A Labuan company is a company incorporated under the Labuan Companies Act 1990 (LCA 1990). Companies
under this Act are allowed to carry out business in, from or through Labuan in order to enjoy its tax neutrality.
A Labuan company may have these shares structures:
• company limited by shares
• company limited by guarantee
• an unlimited company
Types of company:
• Labuan Company
• Labuan Foreign Company
• Labuan Protected Cell Company
Labuan Trading Company
Defined as a Labuan Company which conducts trading activities.
Labuan Trading Activity includes banking, insurance, trading, management, licensing, shipping operations or any others activity which is not a Labuan non-trading activity.
Labuan Trading Company have a yearly election of either paying a flat tax rate of MYR20,000 per annum, or 3% of audited net profit.
Labuan Non-Trading Company
Defined as a Labuan Company which conducts non-trading activities, which includes holding of investments in securities, stock, shares, loans, deposits or any other properties held by a Labuan entity on its own behalf.
Labuan Non-Trading Company (Labuan Holding Company) that derives its investment income from a non-trading activity is not subject to tax and exempt from capital gains tax. Payment of dividends, interest, service fees and royalties by the Labuan Holding Company to non-residents are also exempt from Malaysian withholding tax.