Labuan visa to move to Malaysia: good idea?

[BusinessOne]

I'm trying to decide between either moving to Malaysia via setting up a Labuan company to get a work visa, or just moving to Dubai with a freezone company.

Is the Labuan setup safe long term to be able to live in Malaysia, tax free? Or will there be a lot of yearly tax planning to be done compared to Dubai? (I haven't found many people talking about using the Labuan visa to move to Malaysia instead of MM2H)

I have heard that for $7K you can set up a company in Labuan and get a work permit to stay 2 years. Is that true?

Malaysia appeals to me more as it has more things to do and costs are lower, but I see that most entrepreneurs seem to move to Dubai and very few to Malaysia, so maybe there's a reason.

I run an online business so I can work from either country, but I would like a place that will allow me to stay long term safely and pay little to no tax in a straightforward way.

 

[Sols]

Labuan is not safe to live in, because your mental health with deteriorate quickly form living there. Go spend some time on the island and you'll see why it's not more popular.

If you're interested in Malaysia, Labuan is perhaps the worst part of Malaysia to pick for relocation. Stay on the mainland if you want big city access (Kuala Lumpur and Singapore both within reach) or on Borneo (Sarawak/Sabah) if you want rural, jungle living. Tax situation might not be as good as Labuan, but that may be a worthwhile trade off for the increased quality of life.

 

[fshore]

Labuan has changed recently and a bit unstable in that regards, and is not tax free (3% on profit and income tax on salary).
You could live in other parts of Malaysia with the labuan visa, but I believe you need to have a registered house in labuan also.

 

[BusinessOne]

Labuan has changed recently and a bit unstable in that regards, and is not tax free (3% on profit and income tax on salary).
You could live in other parts of Malaysia with the labuan visa, but I believe you need to have a registered house in labuan also.

I would like to know more about that, as I haven't seen many people posting about doing the Labuan setup. My plan would be to live in KL, not Labuan, and a US LLC to receive the income, so it doesn't even have to be taxed in Labuan.

 

[fshore]

If you dont want to put any income through the labuan company then it would be better to get another visa, the new digital nomad visa or another visa. If you get the labuan visa you should get some income through it, as you'd need to pay your salary.
You also need to employ 2 local employees in labuan (depends on company type) and hire an office there

 

[BusinessOne]

If you dont want to put any income through the labuan company then it would be better to get another visa, the new digital nomad visa or another visa. If you get the labuan visa you should get some income through it, as you'd need to pay your salary.
You also need to employ 2 local employees in labuan (depends on company type) and hire an office there

I would put the minimum income required to cover the salary and setup expenses needed to have the company every year.

I have heard the "office and employees" setup would be done by an agent, and the total cost of the setup including salary would be $7K every 2 years?

That would be cheaper than Dubai, which is $10K/year + higher living costs, if it really is possible and easy to maintain long term.

 

[fshore]

Maybe that price is right. But still, why not get another cheaper visa?
Also labuan is not very stable, lots of changes last few years. So it's hard to day if it's possible to maintain long term.

 

[Offshore13]

Initially, my Labuan company proved to be a good venture with its attractive 3% corporate tax rate and the convenience of living anywhere in Malaysia. However, despite its sound economic and secure conditions, Labuan faced political challenges that could result in sudden changes in laws. Consequently, I found myself paying a much higher tax rate of 23% since I did not meet the new requirements, which included spending at least $10,000 annually in Labuan, hiring two full-time local employees, and having a registered office and property there. While Labuan is undoubtedly beautiful, its charm tends to wear off after a few days.

Given my experience, I do not recommend Labuan anymore. Nevertheless, if you want to reside in Malaysia, it remains one of the easier options as compared to the somewhat complex Malaysia My Second Home (MM2H) program. However, if you are looking for a better alternative, the United Arab Emirates (UAE) with its freezone or local company setup could be a suitable choice, depending on your business requirements. Although the UAE presently provides a favorable business environment, changes may occur in the future. Personally, I have transitioned from Labuan to the UAE.

 

[BusinessOne]

Initially, my Labuan company proved to be a good venture with its attractive 3% corporate tax rate and the convenience of living anywhere in Malaysia. However, despite its sound economic and secure conditions, Labuan faced political challenges that could result in sudden changes in laws. Consequently, I found myself paying a much higher tax rate of 23% since I did not meet the new requirements, which included spending at least $10,000 annually in Labuan, hiring two full-time local employees, and having a registered office and property there. While Labuan is undoubtedly beautiful, its charm tends to wear off after a few days.

Given my experience, I do not recommend Labuan anymore. Nevertheless, if you want to reside in Malaysia, it remains one of the easier options as compared to the somewhat complex Malaysia My Second Home (MM2H) program. However, if you are looking for a better alternative, the United Arab Emirates (UAE) with its freezone or local company setup could be a suitable choice, depending on your business requirements. Although the UAE presently provides a favorable business environment, changes may occur in the future. Personally, I have transitioned from Labuan to the UAE.

Thank you very much for your detailed response, it's extremely helpful. I think UAE will be a safer bet then.

 

[BlinkHood]

Thank you very much for your detailed response, it's extremely helpful. I think UAE will be a safer bet then.

I'm personally looking at the Digital Nomad Visa for Malaysia. You can get 1 year and another year extension and it's quite cheap (I think the fee is like 500 RM). I'll contact an inmigration lawyer since I could be interested for next year.

It's not a permanent residency option but you can get 2 years and maybe by then they have a newer residency visa in Malaysia

 

[Offshore13]

I'm personally looking at the Digital Nomad Visa for Malaysia. You can get 1 year and another year extension and it's quite cheap (I think the fee is like 500 RM). I'll contact an inmigration lawyer since I could be interested for next year.

It's not a permanent residency option but you can get 2 years and maybe by then they have a newer residency visa in Malaysia

Thanks for this update I am now fully focused on the UAE as there is as well quite a bit to learn about the company and taxes etc.
I don't believe that there will be an easier solution for Nomad Visa or anything else cheap and permanent, because Malaysia wants only expats long term who are bringing a lot of money into the ecosystem, and trust me they have figured it out if not it would be like Thailand. if you want a secure family friendly country Malaysia is still on my favorite list

 

[BusinessOne]

Thanks for this update I am now fully focused on the UAE as there is as well quite a bit to learn about the company and taxes etc.
I don't believe that there will be an easier solution for Nomad Visa or anything else cheap and permanent, because Malaysia wants only expats long term who are bringing a lot of money into the ecosystem, and trust me they have figured it out if not it would be like Thailand. if you want a secure family friendly country Malaysia is still on my favorite list

I would like to DM you to get some more info, but not sure how to do it in the forum.

If I could get the Labuan setup to work for less than $7K/year it would be great, otherwise I will be looking at other alternatives.

 

[Offshore13]

I would like to DM you to get some more info, but not sure how to do it in the forum.

If I could get the Labuan setup to work for less than $7K/year it would be great, otherwise I will be looking at other alternatives.

Not sure as well how it works, never used it

 

[BlinkHood]

Thanks for this update I am now fully focused on the UAE as there is as well quite a bit to learn about the company and taxes etc.
I don't believe that there will be an easier solution for Nomad Visa or anything else cheap and permanent, because Malaysia wants only expats long term who are bringing a lot of money into the ecosystem, and trust me they have figured it out if not it would be like Thailand. if you want a secure family friendly country Malaysia is still on my favorite list

Yeah maybe not, but for me one or two years on a nomad 'cheap' visa is good enough to try and see if I would actually like the country as a long term option

 

[Cloudbanck]

I would put the minimum income required to cover the salary and setup expenses needed to have the company every year.

I have heard the "office and employees" setup would be done by an agent, and the total cost of the setup including salary would be $7K every 2 years?

That would be cheaper than Dubai, which is $10K/year + higher living costs, if it really is possible and easy to maintain long term.

In Dubai, with a US LLC or any foreign company, you can get a remote worker visa for about $400 /year. No need to pay to set up a local company.

 

[pieceofmind]

But does the remote worker have to pay taxes on the foreign-sourced income remitted within Malaysia with the new laws around FSI that came into effect? How can that be structured with the tighter controls for taxing FSI?