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Tax Exemptions in Labuan

Update Date:2021-5-27 16:31:05     Views:33

Tax Exemptions in Labuan

Labuan is a tax-friendly region, in which companies can benefit from numerous tax exemptions. For example, a legal entity is not required to pay the goods and services tax (GST) for sales transactions and it also qualifies for an exemption on the withholding tax of dividends and interest.

The corporate income tax rate for a Labuan company is differentiated according to the type of activity. In this sense, some business activities are favored, meaning that they are subject to a low tax or they are tax exempt. An investment holding company is subject to zero tax in Labuan while a company involved in trading activities is subject to a profit tax of 3% or 20,000 RMN. These values apply when the company trades on the ASEAN market; when the Labuan company trades on the Malaysian market the corporate income tax for trading activities is the usual 24% applicable throughout Malaysia. One of our Labuan company formation agents who specialize in taxation matters can give you more details about these differentiated taxation regimes according to the company’s activity.

Companies set up in Labuan are not subject to a capital gains tax and the double tax treaties signed by Malaysia will generally also apply in case of Labuan companies. One of our Labuan company formation specialists can give you more details about the provisions of these treaties.

It is also important to know that the Labuan company can have a corporate bank accountopened in other regions of Malaysia.

There are other benefits, including those referring to the visas the investors (and their families) have to obtain when relocating here for business purposes.

Labuan is not only a tax-advantageous financial center but is also a preferred location for traders and investors because it offers easy access to other areas and markets. Entrepreneurs who open a company in Labuan are located fairly close to Hong Kong and China, Indonesia, India or Tokyo, all o these locations being of interest for many foreign investors. By setting up a company in Labuan, they can enjoy the advantages of being closely located to these important markets, with minimum corporate taxes and requirements for their business.

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