The Labuan Director Visa is an excellent solution for entrepreneurs looking to live in Malaysia. 

This two-year renewable, multiple-entry visa offers an incredible opportunity for entrepreneurs to immerse themselves in the vibrant culture of Malaysia while leveraging the offshore jurisdiction of Labuan, which boasts a favorable 3% tax rate for trading companies.

Benefits of the Labuan Director Visa

Live in Malaysia Indefinitely

With the Labuan Director Visa, you have the flexibility to live in Labuan or Western (Peninsular) Malaysia – including Kuala Lumpur and Penang. The visa is renewable every 2 years.

Business Freedom

This visa not only allows you to live in Malaysia but also grants you the freedom to conduct business related to your Labuan company. This is one of the easiest ways to live and operate your business legitimately in Southeast Asia.

As the visa is multiple entry, it is suitable if you need to make business trips around Asia.

Tax Advantages

Labuan’s tax regime offers a 3% tax rate for trading companies that meet the substance requirements. 

Shareholder dividends are not taxed. However, you are required to pay yourself a monthly salary of 10,000MYR ($2,200), which will be taxed between zero and 28% depending on your tax situation.

Open a Malaysian Bank Account

As a Labuan Director Visa holder, you can open a personal bank account in Malaysia, streamlining your financial affairs and planting a new flag.

Bring Your Family

The Labuan Director Visa allows your spouse and children to join you as dependents. It’s worth noting that Malaysia has great international schools and is a very safe and friendly country.

More Potential Tax Savings

Malaysia’s territorial tax system can potentially save you money on taxes, depending on your specific financial circumstances. Bear in mind, Malaysia’s tax system will be undergoing changes in 2026 that may affect this.

Labuan Company Requirements

To secure the Labuan Director Visa, you must renew it every two years and apply for renewal six months before the expiration date. To be considered for the visa, you first have to have a Labuan Company.

Only specific industries are eligible to open a Labuan Company. As there have been changes in the last couple of years, the majority of information online is dated, we suggest that you get in touch to learn more.

There are also background checks to ensure that the applicant/company is not associated with anything nefarious or illegal.

Labuan Director Visa Requirements

  1. Salary Payment: You must pay yourself a salary, which will be taxed according to your residency status. The amount set for this purpose is 10,000 MYR per month, equivalent to approximately $2,200 USD at the time of writing.
  2. Business Plan: You must submit a business plan that outlines objectives, your target market, products, a 3-year financial projection, and more.
  3. Personal Resume: You a required to submit a personal resume.
  4. Ongoing Compliance: You are required to continue to run the company according to the laws of Labuan and Malaysia and to pay annual fees and any tax required.

Substance Requirements

Though it is possible to obtain the visa without meeting the substance requirements, most applicants are also interested in the tax savings this entails. To meet the substance requirements, the company must adhere to certain guidelines:

  1. Hiring Staff: Depending on the industry*, the company must hire at least two full-time staff members.
  2. Minimum Spend: A minimum annual spend of 50,000 MYR (approximately $11,000 USD) is required, although this amount may vary depending on the industry*.

More on substance requirements in an upcoming article.

*Different approved industries have unique substance requirements, these are just the most typical requirements.

Working with a Trust Company

The process of fulfilling the above substance requirements might seem overwhelming but a Labuan Trust Company will help simplify this for you. 

A Labuan Trust Company will help ensure compliance with onshore requirements, making the entire process much smoother and more manageable.

Working with a Trust Company in Labuan is mandatory.

Costs Involved

Obtaining the Labuan Director Visa comes with some costs, including a visa fee of 1,225 MYR (approximately $270 USD), this price includes a work permit. 

Approval usually takes between 45 to 60 days and requires authorization from both the Immigration Department and Labuan Authority.

Additionally, forming a Labuan company involves an initial cost of no less than $3,000 USD, with annual administrative costs starting around the same amount. 

For companies meeting the substance requirements, the costs can amount to 50,000 MYR (around $11,000 USD) or more per year, depending on the industry. This includes staffing and renting an office.

In Conclusion

If you are a business owner looking to make Malaysia your new home and take advantage of Labuan’s tax-efficient business environment, the Labuan Director Visa could be the perfect fit for you. 

However, it’s crucial to stay updated with the ever-changing tax laws and regulations, especially considering that Malaysia’s taxation laws are expected to change in 2026.

Remember, while the process may seem complex, both our team at Offshore in Asia and a Labuan Trust Company will work together to guide you through it and ensure you meet all the necessary requirements with ease. 

Book a call with us to discuss whether a Labuan Company aligns with your offshore strategy.

Thanks for reading.