Labuan Company For Property Investment in Malaysia
Many foreigners are confused as to which is the right entity to set up for property investment in Malaysia, which can secure their 100% interest, without any disruption of law, and with the ability to maintain legality at the same time.
The solution for Property Investments in Malaysia with Labuan Company!
A Labuan Company may be the solution for your property investments in Malaysia to maximise the return with a change of control can be done easily. It may act as an investment holding to be the sole corporate shareholder of the local Malaysian private limited (Sdn Bhd) company which in turn holds the Malaysian properties.
It is also possible for the Labuan Company to hold the Malaysian properties, provided that the purchase price of each property is a minimum of RM 1 million or RM 2 million depending on the different areas and states as determined by the Land Office. For example, Kuala Lumpur is min. RM 1 million per property while Penang is min. RM500,000. For any rental income received will be taxable at 24% according to the local Income Tax Act 1967.
The beauty of the Labuan Company is that it not only allows the holding of property investments in Malaysia, it may also hold international abroad properties. For international properties’ rental income, it is taxable at only 3% on net audited profits.
Key Points of Using Labuan Company for Property Investment in Malaysia:
- With Labuan Investment Holding Company holding local Sdn Bhd company, the corporate tax rate is 0% with no audit account (only management account)!
- Local Sdn Bhd company’s corporate tax rate is 24% on rental receivable with choice of full employment of local staffs to manage the company office which can be located anywhere within Malaysia. It is cheaper compared to Labuan Company setting up a marketing office with yearly fee payment to Labuan FSA of RM7,500 and it comes with a restriction of maximum 4 personnel employment with the office located in Kuala Lumpur and/or Iskandar Johor only. Moreover, one may only apply for the marketing office provided there is an established operational management office in Labuan itself.
- The accounting books of both companies are relatively easier to manage whereby, the Labuan Company (i.e. offshore entity) acts as an Investment Holding Company while the local Sdn Bhd company performs the trading activities such as receiving rental, management business, etc in Malaysia.
- When the local Sdn Bhd Company pays a dividend to the Labuan Company (as the shareholder), it is tax exempted (0% tax).
- Save on property gains tax by way of transfer of shares in the Labuan Investment Holding Company. Through this way, the new shareholder will automatically be the owner of the company and the properties it holds. There is no stamp duty for transfer of shares!
- Using Labuan Company for Property Investment in Malaysia facilitates tax efficiency and cost savings!
Feel free to contact us by filling the enquiry form to explore the best type of Labuan entity to meet your business objectives. We “simplify the complexities” of your Labuan investment.