Servicing Singapore from Outsourcing Office in Malaysia
Servicing Singapore from Outsourcing Office in Malaysia
Manufacturing and Services 制造与服务
A. The Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulation 2021 has been gazetted on 22 November 2021 and are deemed to have come into operation on 1 January 2019, a Labuan company carrying on a Labuan business activity is only subject to tax at the rate of 3% of net profit PROVIDED that it has fulfilled the requirement of the number of full time employees and an amount of annual operating expenditure as specified in the Schedule below:
Labuan Company Carrying on a Labuan Business Activity
Minimum Number of Full Time Employees in Labuan
Minimum Amount of Annual Operating Expenditure in Labuan (RM)
Labuan Insurer, Labuan reinsurer, Labuan takaful operator or Labuan retakaful operator
Labuan underwriting manager or Labuan underwriting takaful manage
Labuan insurance manager or Labuan takaful manager
Labuan insurance broker or Labuan takaful broker
Labuan bank, Labuan investment bank, Labuan Islamic bank or Labuan Islamic investment bank
Labuan trust company
Labuan leasing company or Labuan Islamic leasing company
4 per group
Labuan credit token company or Labuan Islamic credit token company
Labuan development finance company or Labuan Islamic development finance company
Labuan building credit company or Labuan Islamic factoring company
Labuan factoring company or Labuan Islamic factoring company
Labuan money broker or Labuan Islamic factoring company
Labuan fund manager
Labuan securities license or Labuan Islamic securities license
Labuan fund administrator
Labuan company management
Self-regulatory organisation or Islamic self-regulation organisation
B. Management And Control Requirement For Labuan Entity That Undertakes Pure Equity Holding Activities
Regulation 3, The Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulation 2021 which is deemed to have come into operation on 1 January 2021, requires the above mentioned company to comply with the following:
C. Income derived from intellectual property rights is subject to tax at the rate of 17% or 24% under Income Tax Acts 1967(“ITA”) .
With effect from 1 Jan 2019, under Income Tax (Deductions Not Allowed for Payment Made to Labuan Company by Resident) Rules 2018 (Amendment) 2020, the following type of payments made to a Labuan Entity by a company resident in Malaysia are not entitled to a tax deduction:
Type of payment
Amount not allowed for deduction
Labuan is low-tax jurisdiction country.
BVI is tax-free jurisdiction country.
Labuan Co enjoys more than 70 countries’ double tax treaties (DTAs).
BVI enjoys only 2 countries’ (Japan and Switzerland) double tax treaties (DTAs), and these treaties are not used in practise.
Dividend declared from Labuan Co to Malaysia is free of tax.
Dividend declared from BVI co may subject to income tax.
Note: If the company is Non-Malaysian Co, the tax exemption will depend on each home country’s law jurisdiction and its double tax treaties with Malaysia.
No withholding tax on interest payment.
BVI has applied the European Union (EU) Savings Directive since 1 July 2005. A withholding tax (initially 15%, rising to 20% from 1 July 2008) has been applied to interest payments to natural persons resident within the EU.
Labuan has its registered auditor under its jurisdiction. The income tax payable is allowed to base on the audited profit, the source of income is cleared for reinvestment or dividend purpose, once it is paid.
Suitable Industries 合适行业 :
Tax Advantages 税务优势:
Income tax is only 3% of net profit
Use of Local Ancillary Services
Trading of Goods Annual Sales Turnover
(Additional requirement for companies applying for
tax exemption on trading income)
Average sales turnover for the past 3 years or
RM500 million whichever is higher.
Structured Internship Programmes / equivalent
Training Schemes introduced by the Government
Not subjected to
|Labuan Entities||Annual operating expenditures|
||RM3,000,000 (USD 750,000) per entity in Malaysia
(including minimum of RM100,000 (USD 25,000) in
RM3,000,000 (USD 750,000) per entity in Malaysia (including minimum of RM100,000 (USD 25,000) in Labuan).
Local business spending including:
|Labuan Entities||Minimum number of full time employees in Labuan|
2 staff per group.
Increase of 1 employee for every additional 5 LITC companies.
c. To employ at least three (3) professional traders who are tax residents of Malaysia.
Labuan Foundation is probably one of the Best Choices in Asia as your wealth management vehicle. While there are 21 jurisdictions worldwide which have Foundation Acts to govern wealth management activities, Labuan which is governed by the Labuan Foundation Act 2010, remains the ONLY jurisdiction in Asia. As such, your assets are protected under its own jurisdiction from the local or foreign claims and cannot be liquidated forcefully.
Labuan Foundation has other Silent Features as private wealth management vehicle as below:
End beneficiaries is anonymous.
No capital requirements. Minimum endowment of USD1.00 as an initial asset at time of establishment.
No requirement for founder/councillor.
Appeal Against Transfer By Creditors
Only within the first two years of registration.
Appeal Against Inheritance Provisions
No appeal possible because of foreign laws.
Foreign Claim Or Judgment
Rights And Powers Of A Founder
Enshrined via the charters.
Holding Of Malaysian Assets For Non-charitable Foundations
May hold with Labuan FSA’s approval.
Involvement Of Corporate Body
Allowed to be appointed as :
Fixed or perpetual.
Assets returned to designated party.
Ownership Of Foundation’s Asset
Beneficiary has no legal or beneficiary ownership over the foundation’s asset.
Taxation On Income
The Northern Corridor Economic Region (NCER) is a development plan encompassing the four Northern States of Malaysia namely Perlis, Kedah, Perak and Penang. The priority sectors in NCER are manufacturing, agriculture and bio-industries and services which include the sub-sectors of tourism, global business services and logistics & connectivity.
The objectives of the NCER initiative include:
a) To stimulate economic growth to address the imbalances and increase inclusively;
b) To achieve balance growth in the manufacturing, agriculture, bio-industries and services sectors;
c) To enhance talents to meet the growing needs of the region;
d) Increase private sector investments and finance initiatives.
The advantages include:
a) Located within the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT);
b) NCER has hosted many multinational companies and local companies with approximately RM47.7 billion of investment in the year 2009 – 2016;
c) Year 2020, RM50 million for high impact strategic projects has been allocated to Chuping Valley Industrial Area in Perlis;
d) NCER plays a predominant role in agriculture in the NCER;
e) NCER is renowned for its rich natural and heritage attraction.
1. Electrical & Electronic
2. Machinery & Equipment
a. Green Technology (product)
b. Medical Devices (products)
c. Automotive (products)
d. Additive Manufacturing (products)
e. Aerospace (products)
B. Agriculture & Bio-Industries
a. Sustainable Agriculture
b. Processing of Agriculture Produce
c. Superfruit/ Superfood (Upstream)
d. Superfruit/ Superfood (Downstream)
e. Green Technology Services
f. Halal Industry Seed Research & Development
D. Medical Science and Science & Technology
Research & development undertaken by Malaysian company for their own business.
Research on science or technology including Industry 4.0 for the production/ improvement of materials, equipment, products or processes.
Seed R&D Centre
Seed R&D Centre
Approved Agriculture Project
a. Private Institution of Higher Learning
b. Technical & Vocational Education and Training (TVET)
c. International/ Private Schools
1. KSTP Park Manager
4. KSTP Global Research Centre (GRC)
Income tax exemption of 100% of statutory income for 15 years (5+5+5).
1. Income tax exemption of 70% of statutory income for 5 years for the following income:
a. Disposal of all or part of right or land/building located at CVIA; OR
b. Rental of all or part or the land/buildings located at CVIA.
2. Stamp duty exemption on transfer or lease of land only.
Income tax exemption of 100% of statutory income for 5 years.
3. Waste-To-Resources Facilities Provider
3. Main Developer and Residential and Commercial Developer
Culture and Heritage
Agriculture – related services
1. Approved developers undertaking development in industrial parks or fee zone.
Income tax exemption for 10 years commencing from the year company derives statutory income:-
2. Approved development manager providing management, supervisory or marketing services in relation to the development of an industrial park or free zone.
3. Approved park managers providing park management services including maintenance, marketing and rental of common facilities and utilities services in the industrial park or free zone.
Income tax exemption for 10 years commencing from the year company derives statutory income derived from a qualifying activity.
4. Qualifying person who sponsors a hallmark event.
A deduction equivalent to the amount not exceeding RM1 million for each year of assessment in respect of cash contribution or contribution-in-kind.