The corporate tax rate for trading businesses in Labuan is 3%. This rate applies to companies that are engaged in trading activities and that meet the economic substance requirements set out by the Labuan Financial Services Authority (Labuan FSA). These requirements include maintaining a physical presence in Labuan, having an adequate number of employees and expenditures, and maintaining accurate financial and accounting records.
Companies that are unable to meet the economic substance requirements will be subject to the standard corporate tax rate of 24% on their net income.
It is important to note that Labuan trading businesses that are considered tax residents in Malaysia will be subject to the Malaysia corporate tax rate which is currently 24%.
In summary, Labuan trading businesses that meet the economic substance requirements set out by the Labuan FSA will be subject to a corporate tax rate of 3%, while those that do not meet these requirements will be subject to the standard rate of 24%.