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.

labuan1

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

  • Corporate Income-Tax:- Malaysia charges 3% tax on corporate income earned outside Malaysia.  As against that, in Hong Kong, you will have to pay an equivalent tax at the rate of 16.5%
  • VAT/ SST/GST:- Just like Hong Kong, Labuan too has no VAT/SST/GST payable.
  • Stamp Duty:- In Hong Kong, up to 30% stamp duty is payable on residential property transactions. As against that in Labuan, no stamp duty is applicable.
  • Tax on dividends:- Just like Hong Kong, Labuan too has no tax on dividends payable.
  • Housing costs: Hong Kong as a colony has a very limited land mass. Hence the real estate rates are very high. 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. Average rents in Hong Kong are 694.26 % higher than in Labuan. Per Sq. M buying rate in Hong Kong is 1435.3% higher as compared to Labuan.
  • Cost of living:- Hong Kong has no natural resources and has to transport virtually everything from main land China. Naturally the prices are very high. So living in Hong Kong is exceptionally expensive. The Malaysian costs of living are comparable to many EU countries if not less. Some comparisons of food items in Hong Kong as compared to Labuan- Rice 127.15% higher, white bread 178.91% higher, Chicken 242.64% higher, Beef 220.16 higher.
  • Salaries to local employees:- As a result of all the above factors, the salaries and wages of local staff in Hong Kong are far higher than those in Malaysia.  Average monthly salaries in Hong Kong are 193.92% higher than in Labuan.  
  • Political stability: At present the political situation in Hong Kong is very volatile. The Chinese government trying to slowly curtail the special privileges given to this erstwhile British Colony and bring it at par with rest of China. However the local residents of this Special Administrative Region of China are resisting every such effort tooth and nail. This has resulted in a deterioration of the law and order situation. It is not at all conducive for setting up an overseas venture there at least in the present scenario.

As against that, the political situation in Malaysia has always been stable and perfectly conducive for setting up and quick growth of your overseas venture.

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 Hong Kong.