Our website uses  cookies for statistical purposes.

  • Block A, Lot 7, 1st Floor, Pertama Industrial Estate, 87000 F.T Labuan, Malaysia
  • clients(at)labuancompanyformation.com
  • +6011 6334 3949
Our Articles

Set up a Branch in Labuan

Set up a Branch in Labuan

Branches in Labuan are registered with the Companies Commission in Malaysia and represent a legal business structure that operates under the rules and regulations of the parent company. The registration of a branch in Labuan is an easy process that can be properly handled by our team of company formation agents in Labuan for all foreign investors who want to enter the Malaysian market.

 Quick Facts  
Definition of a branch in Labuan An extension of a foreign company that operates in Labuan and the Labuan International Business and Financial Centre (IBFC) for conducting offshore activities.

General documents required for opening a branch

– power of attorney,

– identification details for the parent company,

– parent company’s Memorandum and Articles of Association,

– resolution to open a branch, etc.

Possibility of setting up multiple branches (YES/NO)

 YES

Steps of opening a branch

– prepare documentation,

– open a bank account,

– appoint a representative agent,

– establish the board of managers,

– register for tax purposes

 Tax returns

Must be filed by March 31st each year, with a 10% penalty for late filings

Remote registration

We handle company formation in Labuan and branch registrations remotely through power of attorney.

 GST rate

6% (only if the company provides goods and services in Malaysia)

Corporate income tax

3%

Authorities overseeing branches in Labuan

– Inland Revenue Authority,

– Labuan Financial Services Authority,

– the Central Bank of Malaysia,

– Malaysia Immigration Department

Alternatives to a branch office Our specialists in company incorporation in Labuan can help you open alternative entities such as a representative office or a subsidiary.
Can hire employees (YES/NO)

YES

Number of double taxation treaties in Labuan

73 (approx.)

Other taxes in Labuan

24% tax for income from royalties and intellectual property

Advantages of opening a Labuan branch

– tax benefits,

– access to Asian market,

– financial services hub,

– minimal reporting requirements,

– no exchange controls,

– easy incorporation process, etc.

 Assistance We can help you open a company in Labuan or expand your business by establishing a branch.

How can I register a branch in Labuan in 2024?

The registration process starts once the Articles of Association are provided to this institution. These important documents must contain information about the parent company, about the activities which will be placed in Labuan, the name of the owners, the board of managers and the capital contribution.

The branch registration and compliance requirements may be subject to regulations if this business form is opened in a certain field. For example, when an investment bank opens a branch in Labuan, it must provide a letter of undertaking from the parent company abroad through which it is made clear that the head office acknowledges that it will be liable for the operations of its Labuan branch.

The liability of the parent company is a particularity that needs to be taken into consideration when deciding to open a branch or a subsidiary. Our Labuan company formation specialists can provide complete details on the current requirements that apply to branches in general as well as any particular licensing or reporting requirements that may apply in specific business fields that are subject to a higher degree of regulation in Labuan.

We can also provide detailed information to those investors interested in making an application with the Financial Services Authority (FSA) for registering a branch. In addition to the liability acknowledgment, other documents will be required to register the branch of an investment bank or another financial institution.

Among these, we can mention the business plan, three-year financial projections, audited accounts, a letter of consent from the country of origin’s regulatory authority as well as details about the composition of the Board of Directors. These requirements for submission may differ from one case to another.

We strongly advise investors who are interested in opening a branch of a financial institution to reach out to us for more details. We can also provide assistance for other business fields of interest.

We invite you to address to our company incorporation specialists in Labuan who can help you set up a business in this offshore jurisdiction. You can also ask for information about how you can set up a Labuan trust company.

What are the authorities which offer approvals for your branch in Labuan?

Most business structures in Malaysia, including in Labuan, are approved by the Inland Revenue Authority, Labuan Financial Services Authority, the Central Bank of Malaysia and the Malaysia Immigration Department.

As previously mentioned, some branches may be subject to additional licensing and control, like those in the financial sector. Investors can reach out to our Labuan offshore company specialists for details.

the-advantages-of-opening-a-branch-in-labuan

What are the steps for opening a branch in Labuan in 2024?

Among the important steps of opening a branch in Labuan as a foreign company, we mention the following:

  • apply for a work permit visa as a foreign entrepreneur in Malaysia;
  • prepare the Articles of Association with information about the branch in Labuan;
  • provide complete information about the parent company which intends to set up a branch in Labuan;
  • open a bank account for the minimum share capital and future financial operations of the branch;
  • appoint a representative agent and the board of managers for the branch in Labuan;
  • register for tax purposes and social contributions in Malaysia.

Please keep in mind that these steps are only general ones that include a brief description. For more details, please reach out to our Labuan company formation agents.

What are the main benefits of branches in Labuan?

Branches in Labuan are treated as an extension of a foreign company that is interested in expanding its operations in Labuan and Malaysia.  The branch is a completely dependent structure and any business decision of a Labuan branch is usually subject to acceptance of the parent company and only then implemented by the local branch.

Other benefits to opening a branch in Labuan include minimum tax filing obligations (when a company pays 3% on its Labuan trading activities audited accounts are required as part of these obligations).

Branch requirements in Labuan in 2024

Apart from observing the requirements for proper registration and licensing, branches are also subject to the tax return requirements for companies in Labuan. These include preparing a statutory statement and filing the tax returns by 31 March each year. A difference is made between trading and non-trading activities in Labuan, with the trading ones including banking insurance, import/export or shipping. Non-trading ones refer to holding activities.

Branches of foreign companies involved in the provision of goods and services in Malaysia are subject to the goods and services tax applicable in the country, including for activities related to importing goods into Malaysia. One of our Labuan company formation agents can provide investors with more details if their business activities in Labuan will also include imports in Malaysia. 

Foreign companies that wish to open a branch in Labuan in 2024 can reach out to our company formation agents for more details if they wish to set up their presence this year. We can help manage the procedure as well as make part of the needed submissions in your name, as needed. We will guide you throughout the procedure and provide information on the post set-up phases, such as applying for special types of permits for financial activities. We invite you to watch a short video on how to register a Labuan branch:

Investments in Labuan

We list some of the key investment and market evolution highlights, according to a market report for 2018 presented by the Labuan International Business and Financial Centre:

  • 12.5%: the growth of new company incorporations in Labuan compared to the previous year; Japanese, Chinese and South Korean investors remain the top ones.
  • 1,059: the number of new companies in 2018 in Labuan.
  • 60.1%: of the total Labuan companies originated from Asia and the Pacific Region in 2018.
  • 12.8%: an increase of companies opened by investors from the Far East, as compared to the previous year.

The growing number of companies is a reflection of Labuan’s position as a business center that has much to offer to foreign investors. While Asian investors retain a majority, investments from the Far East, Europe, and America have also increased in recent years. 

Those who want to invest in Labuan in 2024 must know that the region has been maintaining its steady development in the business sector – for instance, in 2020, 872 new companies were incorporated in Labuan, and in 2023 (measurement made for June, 2023), there were 930 new legal entities incorporated here.

It must be observed that the number of legal entities has been constantly increasing in the last 2 decades, from less than 1,000 companies in 1996 to 4,858 companies by mid 2023, showing that investors can benefit from a reliable business market if they want to start a branch or register another type of legal entity in 2024 in Labuan.

If you would like to know more about how you can set up a branch in Labuan or about how you can open a Labuan offshore company, we invite you to contact our team of company formation representatives in Labuan.

When you will set up a branch in Labuan in 2024, you will be required to select a suitable company name. This is necessary regardless of the company type selected for incorporation. The company name must follow the standards imposed by the Registrar.

First, the investors will have to reserve the company name that they are interested in, and they will also need to pay a fee during this procedure, which, in 2024, is of only RM 50. After this, the company founders have to wait 24 hours until they get an answer for the name reservation.

If the desired company name meets the required standards as per the applicable legislation, the name will be approved and reserved for the next 3 months. Our consultants can offer assistance for the registration of a branch in 2024.

In general, the registration of the company with the Labuan Financial Services Authority does not imply other fees, but exceptions can apply for specific situations, therefore we invite you to address our consultants if you want to register a branch in 2024.