Labuan in Malaysia is a favoured 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. It is a ‘mid-shore’ free trade jurisdiction for foreigners desirous of setting up an overseas venture.

However, a person looking for such opportunities is now wary of the risk of duplicate taxation i.e. in Malaysia and also in his country of origin, which can completely offset the advantages of setting up an overseas business venture.

In this scenario, we at QX Trust Company will act as a Company Secretary for your business and ensure that you do not face duplicate taxation.

double taxes

How can QX Trust Company help you mitigate the potential risks of dual taxation?

Fortunately, Malaysia has the infrastructure in place for issuing you with a Certificate of Residence. A Certificate of Residence serves the purpose of confirming the ‘resident’ status of the taxpayer for the taxation purposes. The country of Malaysia has Double Taxation Agreements (DTA) with some countries which are thus her treaty partners for this purpose. The Certificate of Residence ensures that the Malaysian tax residents can claim tax benefits under the DTA and need not pay double tax on the same income.

Also, most probably, Malaysia and your country of origin are both part of the CRS (Common Reporting Standard).

What is CRS

Any government or jurisdiction desires to collect the taxes due to it diligently and to thwart any attempts at tax evasion.

However, many business persons and corporates have been finding loopholes by taking shelter in the (ill) famous tax heavens like Cayman Islands or Monaco. Hence demands for more standardised levels of tax reporting compliance at the international level have been increasing over the last decade.

Various countries have existing treatise for exchanging financial details of certain individuals or corporates on ‘exchange on request’ basis. However, these measures were not sufficiently effective deterrents against cross-border tax evasion.

At the request of G20 countries, the Organisation for Economic Development (OECD) has in 2014 established what is known as CRS (Common Reporting Standard).

The CRS is a standard for the automatic exchange of information (AEOI) pertaining to financial account. It compels a jurisdiction’s financial institutions such as banks, trust companies, insurance companies, and corporate services) to report to their tax authority specific information on yearly basis pertaining to the financial accounts in the names of non-resident persons and institutions like companies, partnership firms, trusts and foundations located in countries which are committed to CRS.

It works on a reciprocal basis.

Hence a company has to be careful in keeping its records above board and file taxes in proper forms within the prescribed time limits.

In this scenario, we at QX Trust Company will act as a conscience seeker for your company.

We will ensure Tax-proofing your overseas business venture at Labuan, Malaysia with the following measures:-

  • Prompt and transparent tax payments
  • Help you take appropriate key management decisions
  • See to it that your annual compliance is in order
  • Ensure that you have a permanent office location.
  • Ensure employment of local staff.
  • Ensure that your entity has a bank account in that jurisdiction.

We at QX Trust Company can thus mitigate the risk of duplicate taxation while you set up your business in Labuan.