Labuan Tax Rate

Malaysia Hotline : +603-2141 8908

Tax System for Labuan Entities

The Labuan Offshore Business Activity Tax Act 1990 (as amended in 2004) provides for the reduction or complete exemption of income tax in respect of certain business activities carried on by Labuan offshore companies.

- Chargeable profits derived by an offshore company from an offshore trading activity are subject to tax at a rate of 3% on net profit. (audit is required for this tax election)

 - Alternatively, an offshore company which carries on an offshore trading activity may, within three months from the commencement of any calendar year, elect to be charged to tax of M$20,000 for that year of assessment. (not audit id required)

 - An offshore company which carries on an offshore non-trading activity is exempt from income tax altogether.

The Income Tax Act 1967 applies to any activity other than offshore business activity carried on by an offshore company, ie they required to pay normal taxes according to Malaysia taxation.

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