Labuan Foundation FAQ on First Steps to Get Started
Speak to us on your objectives, we will help you to decide if Labuan Foundation suits you. Send us the enquiry form. You need to list down all your current assets holding by you or nominee and start to make provision to transfer them to Labuan Foundation.
Send us a copy of Founders’ passport (info page) for us to do the due dilgence back ground check. Once it is clear, we will send us the Registration Form to capture your information to prepare you the Service Agreement and check on the name availability for the Foundation.
The Foundation will be issued with a Registration Certificate (Form 3) once Labuan FSA approved. The approving process will take approximate 1 to 2 months.
The name reserved will be valid for 3 months. You may change the name anytime after registration by way of submitting your new name to the Labuan FSA and passing necessary resolutions.
You may change the name anytime after registration by way of submitting your new name to the Labuan FSA and passing necessary resolutions, approving often within 1 to 2 weeks.
Yes, you can hire local Malaysians or foreigners to be part of your team to manage your Foundation.
As soon as the Labuan Foundation fully incorporated with post incorporation approved by Labuan FSA, we can generate the documents for the banker to open the bank account for your Labuan Foundation.
You can have the choice to open offshore bank account from Labuan licensed bankers or bankers worldwide from Singapore, UK, etc. Most of our clients will set up Malaysia onshore bank account for RM currencies also.
After the Foundation registered, we will arrange meeting with bankers for all signatories and founders. Approval process usually takes about 1 to 2 weeks.
Yes, you can do so anytime as you wish.
Onshore bank accounts are bankers that operate in Malaysia with extensive branches govern by Malaysia Central Bank while the Labuan offshore bankers are regulated by LabuanFSA. Both offered common major foreign currencies, with off shore bankers do not operate in RM.
Yes, in Singapore, Hong Kong etc, most private bankers open bank accounts for Labuan Foundation.
5 stunning features of Labuan Private Foundation!
Frequently Asked Questions on Labuan Foundation Characteristics
You can have your own name with logo (optional). The name will follow by letter ” Labuan Foundation (L) “ appear in the Registration Certificate Form 3.
Yes, Founder can appoint nominee.
Yes, Founder may transfer his rights, powers and obligations allowed in the Charter or Deed of Assignment to a nominee of individual or corporate. Assets that are in the name of nominee Founder can be endowed. If the assets not in nominee Founder name, he has to provide a Declaration to ROC LFSA on the beneficial ownership to be make known.
No limit, can be individual or corporate.
Yes, it can be done thru Deed of Assignment to submitted to LFSA. Any changes of assignee must notify LFSA within 30 days.
The degree of flexibility is governed by the Charter which can make changes to it from time to time depends on your needs.
Yes,the assets under “assignee” can be endowed as long these assets are proven belonged to the founder.
Anyone appointed by the Foundation including the founder, beneficiary or company secretary. If founder is the council member, he is allowed to direct and manage the Foundation assets.The secretary may be a council member at the same time provided that the secretary shall not be the sole council member.
1. Officer – primarily administrative as the officer is responsible for ensuring the proper administration of the foundation.
2. Council member – responsible for the general supervision of the foundation management and ensuring that the purpose for which the foundation was established is fulfilled in accordance with the charter, articles and the law. In effect, the council is similar to the Board of Directors of a company.
3. Secretary – performs all secretarial functions including filing and lodging of documents with Labuan FSA.
4. Supervisory person – to ensure the council members act in accordance with the charter as well as safeguard the Labuan foundation’s properties in line with its purpose and object.
Note: Officer and Supervisory person cannot be the same person to avoid conflict of interest in performing their respective roles.
Founder can be officer, provided he is not the council member. Founder can be the beneficiary. Anyone including Company Secretary can be the officer appointed by Founder during the registration. It can be natural person or corporate entity. The appointment must be consented with an appointment letter with resignation notice of 30 days and lodge to the LFSA.
Yes, can be the same person or corporate entity.
Yes, but founder cannot be an officer.
Individuals, corporate entities or charities and those who have vested interest of the Foundation assets.
Officer is appointed by Founder to be responsible for the proper administration of the Labuan Foundation and to carry duties and decisions of the Council. You can have a appointment letter to clearly specify the scope of responsibility of the officer.
Not a compulsory appointment. His responsible to manage and oversee operations by its officer to meet the objectives and purpose of the Foundation.Council member do not owe fiduciary duty to the beneficiaries to eliminates competing beneficiaries’ interests.
Yes, but appointment of the officer is a must.
Appointment of supervisor is optional. The function of supervisor be appointed by founders mainly to monitor the Council’s decision with the powers to add or remove Council members or Officers, etc.to the overall function of the Labuan Foundation.
Upon declaration by the council members anytime when it deems fit and/or as distribution conditions stated in the Charter ie. upon death of founder or dissolution of the Foundation.
Only council members will sign.
No claim if the assets already endowed into the Foundation after 2 years’ period from date of registration.
Generally there are three(3) kind of protection:
- creditors’ claims
- foreign claims
- forced heirship
Labuan Foundation cannot be forcefully liquidated to satisfy other obligations such as claims arising from divorce, lawsuit or creditor after 2 years of establishment.
Council members, supervisory person, officers,beneficiary and approval auditor (if appointed) are allowed to inspect the documents and they are kept in the Trust Company who is your company secretary situated in Labuan.
The foundation will continue as long as the Charter permits it, unless it mention to dissolve it when the founder die.
Labuan Foundation shall be dissolved on the occurrence of the following events:
(a) the Labuan Foundation is established for a fixed duration and that duration expires;
(b) the purpose of the Labuan Foundation is fulfilled or becomes incapable of fulfillment, or
(c) any provision of the charter of the Labuan Foundation so requires
(d) by court order
The officers of the Labuan Foundation has to pass a resolution to that effect of the dissolution.
More on dissolution!
Frequently Asked Questions on Labuan Foundation Taxation and Compliance
For investment holding it is zero tax with submission of management account. For trading, the tax will be 3% with audited report or pay flat fee of RM20,000 with submission of management account. It is not advisable for Labuan Foundation to act for both investment and trading company in nature. However, if both prevail, the tax rate will be 3% with audited report or pay flat fee of RM20,000 with submission of management account.
Although distributions by a Labuan Foundation to its beneficiaries are tax-exempted in Labuan, the beneficiaries will need to satisfy their own tax liabilities in their respective jurisdictions of tax residence.
Stamp duty will be charged by Company Commission Malaysia based on :
Non-public Company : 03% of shares value
Public Company: 0.1% of shares value or pay max. RM200
Labuan Company: There is no stamp duty except paying secretarial fee to do the transfer.
Yes, as investment holding of shares of the Malaysia companies and purchase of Malaysia properties. If it is trading business in nature, it is permissible but the corporate tax will be 24% and it will have to submit to local inland revenue with a new corporate tax file.
No withholding tax, no service tax, no inheritance tax, no GST for international trades and ability to access to more than 70 Malaysia tax treaty partners.
For Malaysia trades, GST account is required to register if the revenue is more than RM500,000 in the calendar year.
Distributions made to beneficiaries are tax exempt.
It is depends on your tax election based on your activities ie trading business would required the financial statement to be audited if you opt to be taxed under the 3% regime, it must be appointed before 31st March to meet the Corporate Tax Filing Inland Revenue dateline of 31st May. The auditor also can be appointed if the council decides to have the financial statements to be audited disregards the tax equation.
Please refer to this link for complete support and services and yearly compliance:
It is not advisable to engage trading and commercial transaction. This is to avoid any risk which may arise from the commercial activities that may affect the assets placed in the Foundation.
Labuan Foundation is subject to Labuan Business Activity Tax Act 1990 (“LBATA”) that governs the imposition, assessment and collection of tax.