A CPA in Asia told me it's possible to form a totally tax exempt company in Malaysia --and they don't mean Labuan -- which is apparently a dead dog nowadays.
Here's the link below -- do experts here concur this is do-able? See salient weaknesses? Malaysia is a nice place, would be great if this would actually work to form an offshore business that's totally tax exempt:
http://www.hasil.gov.my/bt_goindex.php?bt_kump=5&bt_skum=1&bt_posi=2&bt_unit=5000&bt_sequ=3&bt_lgv=2
just switch the language to english in top right corner and peruse and let me know thoughts.
There's nothing wrong with Labuan. In fact, if you hit the substance requirements and basically run your business outside of Labuan, 3% on Net profits in a jurisdiction with real banks (gosh!) is a sweet deal.
What you are referring to is that Malaysia, including companies, has a territorial tax system.
That would mean that this income will need to originate from a subsidiary or permanent establishment that really generates the profit by working OUT of the jurisdiction. That will obviously mean it will need to be tax resident in said jurisdiction. That would mean that you're not making any tax savings unless it's a real 0% jurisdiction (UAE, Caymans, Bahamas, Turks Caicos, Anguilla, BVI and a couple of others). At the very least you need to have employees there and travel one-two-three times a year to make strategic business decisions and document them. The only real benefit would seem that you could hide a tax-free jurisdiction inside a Malaysia company, but you'd still have to use the billing address of the tax free P.E. to bill your clients, so it will be obvious.
Further that, you'd be pissing off Malaysian tax, you may hit general anti-avoidance rules and you'll have little chance convincing a Malay CPA of taking your company on with these shenanigans in mind.
It's not designed for this. Labuan is.
To comment on other aspects:
- If you run your business from a country that is not the country where its registered, 99,99% it will need to be tax resident where you run it from. Legally, same goes for Thailand.
- The tax exemption for foreign sourced profits in Thailand is exactly that: only foreign sourced profits. Plus, they need to be booked and stay abroad for a year (not enough to just get paid by your client on the company, need to distribute dividends and keep on personal account). Enforcement, as others have said, is near to none, but that's something I would never stake on.
- Philippines also excludes foreign sourced income of foreigners. With less silly rules. But it still needs to be genuinely foreign sourced.
Oh, and Laos - shithole.
