicable to foreign investors dealing with cryptocurrency operations, there are certain basic taxes charged, as well as other important matters that will appear during the process of company formation in Labuan.
Below, our consultants in company registration in Labuan have highlighted some of the main aspects foreign investors should be aware of:
- investors are required to invest a capital of RM 50,000 (or $120,000) for this type of business activity;
- as said above, one must apply for a Labuan crypto exchange license, which can be issued over a period of 4 to 6 months;
- foreign businessmen can also start an initial coin offering (ICO) platform, and for this, they will need to invest $100,000 and make proof of having at least 3 years of profitable business activity;
- one can also register a crypto fund in Labuan, and the capital requirements will be $50,000 to $120,000, depending on the number of investors (less than 50 or more than 50);
- those who will set up a cryptocurrency company in Labuan will pay a corporate tax charged at a rate of 3%.
Please mind that the legislation in Labuan allows the registration of companies with 100% foreign ownership. However, all foreign investors should comply with certain immigration procedures before their arrival.
In most cases, a visa will be necessary. For most of the applicants, a visa with a validity of 2 years will be issued (in the case of investors who comply with all the requirements for the registration of a cryptocurrency company).
Also, we mention that the licensing requirements can vary based on the specific crypto activity that will be developed here. For instance, those registering a crypto fund do not need a license, but a Labuan crypto exchange license is necessary for operations involving the transaction of cryptocurrencies.
The Labuan government offers several tax benefits for foreign cryptocurrency companies that want to open a headquarter in the country.
A major advantage is the low corporate income tax – 3%. To this, we may add a wide list of tax exemptions and incentives for opening a cryptocurrency company in Labuan.
Furthermore, the double taxation agreements that Labuan has signed with a wide number of countries can save companies some extra costs. If you want to find out if your country has a double taxation agreement with Labuan, one of our specialists in opening a cryptocurrency company in Labuan can answer all your questions.
Some other tax benefits include no value-added tax, no capital gains tax, and tax-free dividends and repatriation of profits.
Labuan is one of the most chosen places for setting up a cryptocurrency company because it is considered a tax haven. The beneficial regulations, the tax exemptions, and the location attract more and more investors each year.
If company formation is on your mind or you need help in obtaining a Labuan crypto exchange license, our specialists in company formation can offer their full assistance and guide you through each step of the process.
It’s important to note that the crypto regulations as well as the steps for company incorporation in this field are evolving. Thus it is advisable to seek professional help and guidance.
Below, you can watch a short video on how to set up a cryptocurrency company in Labuan:
What is the governing body for cryptocurrency in Labuan?
Cryptocurrency operators will need to conduct the procedure for company incorporation in Labuan as per the applicable law, which is the same regardless of the business activity developed by a local or foreign business.
Companies involved in crypto operations are considered financial operators, therefore they will have to register with the Labuan Financial Services Authority.
For this, you can always contact our team of consultants in company formation in Labuan, who can conclude this procedure on your behalf.
Our consultants can assist you in the formalities of starting a crypto business. You are also invited to contact us if you need legal advice on any other matter concerning Labuan offshore.
You can request information concerning the tax advantages and the tax system, the visa requirements, the basic conditions to set up a business, details on confidentiality policies applicable here, etc.