Print ready version
A foreign company shall not have a place of business in Labuan or carry on business in Labuan unless it is registered as a foreign Labuan company (“Labuan Branch”) under the Labuan Companies Act 1990. This write-up does not apply to a foreign company registered under the Malaysian Companies Act 1965.
The LCA requires the engagement of services of a Labuan IBFC registered trust company to act as its registration agent. For your information, Kensington Trust Labuan Limited (“KTLL”) is a licensed trust company in Labuan.
Every foreign company shall, prior to establishing a place of business, or carrying on business, in Labuan, apply / lodge with the Labuan Financial Services Authority (“Labuan FSA”) the followingsfor registration:-
- Reservation of name for the Labuan Branch. Please note that the Labuan Branch shall have the same name as its foreign company and advisable to have the additional words “Labuan Branch” behind its name. Eg. XYZ Limited, Labuan Branch.
- * A certified copy of the certificate of incorporation or registration of the foreign company in its place of incorporation or origin, or a document of similar effect.
- * A certified copy of its charter, statute or memorandum and articles or other instrument constituting or defining the constitution of the foreign company.
- ^ A latest certified copy of the register of directors, officers and secretaries of the foreign company showing the following information:
- Full name
- Residential address
- Passport number
- Date of birth
- Date of appointment as director / officer / secretary
- ^ A latest certified copy of the register of shareholders of the foreign company showing the following information:
- Full name of shareholder
- Residential address/Registered Office address
- Passport number/Company number
- Date of birth/Date of Incorporation
- Nationality/Place of Incorporation
- Date of entry as shareholder
- A memorandum of appointment or power of attorney under the seal of the foreign company or executed on its behalf in such manner as to be binding on the company and, in either case, verified in the prescribed manner, stating the name of a Labuan trust company that is authorized to accept on its behalf service of process and any notice required to be served on the company. A sample of this document could be provided upon request.
Sample Affidavit verifying the execution of the Memorandum of Appointment could be provided upon request. This document has to be notarised, verified and endorsed in accordance with Note (*) below.
- A statutory declaration in the prescribed form made by an officer of the Labuan trust company. This will be prepared by KTLL as your Labuan trust company.
The following additional information would be required for registration of the Labuan Branch:
- The Authorised and Paid-Up share capital of the foreign company. Please state amount, currency and par value. A prescribed fee would be payable to the Labuan FSA upon registration.
- The registered office of the foreign company. For your information, the Labuan Branch will have a registered office in Labuan, which office shall be the principal office of a Labuan trust company. The registered office of KTLL will be the registered office of the Labuan Branch.
Situation of the registered office and any change thereof shall be lodged with the Labuan FSA within one (1) month after the date of registration of the Labuan Branch or the date of change, as the case may be.
- An original extract of Board resolution from the foreign company with regards to the registration of branch in Labuan, representative for executing the registration documents and principal officer to manage the Labuan Branch.
Upon lodgement of complete documentation and payment of fees as well as clearance from the due-diligence process conducted by the Labuan FSA, a certificate of registration of a foreign Labuan company will be issued and the certificate shall be conclusive evidence that the requirements as to registration have been complied with.
- The Labuan Branch shall, within one (1) month after the date of change or alteration, lodge with the Labuan FSA where any change or alteration is made in the followings:-
- the charter, statute, memorandum or articles of a Labuan Branch company, or other instrument relating to the company, lodged with the Authority;
- directors of a Labuan Branch or in the name or address of any director;
- address of the registered office of a Labuan Branch in its place of incorporation or origin;
- name of a Labuan Branch;
- powers of any directors resident in Labuan who are members of the local board of directors of a Labuan Branch; or
- the Labuan trust company or the name or address of the Labuan trust company mentioned in the memorandum of appointment or power of attorney lodged with the Labuan FSA.
If a Labuan Branch ceases to have a place of business or to carry on business in Labuan it shall, within one (1) month after it so ceases, lodge with the Labuan FSA notice of that fact, and as from the day on which the notice is so lodged, its obligation to lodge any document with the Labuan FSA shall cease. Labuan FSA shall accordingly remove the name of the Labuan Branch from the register.
|Annual Return||Lodge annual return once in each calendar year not later than thirty (30) days prior to the anniversary of the date of its registration.|
|Annual Government Fee||Pay annual fee of such amount as may be prescribed not later than thirty (30) days from each anniversary of the date of its registration|
|Annual Tax Filing||Annual tax return needs to be filed with the Malaysian Director General of Inland Revenue by 31 March of that year of assessment. Normally, an extension of time for filing is allowed by the Inland Revenue|
Labuan Business Activity Tax Act 1990 (“LBATA”) governs the imposition, assessment and collection of tax on a Labuan business activity carried on by a Labuan entity in, from or through Labuan. Only Labuan entities carrying on a Labuan business activity are chargeable to tax under the LBATA. Labuan entities that carry on a non-Labuan business activity are subject to the provisions of the Malaysian Income Tax Act, 1967 (ITA).
“Labuan business activity” means:
- a Labuan trading or a Labuan non-trading activity carried out by a Labuan entity (which includes Labuan Branch);
- activities carried on in, from or through Labuan;
- business currency other than Malaysian currency;
- activities carried out with non-resident or with another Labuan entity
"Labuan non-trading activity” means an activity relating to the holding of investments in securities, stock, shares, loans, deposits or any other properties by a Labuan entity on its own behalf. Such activity is not subject to tax under LBATA.
“Labuan trading activity” includes banking, insurance, trading, management, licensing, shipping operations or any other activity which is not a Labuan non-trading activity. The Labuan entity shall pay either 3% of net profits as per audited accounts OR RM20,000/- upon election annually.
Labuan entity carrying on both Labuan trading and non-trading activities will be deemed to be carrying on Labuan trading activities. Hence, it will have the same tax treatment as those undertaking Labuan trading activity mentioned above.
The information in this document is not advice of any kind but general information only and should not be relied on as legal advice. Kensington Trust Group recommends seeking professional advice on legal or tax issues affecting you before relying on it. While Kensington Trust Group tries to ensure that the content of this document is accurate, adequate or complete, it does not represent or warrant, express or implied, its accuracy, correctness, completeness or use of any of the information. Kensington Trust Group does not assume legal liability for any loss suffered as a result of or in relation to the use of this document. To the extent permitted by law, Kensington Trust Group excludes any liability for negligence, for any loss, including indirect or consequential damages arising from or in relation to the use of this document.