Labuan Company Guide: Forms, Tax, Substance and Who Runs It

What a Labuan Company Is and What It Is Used For

A Labuan company is incorporated under the Labuan Companies Act 1990 in the Federal Territory of Labuan, the part of Malaysia that hosts the Labuan International Business and Financial Centre (Labuan IBFC). The centre has its own registrar and regulator, the Labuan Financial Services Authority (Labuan FSA), and its own tax statute, the Labuan Business Activity Tax Act 1990. Bank Negara Malaysia treats every Labuan entity as a non-resident for foreign exchange purposes. The name Labuan offshore company survives from the Act’s earlier title and is still how most people search for it.

Owners use a Labuan company in three main ways: as an international holding company for shares abroad or in Malaysia (Labuan FSA notes that Labuan entities can invest in domestic companies), as a regional services company with staff in Labuan, and as the vehicle for licensed financial business such as Labuan banks, insurers and captives, fund managers, payment system operators and leasing companies. The usual form is the company limited by shares. A business whose customers are mainly in Malaysia normally belongs in an onshore company instead, set out in our Malaysia company guide.

Labuan Company Types at a Glance

Requirements, the registration steps and the substance test for each activity are on Labuan company registration.

Labuan Tax at a Glance

Labuan still turns up in searches for tax havens, but the regime has changed. The low rates now depend on real staff and real spending in Labuan, the 24% fallback equals Malaysia’s standard corporate rate, beneficial owners are recorded and changes reported to Labuan FSA, and a Labuan entity whose management and control are exercised in Malaysia counts as resident there for Malaysia’s tax treaties under section 3B of the tax Act.

Who May Own and Run a Labuan Company

Ownership is open: one shareholder is enough, of any nationality, whether an individual, a company or a trust company holding the shares as nominee or on trust. The control rules attach to the officers. The board needs at least one resident director, either a trust officer from a Labuan trust company or a natural person meeting Labuan FSA’s criteria, and Labuan FSA says that person may reside anywhere in the world; Singapore, by contrast, requires a director ordinarily resident in Singapore, as our Singapore company guide explains. The resident secretary has to be a trust officer of a Labuan trust company, and the registered office sits at a trust company’s office in Labuan.

Beneficial owners go into a register at the registered office, and every change is reported to Labuan FSA within 30 days under Part VA of the Act, added in 2025. Labuan FSA decides who may see that information; its public REEFS search shows only whether a company exists and its status. Where nobody in your business will act as resident director, we can arrange one along with the resident secretary, a post the law reserves to trust officers of licensed Labuan trust companies, and a nominee shareholding held by a trust company if you want one; the resident director has a director’s duties under the Act, and the beneficial owners stay on the company’s register and on file with Labuan FSA.

The Yearly Cycle

• Annual return to Labuan FSA once every calendar year, no later than 30 days before the incorporation anniversary.
• Accounts laid before the members within nine months of the year end, then a director’s solvency certificate and an approved auditor’s certificate, each within 30 days.
• Tax return under the Labuan Business Activity Tax Act within seven months after the accounting period ends, the tax falling due by the same date.
• Substance tested for every basis period: fit and proper staff physically working in Labuan under contracts with the company, and the minimum annual spending there.
• Changes of shareholders and beneficial owners reported within 30 days; changes of directors or secretary within one month.

Banking a Labuan Company

A Labuan company may keep accounts with any bank in Labuan or abroad, always in its own name, and Labuan FSA describes its dealings with non-residents as outside exchange control. Ringgit dealings and dealings with Malaysian residents follow Bank Negara Malaysia’s rules for non-residents. Each bank decides on its own review of the owners, the directors and the business. How account opening works for a Labuan company is covered on bank accounts for Labuan companies.

Registering a New Labuan Company or Buying a Ready-Made One

Register a new company when you want to choose the name and articles yourself. Labuan FSA states it can approve a complete application within 24 hours once its due diligence is cleared, after the trust company’s own checks on the founders. The procedure is on Labuan company registration.

Buy a ready-made company when an earlier incorporation date is worth more to you than choosing those details. Labuan FSA recognises pre-incorporated companies held by trust companies, but the buyer still has to meet the substance test, appoint officers and update the beneficial owner register. The transfer is set out on Labuan shelf companies, and the general idea in our guide to off-the-shelf companies.

What We Do for Labuan Companies

We form new Labuan companies and supply ready-made ones, draw up the papers for an incorporation or a share transfer, prepare the Labuan FSA filings and help put together the bank application. Where we have a working contact at a suitable bank we can introduce you; the bank takes its own decision.

Frequently Asked Questions about Labuan Companies

What is a Labuan company in Malaysia?

It is a company incorporated under the Labuan Companies Act 1990 and registered by Labuan FSA in the Federal Territory of Labuan. It is part of Malaysia but sits under its own company law and its own tax Act, pays 3% on trading profits or nothing on non-trading profits when it meets the substance rules, and is a non-resident for exchange control. A Malaysian domestic company is incorporated under the Companies Act 2016 instead.

Is Labuan a tax haven?

Not in the old sense. The 3% and 0% treatment survives, but only for companies with full-time staff and annual spending in Labuan suited to their activity; a company without them pays 24%. Beneficial owners are recorded and reported to Labuan FSA, company status is publicly searchable, and members of large multinational groups are subject to the global minimum tax.

What are the disadvantages of a Labuan company?

The main ones are the substance burden and the Malaysian link. The low rates need real employees and spending in Labuan; every company depends on a Labuan trust company for its secretary and registered office; Malaysian customers lose most of their tax deduction for payments to it; and exchange control treats it as a non-resident. Royalty income is taxed under the Income Tax Act, not at the Labuan rate.

What are the Labuan substance requirements?

They are minimum numbers of full-time employees and minimum annual operating expenditure in Labuan, set activity by activity by regulations of 2021: two staff and RM50,000 for most service companies, more for licensed financial firms, one employee and RM20,000 for investment holding. Since 2025 only fit and proper staff on the company’s own contracts, working physically in Labuan, count towards the minimum.

Can a Labuan company open a bank account outside Malaysia?

Yes. Labuan FSA’s FAQ states that a Labuan company can open accounts with any bank in Labuan or outside Labuan, provided the account is in the company’s name. Whether a particular bank accepts the company is that bank’s decision after its own checks, and ringgit accounts or dealings with Malaysian residents follow Bank Negara Malaysia’s rules for non-residents.