Labuan in Malaysia is a favored destination for those desirous of setting up business overseas. As compared to other erstwhile so called tax heavens like Cayman Islands or Monaco, Labuan in Malaysia has distinct advantages due to its geographical location.

  • There is no need to take long-haul flights which would leave you tired apart from eroding time in unproductive hours from your already tight time schedule.
  • Also, difference in time lines at the above tax heavens makes remote monitoring of the day to day operations of your overseas ventures there virtually impossible.

Labuan free trade zone and financial centre in Malaysia has a competitor to contend with in the form of Singapore. But if you see the following key-factor comparisons, you will find that Labuan will prove to be a cheaper option for you in the long run.

  • Corporate Income-Tax:- Malaysia charges 3% tax on corporate income earned outside Malaysia.  As against that, in Singapore, you will have to pay an equivalent tax at the rate of 16.51%
  • VAT/ SST/GST:- Just like Singapore, Labuan too has no VAT/SST/GST payable.
  • Stamp Duty /Tax on dividends:- Just like Singapore, Labuan too has no Stamp duty or tax on dividends payable.
  • Housing costs: Singapore has a very limited land mass. Hence the real estate rates are very high. Most of the population stays in match-box houses owned by the Government and rented out to the residents because very few can afford to buy a house. This tenancy is not transferable to your next generation. As against this, Labuan has no such limitations on land mass, so the real estate prices are affordable and you can happily invest in a house of your choice for a comfortable stay whenever you visit your local office. Rents in Singapore are 755.22 % higher than in Labuan. Per Sq. M buying rate in Singapore is 797.27% higher as compared to Labuan.
  • Vehicles:- For the same reason cited above, in the island country of Singapore, space is a luxury so the government wants to discourage private vehicle ownership. Thus, if one wants to buy a car, he has to participate in a bid for the registration of the car. Naturally the costs of vehicle ownership are sky high. Singapore has an extensive network of metro rail in tandem with bus services but these services are over-burdened and an expat finds it traumatic to depend upon them. Taxi rentals are also very high. Again in Malaysia, there is no such dearth of space and no need to curb the number of vehicles on road by over taxing. You can easily afford a vehicle of your choice. Some cars can cost 200% more in Singapore as compared to Labuan.
  • Cost of living:- Singapore has no natural resources and has to import virtually everything including fresh water. Naturally the prices are very high. So living in Singapore is exceptionally expensive. The Malaysian costs of living are comparable to many EU countries if not less. Some comparisons of food items in Singapore as compared to Labuan- Rice 358.62% higher, white bread 61.32% higher, Chicken 130.89% higher, Beef 147.115 higher.
  • Salaries to local employees:- As a result of all the above factors, the salaries and wages of local staff in Singapore are far higher than those in Malaysia.  Average monthly salaries in Singapore are 308.73% higher than in Labuan.

This will prove to you the long term advantages of selecting Labuan in Malaysia as your destination for setting up an overseas venture as compared to Singapore.