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Open a Financial Company in Labuan

Open a Financial Company in Labuan

The Labuan International Business and Financial Centre is recognized for its pro-business environment, the simple tax system and the legal framework that is supported by the regulator. There are a wide range of business and investment structures that make it accessible for investors to engage in various business transactions or plan their wealth management. 

Investors can open a financial company in Labuan with great ease and benefit from the low taxation regime as well as the location, in the Asia Pacific region, close to Malaysia and to other growing Asian economies. 

The Labuan company formation process is a simple one, which can be assisted upon request by our experienced team. 

Our Labuan offshore company specialists can offer more details on the general requirements for company incorporation in this jurisdiction. 

What are some examples of financial services offered in Labuan?

There are several types of financial services available in Labuan, more specifically in the International Business and Financial Centre, the Labuan IBFC. We list some of them below:

  • – Banking: a number of banks and financial intermediaries offer their services, including Islamic banking services.
  • – Insurance: the insurance industry is an important one in Labuan, with direct insurers and reinsurance companies. 
  • – Leasing: companies offer leasing solutions and structure as a response to the growing demand for companies from various countries.
  • – Broker services: money broking services for those entering transactions, with the broker acting as the intermediary. 
  • – Company management: included here are treasury processing activities as well as Islamic advisory services and processing. 
  • – Others: wealth management services, fund establishment services as well as fund management services.

For more details about regulations or specific details about these types of services, please reach out to our Labuan company formation agents.

What is the Labuan tax regime like?

Investors who open a company in Labuan enjoy the favorable taxation regime. Trading activities are those such as banking, insurance, licensing, management and others while non-trading activities relate to investment holdings and holding shares, loans and other properties by a Labuan legal entity. A 3% rate applies on audited net profits.

Investors who open a Labuan offshore company are subject to few filing obligations, no need to submit income estimates or bi-monthly deductions. Moreover, companies in Labuan are subject to the double tax treaties concluded by Malaysia. 

What are some other conditions for doing business in Labuan?

Labuan is an attractive location for investors because there are no restrictions on foreign ownership and the is no minimum share capital requirement. Companies are, however, required to have a minimum of one share and they can choose to issue different classes of shares. A minimum of one shareholder is required and he can be an individual or, alternatively, another corporation. 

Companies in Labuan are incorporated as per the Labuan Companies Act 1996 and the legal framework for the Labuan IBFC is established by the Labuan Financial Services Authority. 

As far as the Labuan corporate structures are concerned, investors can open a company in Labuan that takes one of the following forms:

  • – Labuan companies: limited by shares or guarantee or an unlimited company; needs to be licensed for certain financial activities.
  • – Protected cell companies: can be used as a tax planning tool or a wealth management vehicle; it is composed of several cells, independent of each other and holding different assets and liabilities.
  • – Partnerships: the limited partnership and the limited liability partnership (combining the features of a limited liability company with that of a partnership).

In addition to these business forms, investors in Labuan can also open private trust companies, foundations, special purpose trusts, and others. 

The following key statistics were issued by the Labuan Financial Services Authority with respect to financial companies and their situation in Q2 2018:

  • – there were 40 investment banks and 16 commercial banks.
  • – 213 insurance and insurance-related licenses were issued, out of which 13 were general insurance licenses.
  • – there were 78 broker licenses.
  • – there were 365 leasing companies and the cumulative asset leased for the period was 48.7 billion USD.

Contact our Labuan company formation specialists for more detailed information on how to open a financial company as well as other details on investments in this region.