Labuan

Labuan is federal territory that is made up of the main Labuan Island and six smaller islands. The island is mostly known for its capital as an offshore financial center that offers international financial and business services and also being famous for the deep water offshore gas and oil extraction. The name of the country derives from the word Labuan which means harbor, as in the past it used to be a place travelers would come to restock goods.

Economy

The economy of Labuan is not only dependent on banking and international investment services, but also on the export of oil and gas. Almost all of the extracted gas and oil is exported to other countries. Almost all of the crude oil is exported. A part of the economy consists of import of raw materials and equipment and export of refined materials. The territory just recently became an offshore financial center. And since then more than 6000 registered offshore companies can be found there and more that 300 licensed financial institutions.  Including the branches of major world banks.

Incorporation

There are two types of companies usually registered in Labuan. The first being offshore trading and the second offshore non-trading company. Both types of companies are usually incorporated within 4 to 8 business days. The incorporation process is quite similar to other jurisdictions, as it is only required to submit the following documents with the registrar of companies:

• Consent form the director of the company,
• Memorandum and articles of association,
• Compliance with the Companies Act,
• A document confirming the identity of the member of the company,
• Statuary declaration and the proof of the payment of the fee.

The name of the company may be in any language as long as it’s based on Latin alphabet. Companies related to activates such as banking, education, trusts, funds, insurance, investment or municipal activities require a special license. Suffixes to denote limited liability also must be added. The director of the company may reside anywhere in the world. The company board meeting’s may also take place anywhere in the word. The company must employ a local secretary. The minimum number of shareholders is one and he may reside anywhere in the world. The records of the shareholder or the director are not publicly available.

Taxation

Trading companies pay 3% on net audited profits or RM 20 000, non-trading companies are free form corporate taxation.

The Labuan falls under the taxation of the Malaysia and lies under most of its taxation laws. Having at least 70 of the double taxation agreements.

Company upkeep

The yearly fees for a company incorporate in Labuan are RM 1500. Annual return must be filed, accounts have to be prepared, but don’t have to be filed.