2026 Edition · Hybrid Structure
Hybrid structure — Sdn Bhd credibility × Labuan 3%
A two-company structure: an onshore Sdn Bhd (local credibility, domestic sales, bank loans, Employment Pass) plus a Labuan IBC (3% on international profits, tax-free intercompany dividends). Typically worthwhile from around ¥30M+ annual revenue.
The logic, on RM-terms
| # | Step | Tax |
|---|---|---|
| 1 | Book international profits in the Labuan IBC | 3% |
| 2 | Distribute the remainder to the Sdn Bhd as an intercompany dividend | 0% (no cap) |
| 3 | Accumulate capital in the Sdn Bhd (credit standing, loans, domestic contracts) | — |
| 4 | Distribute to the individual from the Sdn Bhd | 0% up to RM 100K, 2% above |
Overall burden on the corporate side: roughly 4–6% on this flow (versus roughly 50% combined in Japan). Figures are indicative; individual results depend on facts and current law.
Single company vs hybrid
| Sdn Bhd only | Labuan only | Hybrid | |
|---|---|---|---|
| Corporate tax | 17–24% | 3% / 0% | 24% + 3% (split) |
| Domestic Malaysian sales | Yes | Generally no | Yes, via the Sdn Bhd |
| Bank loans | Easier | Limited | Via the Sdn Bhd |
| Visas | Employment Pass | Labuan Work Pass | Both available |
| Audit | Exemptions exist | Required | Both required |
| Suggested revenue | Up to ~¥30M | ~¥30M–100M | ~¥100M+ |
Substance on the Labuan side (Hasil 2025–2026 rules)
- 2+ full-time, fit-and-proper employees (3–4 in some industries; direct employment with EPF/SOCSO; roughly RM 100–150K/year payroll).
- Physical office (virtual offices not accepted; Financial Park shared offices run about USD 6,100/year).
- Industry-specific minimum OPEX — administration RM 50K / funds RM 100K / banking & insurance RM 200K per year.
Transfer pricing (provisional translation): transactions between the Sdn Bhd and the Labuan IBC must be priced at arm's length (ALP). Mispricing can trigger adjustments and, for Japan residents, CFC inclusion on the Japanese side. We prepare documentation together with partner licensed tax accountants.
What Bangga covers
- Simultaneous setup of the Sdn Bhd + Labuan IBC (about 3–4 months end-to-end)
- Bank accounts (Maybank / CIMB / HSBC)
- Annual accounting and audits for both entities
- Transfer-pricing documentation (tax-accountant supervised)
- Employment Pass for directors and key staff
Start with a free 30-minute consultation
Tell us about your plans for a hybrid structure. English and Japanese support, from our Kuala Lumpur office.