Labuan expects an entity to have genuine presence on the island. What that means in practice depends on what the entity actually does.
An entity claiming Labuan treatment has to be run from Labuan. That means real people and real spending in the right place. The detail differs by activity.
The Inland Revenue Board of Malaysia (IRB) administers the requirement, as it does taxation in Labuan. Once an entity complies, it is eligible for the special Labuan tax rate for its activity.
The minimums for each activity are set in the regulations. What needs working out is which activity your entity carries on, and whether its staff in Labuan count.
A client runs a trading company from Kuala Lumpur and books it in Labuan. His auditor asks whether the entity meets the requirement. He does not know, and neither does his accountant, because the answer depends on the activity the entity carries on. That conversation belongs before the filing, not after it.
Activities change, and the requirement follows the activity, so this is not a one-off exercise.
We look at what your entity actually does and tell you what that means for presence.
Where something is missing we say so plainly.
We come back to it, because what the entity does this year is not what it did last year.
You go into a bank review or an audit knowing where you stand. If something has to change, you find out while there is still room to change it.
That depends on the activity your entity carries on. The minimum number of full-time employees and the minimum annual spending in Labuan are fixed in the regulations for each type of activity and do not change with turnover, so there is no second-guessing the numbers. The IRB also checks that those employees are fit and proper for the work. We tell you which activity applies to your entity.
Banks do ask about it during periodic reviews, and so can your auditor.
The Inland Revenue Board of Malaysia (IRB) does, on the facts of the entity. Our job is to tell you what those facts need to look like.
Speak with our team. We will look at what your entity actually does and tell you what that means for presence.