There are two kinds of Partnerships that can be formed through Labuan:

  1. Labuan Limited Partnership (Labuan LP)Characteristics of Labuan Partnership
  2. Labuan Limited Liability Partnership (Labuan LLP)

Two (2) main differences between Labuan Limited Partnership (Labuan LP) and Labuan Limited Liability Partnership (Labuan LLP) are as follows:

  1. a) Labuan LLP partner is not liable for another partner’s
    misconduct or negligence
  2. b) Labuan LLP is required to submit “Solvency Certificate” annually to Labuan
    FSA on or before its anniversary of registration

Labuan Limited Partnership (Labuan LP)
The purpose and advantages of setting Limited Partnership:

  1. It allows for and easier to attract investors to become Limited Partners where liability is up to capital invested and terms are drawn up in the partnership agreement who only wanted their liability on their capital they invested and terms of the in the partnership agreement
  2. Shield Limited Partners from business debts and other liability
  3. A great choice for joint venture where partners can come together to share expertise and run the business while sharing profits
  4. Limited Partners can leave or be replaced without the need to dissolve the Limited Partnership

Characteristics of Labuan Limited Partnership (Labuan LP) Entity:

Governing Act Labuan Limited Partnerships and Limited Liability Partnership Act, 2010 (LPPA)
Suffix "Labuan Limited Liability Partnership", ("Labuan)L.L.P","Labuan LLP",Liability Partnership,""Ltd.P.", "LP" or "L.P"
Composition of Partners Minimum two with no more than 50 partners. Can be individual or corporate
General Partner (GP) Min.one. Can be individual or corporate
Limited Partner (LP) Min. one. Can be individual or corporate
Designation A person can be GP and LP at the same time
Role of GP Responsible day to day operations, have active role, a decision maker, ensure compliance with statutory obligations, with rights to share profits, liabilities and debts of the Labuan LP
Role of LP Liability of LP limited to capital invested, but do not participate in daily operations.
If Labuan LP is formed to carry out Professional service Corporate partners are not allowed
Partner Protection for LP Liability only limit to the capital they invested but do not participate in the daily operations
Partnership Agreement Is the governing documents determine the relationship between the partners, to be executed by all partners and lodge with Labuan FSA by Trust Co and it can be altered
Constituents documents To be kept in Registered Office - CP Trust - your Secretary
Registered Office Principal office of Secretary - CP Trust
Public Access No, unless with the permission from the Directors/Shareholders
Accounts To be kept in Labuan or Registered Office- CP Trust
Dissolution of Labuan LP By lodgement of notice of dissolution to Labuan FSA, or upon death of GP or court order
Annual Compliance
1.Annual Labuan FSA fee to be paid on or before anniversary of the incorporation date

2.Annual Tax filing to IRB by 31st March, which is extendable to 31st May

Corporate Tax
Trading Activity: 3% with audited report or pay flat fee of RM20,000 with management account reporting

Non-Trading Activity: 0% tax with management account reporting

Business Transactions In any foreign currency except Malaysia Ringgit
Gain on Distribution Tax exempt on distribution of profits to partners
Withholding Tax No withholding tax payable to non-residents on dividends, royalties, technical fee, management fee, lease rental and interest
Stamp Duty Exempted on all instruments including transfer of shares relating to offshore business activities

Labuan Limited Liability Partnership (Labuan LLP)
The purpose and advantages of setting Labuan LLP:

  1. Suitable for joint venture on professional services nature of business where it protects Limited Partners from personal liability from claims arising from the other partners’ incompetencies, errors, wrong business decisions or omissions
  2. It allows the Limited Partners to share profits and wanted their liability on their capital they invested and terms in the partnership agreement and shield them from business debts and other liability
  3. Limited Partners can leave or be replaced without the need to dissolve the Limited Partnership
  4. Good for perpetual succession

Characteristics of Labuan Limited Liability Partnership (Labuan LLP):

Labuan LLPDescription
Governing Act Labuan Limited Partnerships and Limited Liability Partnership Act, 2010 (LPPA)
Withholding Tax No withholding tax for royalties, technical fee, interest and management fee payment
Suffix "Labuan Limited Liability Labuan Limited Liability Partnership", "(Labuan) L.L.P." or "Labuan LLP"
Stamp Duty
Role of LPLiability of LP limited to capital invested, but do not participate in daily operations.
Role of DP Responsible day to day operations, a decision maker, ensure compliance with statutory obligations, with rights to share profits, liabilities and debts of the Labuan LLP. Personal liable to penalities imposed onto Labuan LLP for contravene the LPP Act
Registered Office Principal office of Secretary- CP Trust
Public Access No, unless with the permission from the Directors/Shareholders
Partnership Agreement Is the governing documents determine the relationship between the partners, to be executed by all partners and lodge with Labuan FSA by Trust Co and it can be altered
Partner Protection Permits a partner to be shielded from liability of partnership obligations created by misconducts, wrong doing,etc
Limited Partner (LP) Minimum one, can be individual or corporate
If Labuan LLP is formed to carry out Professional service Corporate partners are not allowed
Gain on Distribution Tax exempt on distribution of profits to partners
Dissolution of Labuan LLP By lodgement of notice of dissolution to Labuan FSA, or upon death of GP or court order.
Designation A person can be DP and LF at the same time
Designated Partner (DP) Minimum one, can be individual or corporate
Corporate Tax
Trading Activity: 3% with audited report or pay flat fee of RM20,000 with management account reporting

Constituents Documents To be kept in Registered Office- CP Trust- your secretary
Composition of Partners Minimum two with no more than 50 partners. Can be individual or corporate
Business Transactions In any foreign currency except Malaysia Ringgit
Annual Compliance
1.Annual Labuan FSA fee to be paid on or before anniversary of the incorporation date

Accounts To be kept in Labuan or Registered Office- CP Trust
Non-Trading Activity: 0% tax with management account reporting

2.Tax filing to IRB by 31st March, which is extendable to 31st May

3.Submit “Solvency Certificate” to Labuan FSA on or before the anniversary of date of incorporation

Feel free to email us at contact@labuanbusiness to find out if Labuan Partnership entity is right for your business nature. We “simplify the complexities” of your investment in Labuan Jurisdiction!

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