The Tax System in Labuan


Labuan Business Activity Tax Act 1990 (“LBATA”) governs the imposition, assessment and collection of tax on a Labuan business activity carried on by a Labuan entity in, from or through Labuan.

The tax rate applicable to a Labuan entity is 3% on the chargeable income from Labuan trading activities only.

This means the income from the Labuan non-trading activities (i.e. the holding of investments in securities, stocks, shares, loans, deposits or other properties) of a Labuan entity is not subject to tax at all.

Labuan entities that carry on a non-Labuan business activity are subject to the provisions of the Malaysian Income Tax Act, 1967 (“ITA”).

“Labuan business activity” are referred to as a Labuan trading or a Labuan non-trading activity carried on in, from or through Labuan, excluding any activity which is an offence under any written law.

Pursuant to the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018 that took effect on 1st January 2019:

- Labuan trading activity for licensed business activities are financially regulated such as insurance/reinsurance, financial exchange, wealth management, securities, banking, investment, credit/leasing, and other financial activities.

- Our company will be assisting in the registration of Labuan trading activity for non-licensed business activities (non-regulated) covering any one or more of the following business activities:

  • Administrative services.
  • Accounting services Legal services.
  • Backroom processing services.
  • Payroll services.
  • Talent management services.
  • Agency services.
  • Insolvency related services.
  • Management services (other than Labuan company management mentioned above).

- Labuan non-trading activity has been restricted to investment holding structures only, namely:

  • Pure Equity Holding Company.
  • Non-Pure Equity Holding Company.

Accounting Services and Tax Filings

Accounting Services Including:

  • Bookkeeping,
  • Balance sheet and financial statements.

Accounting fees

Accounting (yearly) fee Fee
Dormant (less than 10 transactions) $ 700.00
Semi-active (11 to 30 transactions) $ 1,000.00
Semi-active (31 to 50 transactions) $ 1,500.00
Active (51 to 100 transactions) $ 1,900.00
More than 100 transactions Starts at $ 2500

Audit Fees

Auditing (yearly) fee Fee
Dormant (less than 10 transactions) $ 1,600.00
Semi-active (11 to 50 transactions) $ 2,300.00
Active (51+ transactions) $ 3,600.00
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