Incorporated under Labuan Company Act, company will be ruled under LABUAN BUSINESS ACTIVITY TAX ACT (LBATA)
LBATA is designated for attracting non-Malaysian capital to construct international business.
Attractive tax benefits to Labuan companies:
- Zero tax when it is doing ‘investnent holding’ business; or
- 3% profit tax on annual audites account when it is a ‘trading’ companu dealing with non-malaysia entities, but audited account is exempted;
- Flat fee of RM20,000 when it is a ‘trading’ company dealing with non-Malaysian entities, but audited account is exempted
A summary of description of Labuan offshore Company business activities and its tax treatment is shown below:
| DESCRIPTION OF LABUAN ACTIVITIES | TAX TREATMENT |
| Labuan non-trading activity · Holding of investments in securities, stock, shares, loans, deposits or any other properties situated in Labuan by a Labuan company | Not subject to tax |
| Labuan trading activity · Includes banking, insurance, trading, management, shipping operations, licensing or any other activity which is not a Labuan non-trading activity | 3% of net profits per audited accounts |
| Carrying out both Labuan trading and non-trading activities · Deemed to be Labuan trading activity | Same tax treatment as Labuan trading activity (3% of net profits per audited accounts) |
| Non-Labuan business activities or where an irrevocable election is made to be taxed under the MITA 1967 | Taxed pursuant to the MITA 1967 at the prevailing income tax rate of 24% |
COMPULSORY REPORTING ON DEALING WITH MALAYSIAN
- When Labuan company deals with Malaysian entities
- Need to report to Labuan FSA