Myths and Truths about Labuan State and Labuan Company

Understanding Labuan
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Fact: Labuan is a federal territory of Malaysia located off the coast of Borneo. It comprises 13 islands and is governed directly by the central government of Malaysia but has its own regulatory framework and state government.

Do not fall for liars and fake agents who are using Labuan state policy, Labuan company, and facilities to do visa business only, which can cost you serious damage, Labuan is a tax haven and business hub for genuine businessmen only not for visa-seeking people to reside in Malaysia. Many businessmen are complaining online and via email about Labuan company scams from India, Bangladesh, Pakistan, and other Asian countries so we will discuss some common issues regarding Labuan company and visa today.  

Myth: Labuan is the same as mainland Malaysia.
Truth: Labuan operates under a different regulatory regime compared to mainland Malaysia, specifically tailored for offshore business activities. Despite being part of Malaysia, Labuan's policies, particularly regarding business and taxation, are unique and designed to attract international businesses.
Business and Taxation in Labuan

Myth: Labuan companies offer the same benefits as Malaysian SDN BHD companies.
Truth: Labuan companies operate under the Labuan Financial Services Authority (LFSA) and not under the Malaysian Companies Commission (SSM). They benefit from low tax rates (0-3%) but do not enjoy the full range of benefits that mainland Malaysian companies (SDN BHD) do, such as local market access without restrictions.

Myth: Labuan is only for shell companies and tax evasion.
Truth: While Labuan is known as a tax haven, it is a legitimate business hub designed to facilitate international business. Genuine businessmen can benefit from its tax-efficient environment, provided they comply with all regulatory requirements.

Labuan Visa and Employment Pass (EP)

Myth: Obtaining a Labuan visa is a quick and easy process.
Truth: Setting up a Labuan company and obtaining a visa involves a complex process that can take 4 to 5 months. Claims of completing this process within a month are typically misleading.

Myth: Labuan EP is a path to Malaysian permanent residency (PR).
Truth: Labuan EP allows you to reside in Labuan and mainland Malaysia for two years but is not a route to PR. Obtaining PR requires different criteria and is more straightforward in mainland Malaysia.

Practical Considerations for Labuan Companies

Myth: Labuan companies have unrestricted access to all Malaysian facilities and licenses.
Truth: Labuan companies must operate under Labuan's jurisdiction and policies. They are considered foreign companies when operating in mainland Malaysia and thus face certain restrictions and additional requirements.

Myth: Labuan company setup and maintenance are inexpensive.
Truth: While Labuan offers tax advantages, the costs associated with setting up and maintaining a Labuan company are significant, often ranging from USD 4,000 to USD 6,000 for setup and USD 1,200 to USD 1,800 annually for maintenance.

Misleading Claims by Agents

Myth: Agents can provide quick, guaranteed results for Labuan company formation and visa acquisition.
Truth: Many agents exaggerate or falsify claims about the ease and benefits of setting up a Labuan company. Always verify the information and preferably deal directly with Malaysian authorities or reputable advisors.

Myth: You can bring maids and drivers on a Labuan company visa.
Truth: Unlike the Malaysia My Second Home (MM2H) program, Labuan company visas do not allow you to bring domestic helpers from abroad.

Recommendations for Business Setup

Fact: Mainland Malaysia offers more comprehensive business opportunities and facilities compared to Labuan. Foreign investors can set up fully foreign-owned SDN BHD companies in mainland Malaysia, benefiting from local market access, banking facilities, and business incentives.

Fact: For those whose business needs align with the tax benefits of Labuan, establishing a company there can be advantageous. However, it's essential to understand the limitations and compliance requirements.
In summary, while Labuan offers significant tax advantages for international businesses, it's crucial to be aware of the complexities and limitations involved. Misinformation and fraudulent claims by agents can lead to costly mistakes. Thorough research and consulting with knowledgeable advisors are essential steps in making informed decisions regarding business setup in Malaysia.

Can consult our experienced Malaysian business advisors at +601126664168  

​We are providing full company setup, business license process, business setup, business bank account opening, accounting, audit, taxation, ESD (expatriate service division) license process, and business visa application advisory. ​
Our company registration consultancy package includes:

• Company registration consultancy
• First company secretary appointment
• Company forms/super form & sections
• CTC's & chop arrangements
• Name search
• SSM charges
• Foreign directors document certification
• Printing & Filing
• Share distribution agreement
• Finding nominee director & agreement
• Prepare signboard & Premises licenses application documents
• Prepare business licenses application documents
• Registered office facility & virtual office facility
• Bank account opening charges (first bank account)
• Service charge & related services
• Business counseling, planning & setup advisory

Contact & Email us for services price quotation at [email protected]

WHY MALAYSIA IS SECURE BUSINESS HEAVEN NOW
Malaysia has emerged as a secure business haven for numerous reasons. Firstly, its robust and resilient economy has withstood the test of time, even during the global recession of 2009. This economic stability provides a solid foundation for businesses to thrive. Another advantage of Malaysia is its multicultural and multinational population, which creates a diverse market with constant demand. Moreover, Malaysia boasts a thriving online market with an active customer base, making it an ideal environment for businesses operating in the digital realm.

​Additionally, the Malaysian government's unwavering support and assistance contribute to the security of investing in the country. The government offers incentives and aid to businesses, while the banking sector provides reliable financial support for investment endeavors, ensuring a secure environment for investors. Malaysia is also renowned for its emphasis on security, respect, and the warm nature evident in daily life. This welcoming and safe atmosphere attracts investors and their families, making Malaysia an appealing location for both business and personal reasons.

​Furthermore, Malaysia offers a wide range of business opportunities across various investment budgets, ensuring that foreign investors can find genuine and profitable investments that align with their financial capabilities. The goal is to foster mutual growth and success between investors and Malaysia as a nation. In conclusion, Malaysia's strong economy, government support, cultural diversity, secure environment, and inclusive investment opportunities make it an attractive destination for foreign investors seeking profitable business ventures and a brighter future for themselves and their families.
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​Call, Email or text us & take an appointment from the website to visit our office in Malaysia.
LIM & ANI ASSOCIATES SDN BHD
Call: +601126664168
Call: +60108242527 
Call: +603-58856648 (office landline)
Email: [email protected]
www.mbbusinessjoint.com

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