A business that is incorporated outside of the nation where its investors reside is referred to as an offshore company. Foreign investors are welcome to register their businesses as offshore companies in Labuan, also known as the Federal Territory of Labuan, a region of Malaysia. This is among the most significant offshore locations that Malaysia has to offer.
Cost Breakdown of Labuan Company Formation
Before the beginning of the Labuan company formation process, investors who open a business in Labuan are frequently curious about the costs associated with the various procedures. The fees owed to the authorities and regulators with which certain registrations are required, along with any additional fees and costs for services that foreign investors specifically request from a team of incorporation experts, make up the Labuan incorporation cost.
Overall, compared to Mainland Malaysia, for instance, the cost of forming a company in Labuan is not prohibitive for foreign investors, and the friendly business environment and low tax regime are key advantages for launching a business in this unique financial hub.
The costs incurred by the Labuan company can be divided into multiple categories:
- General fees: this includes the 50 RM or USD$15 name reservation fee;
- Capital fees vary based on the size of the company; the lowest fee is 1,000 RM, or USD$300, when the Labuan company has capital of 50,000 RM or less.
- Registration fees are 6,000 RMN or 2,000 USD and are only required for foreign companies registering in Labuan.
- The costs for opening a bank account in Labuan are also included; however, they cannot be precisely estimated because they vary from one provider to another. Other fees include fees for additional documents, for specialized incorporation assistance, and for translations or notarized documents, as may be necessary in each specific case.
Special fees for registering the Articles of Association, submitting the statutory declaration of compliance, or obtaining permission to serve as a director of the company are not included in the cost of forming a Labuan company.
Given that the name must be verified and approved before the business can be registered, the cost of reserving a company name is required. We advise business owners to prepare multiple names at this point. The selected name is reserved for three months after it is approved; usually, the Registrar grants name approval in less than a day.
Can a proxy be used to pay the Labuan company formation fee?
One can hire Labuan company formation specialists who can serve as a representative, prepare and submit the necessary paperwork, and make the necessary payments if the foreign investors are unable to attend the entire company formation process in Labuan.
Are there any post-incorporation costs for Labuan company formation?
It is expected that businesses in Labuan will pay annual fees. These vary depending on whether the business is domestic or international:
A Labuan company would pay 2,600 RM, or 800 USD; a foreign Labuan company would pay 5,300 RM, or 1,500 USD.
The annual payment is made without filling out any forms.
In Labuan, the process of forming a company is simple. The Labuan Financial Services Authority starts the verification process after all the paperwork has been completed and turned in, and the authorities have received the fees.
Timeline of Labuan Company formation
- Name reservation- Two days
- Company incorporation- Three days
- Applying for a letter of confirmation for bank account opening- One week
- The business owner’s interview for the bank account specimen and interview- One day
- Bank accounting opening- Three weeks
- Getting a bank token for internet banking- Three weeks
A Labuan company’s incorporation is a strategic business choice as well as a legal requirement. Labuan provides a unique combination of financial benefits, flexibility, and legitimacy. By planning carefully, complying with the local regulations, and hiring experienced service providers, you can easily incorporate your business in Labuan and enjoy tax advantages and access to regional markets.
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