If you've been researching offshore company formation in Malaysia, you've encountered the term Labuan Company or Labuan IBFC. Here's everything NRIs need to know.
What is Labuan IBFC?
The Labuan International Business and Financial Centre (IBFC) is Malaysia's dedicated offshore financial hub, located on Labuan Island off the coast of Sabah, East Malaysia. Established under the Labuan Financial Services Authority (Labuan FSA), it provides a regulated, tax-efficient environment for international business activities.
Key Features of a Labuan Company
- Tax rate: 3% on net audited profits, or MYR 20,000 fixed annual tax
- Capital gains tax: Nil
- Dividend withholding tax: Nil (to non-residents)
- Foreign ownership: 100% permitted
- Minimum directors: 1 (can be non-resident)
- Company secretary: Must be a Labuan trust company
- Registered office: Must be in Labuan
- Annual accounts: Required (audited for trading companies)
- DTAA access: Full access to Malaysia's 70+ DTAA network
Labuan Company vs Sdn Bhd
A Labuan company is an offshore entity — it cannot conduct business with Malaysian residents and is subject to the preferential 3% tax. An Sdn Bhd is an onshore entity subject to 24% corporate tax but can operate freely in Malaysia's domestic market. For NRIs with no Malaysia domestic operations, the Labuan company is almost always the better choice.
What Activities Can a Labuan Company Conduct?
- International trading (buying and selling goods internationally)
- Holding investments (shares, bonds, real estate outside Malaysia)
- Intellectual property holding and licensing
- Financial services (with additional FSA licences)
- Shipping and logistics
- E-commerce and digital services
Economic Substance Requirements
Post-2019, Labuan companies engaged in certain activities must demonstrate economic substance in Labuan — adequate employees, physical presence, and core income-generating activities. Blueberry's Labuan trust company partners provide substance solutions.
How to Obtain a Labuan Company Licence
- Appoint a licensed Labuan trust company (mandatory)
- Submit application to Labuan FSA with KYC and business plan
- FSA review: 5–7 business days
- Receive Certificate of Incorporation
- Open corporate bank account
Start your Labuan company formation with Blueberry →
Also read: Complete Guide to Malaysia Company Formation | Why NRIs Should Form a Labuan Company | Opening a Bank Account for Your Malaysia Company