Labuan Federal Territory — Approved Labuan Auditors for Statutory Audit
Labuan is a Federal Territory of Malaysia, located off the coast of Borneo. It is made up of an island and several smaller islets, situated near the Sabah state of Malaysia and the Sulu Archipelago of the Philippines.
Labuan is known as the Labuan International Business and Financial Centre (IBFC) — a special economic zone offering tax incentives and business-friendly regulations to attract foreign investment. The Labuan IBFC is governed by the Labuan Corporation, which promotes and develops economic and financial activities in the territory.
The main industries in Labuan include oil and gas, shipping, international trade, and financial services. The Labuan IBFC is a popular location for businesses establishing a presence in Southeast Asia, due to its strategic location and well-trained workforce.
Labuan Auditing Requirements
Under the Labuan Companies Act 1990, a Labuan company shall keep proper accounting and other records sufficient to explain the transactions and financial position of the company.
Labuan licensed companies
Labuan licensed entities are required to submit audited financial statements to the Labuan Financial Services Authority (Labuan FSA) within 6 months from the financial year end. These are entities licensed under the Labuan Financial Services and Securities Act 2010 to carry out specific licensed activities, including:
All Labuan licensed entities are required to appoint an approved auditor and file audited financial statements with the Labuan FSA on an annual basis. The auditor must be an approved Labuan auditor with the necessary experience and qualifications.
Other Labuan companies / investment-holding companies
Under the Labuan Companies Act 1990, other Labuan companies or investment-holding companies shall lay audited (or unaudited) accounts at the members' general meeting within 9 months from the financial year end.
To be eligible for the 3% tax rate in Labuan, a Labuan entity must:
- Undertake business activities listed in P.U. (A) 423, and
- Fulfil substance requirements (minimum full-time employees in Labuan & minimum operating expenditure incurred in Labuan)
Other recognised business activities under P.U. (A) 423 include:
Economic Substance Requirement (ESR) & Tax Outcomes
Whether a Labuan entity meets the Economic Substance Requirement determines the tax rate applied to its audited profits — and the outcome differs for trading and non-trading activities:
| Activity type | ESR status | Tax outcome |
|---|---|---|
| Trading activities (active business) | Meets ESR | Pays 3% tax on audited profits |
| Fails ESR | Pays 24% tax on audited profits | |
| Non-trading activities (passive / investment holding) | Meets ESR | Pays 0% tax (tax exempt) |
| Fails ESR | Pays 24% tax on audited profits |
Labuan Auditing: Requirements and Process Overview
A statutory audit is an independent examination of a company's financial statements conducted in accordance with the law. Its purpose is to provide assurance that the financial statements are accurate, complete, and comply with the applicable financial reporting framework. Our audits are performed under approved standards on auditing in Malaysia and International Standards on Auditing.
During a statutory audit, an auditor reviews and assesses the company's financial records — including its balance sheet, income statement, and cash-flow statement — to ensure they are accurate, complete, and comply with accounting standards and other regulations. The auditor also assesses internal controls to ensure they are adequate to prevent fraud and errors.
Statutory audits are mandatory for most companies, and financial statements must be audited by a qualified and independent auditor to be filed with regulatory authorities. In Labuan, the statutory audit must be conducted by an approved auditor registered with LFSA.
The objective of our audit is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but not a guarantee that an audit will always detect a material misstatement when it exists.
Why Choose Us?
Choosing the right auditing firm is a critical decision for any business. We are approved auditors licensed by LFSA — view our LFSA listing →
Experience and expertise
Our team of chartered accountants and other qualified professionals have years of experience in auditing, and are well-versed in the latest accounting standards and regulations.
Tailored services
We understand that every business is unique, and we offer customised auditing services to meet the specific needs of each client.
Competitive pricing
We offer competitive pricing for our services and are transparent about our fees, so you can budget and plan accordingly.
Proven track record
We have a proven track record of delivering high-quality auditing services to a wide range of clients.
Strong communication and client service
We keep lines of communication open throughout the audit process and work closely with clients to minimise disruption.
Use of technology
We use the latest technology and software for our audit process, enabling greater efficiency, accuracy, and real-time access to your financial data.
Continual professional development
We invest in ongoing professional development so our team stays current on the latest auditing standards and best practices.
Speak With Your Audit Partners
Every Labuan audit engagement is led personally by a licensed partner.
Frequently Asked Questions
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