Labuan for Singaporean Businesses: Tax Efficiency You Can’t Ignore
For many Singapore-based entrepreneurs, expanding regionally is a natural next step — and one tax-friendly destination worth serious consideration is Labuan. Situated off the coast of Borneo, this Federal Territory of Malaysia functions as a well-regulated offshore financial hub. But beyond the usual tax haven image, it offers legitimate, structured benefits — including a preferential corporate tax rate of just 3%, if your business qualifies.
So how do you know if it’s right for you, and more importantly — whether your business activities are eligible for that 3% rate?
Let’s dive into the essentials — and how RemoteForce can help you navigate it smoothly.
🧭 Why This Offshore Hub Is Gaining Interest from Singapore-Based Businesses
While Singapore already has a strong tax regime, this jurisdiction attracts business owners looking to optimise their regional structure, especially those involved in:
International trading
Consulting services
Digital or tech-enabled businesses
Investment holding
Leasing and financial services
The key reason? Its tax framework. Under the relevant laws, businesses that qualify as “Labuan business activities” may enjoy a flat 3% corporate tax rate on net profits — significantly lower than Malaysia’s standard corporate tax of 24% and even lower than Singapore’s 17%.
But that 3% doesn’t come automatically — and this is where many business owners go wrong.
⚠️ Who Qualifies for the 3% Tax Rate?
To be eligible, your company must be involved in qualifying activities as defined under the Labuan Business Activity Tax Act (LBATA). These include:
Trading activities (buying/selling of goods and services outside Malaysia)
Non-trading activities like investment holding
Financial services such as leasing, factoring, and fund management
Advisory and consulting services
E-commerce and digital businesses
Important: All companies set up under this regime must meet economic substance requirements to qualify for the 3% tax. This means you must demonstrate:
Physical office presence in the territory
Minimum number of full-time local employees
Minimum annual operating expenditure, depending on your business type
If you fail to meet these conditions, you risk being taxed at 24% instead — and possibly triggering a tax audit or penalties.
🧮 Why Business Valuation Matters
Business valuation is often overlooked — but crucial for tax planning, restructuring, M&A, and investor communications. If you’re setting up or already operating in this jurisdiction, a professional valuation:
Ensures compliance with transfer pricing and tax authority expectations
Helps assess whether your corporate structure is efficient and justifiable
Supports strategic planning and future fundraising
RemoteForce offers tailored business valuation services that consider your entity’s purpose, financial position, industry benchmarks, and future growth. Especially in offshore structures, a reliable valuation adds transparency and credibility — which matters when dealing with regulators or partners.
🛠️ How RemoteForce Helps You Navigate Tax & Compliance
At RemoteForce, we don’t just register companies or file tax returns — we act as your strategic tax and accounting partner. Our advisory team assists you in:
✅ Analysing your current business activities to check 3% tax eligibility
✅ Advising on restructuring if your current setup doesn’t qualify
✅ Supporting you in meeting economic substance requirements (e.g., employee setup, office planning)
✅ Preparing business valuations to strengthen compliance or fundraising activities
✅ Coordinating with licensed Trust Companies if needed
Whether you’re setting up your first entity or reviewing your current tax position, we provide remote, reliable, and cost-effective support to keep you ahead.
Ready to explore Labuan?
Book a free consultation with our tax advisors and let’s assess whether your business qualifies for the 3% Labuan tax rate, or how to structure it so it does.
Maximise your tax savings legally and strategically. Talk to our accountant to find out if Labuan is right for your business — reach us on LinkedIn or Facebook today!
