Open a Holding Company in Labuan - Guide for Investors

The procedure for Labuan company formation allows the registration of a holding company. For in-depth advice on this company type, its advantages, disadvantages and the benefits for foreign investors, we invite you to request in-depth information from our consultants, who can also assist you in the process of opening a holding in Labuan.

Quick Facts
Legal entities used	Public or private limited company by shares (holdings can operate as pure equity holding or non-pure equity holding)
Incorporation method	Registered according to the Labuan Companies Act 1990
Incorporation time	1-2 days to maximum 4 weeks
Advantages	– good options for business activities (investment in real estate, stocks, securities, loans), – no residency requirements for the company’s director, – tax exemptions on the distributions of dividends, withholding tax exemptions, etc.
Precautions	Some holdings must have a minimum number of employees/ operating expenditure requirements of RM 20,000 per year
Shareholding structure	Minimum one shareholder (no residency requirements)
Minimum Capital	no capital requirements
Taxation	Numerous tax exemptions (withholding taxes, stamp duty, capital gains tax; director’s fee exemption up to YA 2025), double tax agreements regime applies
Control	Management and control are done following the rules of the Labuan Financial Services Authority Act 1996
Accounting and Reporting	– prepare and keep records in Labuan, – audit requirements applicable based on the activities developed
Number of double taxation treaties	over 70

What is a holding in Labuan?

A holding refers to a legal entity (incorporated as one of the business forms available for registration in Labuan) that is set up for the main purpose of owning shares in other companies, thus having the right to control the manner in which these companies carry out their business strategies.

Can the holding carry out any type of business activities?

Investors interested in this company type must know that the holding company does not represent a commercial company, and this implies that the legal entity does not enter commercial activities.

What activities can the Labuan holding company develop?

As a general rule, the Labuan investment holding allows the company to enter the following types of operations:

investment holdingin other companies;
owning companies located in other jurisdictions or in Malaysia;
holdings in newly acquired businesses in this country or overseas;
investments in: bonds, securities, deposits, equities, loans, deposits concluded with offshore banks and others.

What types of holdings can I register in Labuan?

The process of company formation in Labuan can be completed for two types of holdings, namely:

pure equity investment holding – this defines a legal entity that only owns shares in other companies;
non-pure investment holding– the holding owns a variety of assets in other companies, which can include: real estate, shares, bonds, etc.

What legal entity should I choose for a holding in Labuan?

A holding must be incorporated under one of the business forms that have separate legal personality from their founders. The most suitable options are the private and public limited companies.

What are the benefits of a Labuan holding company?

Below, you can find some of the main advantages and other benefits applicable to this legal entity:

the company enjoys a liberal ownership system – the investor can own 100% of the company’s shares;
it can be founded by 1 shareholder;
the company can hire foreign workforce;
the Labuan holding company can be charged with a corporate tax of 0%, 3% or 24%.

What is the law regulating the activity of a holding?

The holding company is regulated under the Labuan Companies Act 1990.

What institution supervises the activity of a holding?

The Labuan Financial Services Authority is the main institution overseeing the incorporation and functioning of all company types set up here, including the holding.

Do I need to apply for a business license?

A holding company does not need a Labuan FSA licence; a license is required only for regulated activities (banking, insurance, fund management, leasing, etc.). The license has to be issued before starting any activity.

Do I need to appoint a resident director?

Yes. According to the law, it is necessary to appoint at least 1 resident director – a trust officer of a Labuan trust company or an eligible natural person of any nationality, who does not have to live in Malaysia. You can address our consultants for more details on other managerial obligations that can arise when opening a company in Labuan as a holding.

Are there any employment obligations?

If you will start the process of company formation in Labuan for a non-pure holding company, the legislation obligates the investor to have at least 1 full-time employee in Labuan.

Are there any operating expenses obligations?

Yes. Holding companies need to have, on a yearly basis, operating expenditures in Labuan of at least RM 20,000 (both non-pure and pure holdings). Pure equity holdings are exempt from the employee requirement but must meet control-and-management conditions in Labuan. These can be comprised of:

salaries;
rent;
professional fees;
other business expenses.

When can the holding benefit from the reduced corporate tax rates?

In the list below, our consultants present the situations in which a holding can benefit from the reduced tax rates:

the 0% corporate tax applies to holdingsthat do not engage in any type of trading activities;
the 3% corporate tax is applied in cases where the holding combines non-trading and trading activities.

In what situations can the holding be charged with the standard corporate tax?

The standard corporate tax – 24%, is charged when the holding fails to meet the substance requirements imposed by law (referring to the minimum number of employees and minimum annual expenditures).

Can you assist me in opening a business in other countries?

Yes, you can rely on us if you want to start a business in other countries, such as China, where you can open a company as a foreign businessman.

Please contact our team of specialists for further information on other important aspects concerning the registration and functioning of a holding in Labuan.