Company Formation in Malaysia: The Definitive Guide for NRIs & Global Investors 2025

Last updated: June 2025 | Blueberry – Kerala's Premier Global Trade & Financial Services Facilitator

Why Malaysia for Company Formation?

Malaysia occupies a unique position in Asia: a politically stable, FATF-compliant, OECD white-listed jurisdiction with a sophisticated financial sector, English-language legal system, and strategic position at the heart of ASEAN. For NRIs and Indian entrepreneurs, Malaysia's Labuan IBFC offers one of Asia's most tax-efficient offshore structures, while the onshore Sdn Bhd provides full access to Malaysia's domestic market and ASEAN trade network.

Labuan IBFC – Malaysia's Offshore Vehicle

The Labuan International Business and Financial Centre (IBFC) is Malaysia's dedicated offshore financial hub, located on Labuan Island off the coast of Sabah. Regulated by Labuan FSA, a Labuan company offers:

3% corporate tax on net audited profits (or MYR 20,000 fixed annual tax)
No withholding tax on dividends paid to non-residents
100% foreign ownership
Access to Malaysia's DTAA network (70+ countries including India)
No stamp duty on instruments relating to Labuan business activities

Labuan companies can conduct trading, holding, investment, and financial services activities. They cannot conduct business with Malaysian residents (which would trigger onshore tax treatment).

DTAA Benefits with India

The India-Malaysia DTAA provides:

Dividends: 5% withholding (vs standard 20%)
Interest: 10% withholding
Royalties: 10% withholding
Capital gains: Source-based taxation (generally taxable in Malaysia, where rate is 0%)

Tax Structure

Tax Type	Labuan Company	Sdn Bhd (Onshore)
Corporate Tax	3% or MYR 20,000 fixed	24% (17% SME on first MYR 600k)
Capital Gains Tax	Nil	Nil (on shares)
Dividend Withholding	Nil	Nil (single-tier system)
GST/SST	Exempt	6% SST (on applicable services)

Formation Process

Engagement & KYC document collection
Name reservation with Labuan FSA or SSM
Constitution drafting and filing
Labuan FSA licence application (7–10 days)
Certificate of Incorporation
Registered office and company secretary appointment
Corporate bank account opening (4–6 weeks)
Post-incorporation compliance setup

Costs & Timeline

Blueberry's all-inclusive Year 1 package: ₹44,999. Timeline: 7–10 business days from complete KYC. View full package →

Banking in Malaysia

Key banks for Labuan company accounts: Maybank, CIMB Bank, HSBC Malaysia, Standard Chartered Malaysia. Account opening: 4–6 weeks. Full KYC, business plan, and source of funds required.

Annual Compliance

Annual return filing with Labuan FSA
Audited financial statements (for trading companies)
UBO register maintenance
Economic substance requirements (for certain activities)
India FEMA/RBI APR filing (31 July annually)

Malaysia vs Other Jurisdictions

See our Offshore Company Formation Comparison Chart for a full side-by-side analysis.

FAQ

Can I form a Malaysia Labuan company entirely online?: Yes. Blueberry manages the process remotely. Documents require notarisation/apostille.
Is a Labuan company suitable for holding Indian investments?: Yes, subject to FEMA and RBI regulations. The India-Malaysia DTAA provides reduced withholding on dividends and interest.