Labuan Corporate Tax Info Tax Framework
All permitted business Labuan Company is meant to be carried out activity is permitted to carry on in, from or through Labuan in any foreign currency of choice other than Malaysian Ringgit currency with non-residents or with another Labuan entity.
For corporate tax filing, the assessment will be based on the activities carried out throughout the year. The financial year closing for all Labuan companies is fixed on 31st December annually. We assist in the opening of your corporate tax file (Form LE) and yearly filing with Inland Revenue Board (IRB). The dateline of submission is by 31st March annually, extendable to 31st May and 31st July (subject to IRB’s approval).
There are three (3) tax election options of tax election for the activities of a Labuan Company simplify as follows:
A. For Trading Company
Trading activity of a Labuan Company is defined as carrying activities, which includes banking, insurance, trading, management, licensing, import, export, trading, agency, wholesaler, consultancy and advisory. The corporate tax will be 3% (with audit report required).
B. For Non-Trading (Investment Holding) Company
Labuan Company can act as an investment holding entity of assets such as securities, stocks, shares, loans, deposits and immovable properties in Malaysia or outside Malaysia. The corporate tax will be 0%, no audit reporting required except for management account.
C. For Dormant (inactive) Company
Labuan Company which is dormant is required to submit relevant tax documents. This tax election option is only meant for newly registered companies which have not begun any activities since incorporation. However, there is no tax and audit reporting required except for management account for a dormant company.
D. Non-Labuan Business Company
Labuan Company dealing with Malaysian entities are considered as non-Labuan Business activities. The corporate tax payable will be 24% tax under the Malaysia Income Tax Act 1967 (ITA) on net profit with audited financial accounts to be submitted to Malaysia Inland Revenue with a “C” corporate tax number to be opened and managed by the local licensed tax agent. The Labuan company can permanently elect to be taxed under ITA, to enjoy the full range of Malaysia Double Tax Agreement benefits.
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