Open a Foundation in Labuan: Charitable or Non-Charitable

Labuan is a special region of Malaysia, which provides an attractive taxation scheme available for foreign investors. Businessmen can open a company or open a foundation in Labuan, which is a type of legal entity in which the company’s management can start charitable or non-charitable activities.

Quick Facts
Definition	A foundation refers to a separate legal entity which is set up for the purpose of managing specific assets used for charitable or non-charitable purposes.
Characteristics	In order to open a foundation in Labuan, locals and foreigners need to assign a registered address, provide the assets, establish the beneficiaries and the key management of the foundation (the officer, the secretary, the supervisory, etc.).
Legislation	Labuan Foundations Act 2010 and Labuan Islamic Financial Services and Securities (Amendment) Act 2022 (the latter applies to Shariah compliant entities)
Types of foundations	Charitable and non-charitable
Supervising authority	Labuan Financial Services Authority
Minimum number of founders	One. Those who open a foundation in Labuan can be individuals or corporate entities (residents or foreigners).
Purposes for which the foundation can be set up	Charitable purposes (such as: relief of poverty, the advancement of education, religion, health, sports, culture, environmental protection, human rights) and non-charitable (wealth management, estate planning, asset protection)
Duration of life	The duration stipulated in the incorporation documents (as required by the founders). It also possible to open a foundation in Labuan for an undermined period of time, as the law does not impose a limit in this regard.
Registration fees (yes/no)	Yes
Who can be the beneficiaries of a foundation?	– individuals, – other legal entities, – charities
Statutory documents	Charter
Mandatory elements of a charter	– name, – object of the foundation, – details of the founder, – registered address, – beneficiary, – initial endowment, – duration (if required), – name of the secretary
Redomiciliation	It is possible to redomicile a foundation set up overseas to Labuan (the Labuan legislation allows this procedure as long as the other country has also established this procedure in its national law).
Dissolution	– at the end of its duration, – as stipulated by the charter, – when it reached its purpose, – when the purpose for which it was set up can’t be reached
Legal assistance	Our consultants can offer tailored assistance to any party interested in opening a foundation. We can help you prepare the registration paper, obtain a registered address, register with local authorities and receive ongoing legal support after the entity begins its activity.

Foreign investors interested in company formation in Malaysia should know that a charitable foundation in Labuan can offer relevant tax exemptions. The Labuan legislation provides 100% exemption from paying the tax on distributions received from foundations or inheritance.

Below you can find some common Q&A about Labuan foundations and the manner in which these can be used, either for charitable or non-charitable purposes, such as wealth management.

What types of foundations are available in Labuan?

The legal framework for foundations in Labuan is what makes this jurisdiction attractive compared to other locations. Below, we list some of the characteristics:

minimum capital – one important advantage is that in Labuan there is no minimum endowment needed for a foundation;
privacy – the foundation needs to be registered with the authorities, however, the founder is the one who has extensive control;
confidentiality – the articles of the foundation are registered with the authorities, however, the beneficiaries are anonymous;
nationality – there are no specific requirements regarding the nationality of the founder;
language – any language is accepted provided that an English translation is included in the documents;
others – the foundation can be Sharia-law compliant and there is no requirement for an independent council member.

Our team can help investors who open a company in Labuan and are interested in knowing complete details about the legal framework in this jurisdiction. One of our Labuan company formation specialists can give you more details about the foundation and the manner in which it can be used for charitable or non-charitable purposes.

What is the structure of a foundation in Labuan?

As per the Foundations Act 2010, a Labuan foundation is a corporate entity separate from its founders (it is a distinct legal entity) that is used to manage its own property, for lawful charitable or non-charitable purposes. It is a flexible structure that can evolve and the changes will be included in its constitutive documents.

The general structure that applies to foundations regardless of whether or not they are charitable, is the following:

the founder;
the constitutive documents;
the officer, council members, secretary;
the properties;
the beneficiaries.

These elements are typical for a foundation in Labuan. Charitable foundations are allowed to hold Malaysian assets while non-charitable ones may do so only with the approval of the Financial Services Authority. The founder, council, officer and the beneficiary can also be another corporate body.

What activities can a charitable foundation start?

However, it is important to know that the charitable foundation in Labuan should perform one of the charitable purposes established for the entity under the local legislation. For example, it can conduct activities that will help reduce poverty, develop education, protect the environment. It may also engage in the following:

health-related activities (prevention/relief of sickness, diseases, etc.);
social/community purposes (provide specific services, support or care for children, elderly, persons with disabilities);
cultural purposes (advancement of national heritage, culture, art);
promoting human rights, etc.

Below, we invite you to read our infographic, presenting the characteristics of a Labuan foundation:

Basic registration steps

In order to open a foundation in Labuan, it is necessary to address the Labuan Financial Services Authority (our consultants can complete the procedure), the institution where the founders must submit specific forms and documentation.

For entities registered under the Labuan Foundations Act 2010, it is mandatory to submit Form 1 – Application for Registration of a Labuan Foundation and Form 2 – Declaration by a Labuan Trust Company as Secretary.

Those who will opt for an Islamic Foundation must abide by the rules prescribed by the Labuan Islamic Financial Services and Securities (Amendment) Act 2022. They need to complete and submit Forms 8 and 9.

Our team of Labuan company formation agents can offer more details on how to register a charitable/non-charitable foundation in Labuan. Similar registration steps apply to investors who want to set up a company in Labuan, but they will have to complete different registration forms.

What are the fees charged to a foundation in Labuan?

Investors who will open a foundation in Labuan are required to pay various fees for this structure. The payment of fees is imposed during the process of company incorporation in Labuan, but also throughout the foundation’s years of activity. According to Labuan FSA, the following fees apply from 1 January 2026:

USD 300 – registration fee;
USD 300 – annual fee;
USD 200 – redomiciliation fee (applicable when the investors want to relocate the entity somewhere else).

IMPORTANT NOTE: THESE FEES DO NOT INCLUDE LEGAL ASSISTANCE, BUT SIMPLY OFFICIAL STAMP DUTIES.

Can a foundation be dissolved?

Yes, just like any other legal entity registered in Labuan, a foundation can be dissolved in certain situations. For example, the procedure can start when the foundation reaches the end of the period for which it was set up (provided that its constitutive documents stated a specific amount of time).

If this is the case, the foundation’s officer will pass a resolution in which it is stated that the structure should be dissolved given that it has reached its deadline. The same procedure can be initiated when the foundation has fulfilled the purpose (or purposes) for which it was incorporated.

The dissolution of the foundation may also be initiated in the case in which the structure is incapable of fulfilling its purposes, regardless of the reason. Another way through which dissolution can be started is when the charter of the foundation requests the initiation of the process.

We invite businessmen to contact our team consultants in company formation in Labuan for more details related to the registration of a Labuan foundation and the costs associated with the procedure.

Please mind that although the foundation is a structure that does not require a minimum share capital, when incorporating a Labuan offshore business, you will be required to deposit a minimum capital, in accordance with the type of business you need to set up.

Our consultants can offer in-depth information on the capital requirements applicable to all Labuan business forms (including the Labuan offshore company) and other entities, such as the foundation, trust, branch office, etc.