Form 5471 Malaysia

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    Labuan Company vs Sdn Bhd: US Person CFC & Tax Guide

    ParSmart Invest Malaysia

    Every US person incorporating in Malaysia faces the same pivotal question: Labuan company or Sdn Bhd? The answer depends almost entirely on US international tax law — not on Malaysian corporate rates. A Labuan company taxed at 3% under LBATA still triggers Controlled Foreign Corporation status under IRC §957, exposing its US owner to immediate Subpart F income inclusions and GILTI at ordinary US rates up to 37%. Without a Check-the-Box election on Form 8832, the 3% Malaysian advantage is systematically eliminated at the US level.
    This technical guide compares both entities across 12 dimensions: CFC analysis, Subpart F traps (FPHCI and FBCSI), GILTI mechanics and the critical individual vs C-Corp asymmetry, Check-the-Box election procedure and trade-offs, economic substance requirements, IRS filing obligations, and a decision matrix covering six distinct US investor profiles — from passive holding and active SaaS businesses to family offices and real estate structures.

  • US Investor Malaysia Tax Strategy 2026: The Playbook

    ParSmart Invest Malaysia

    The United States taxes its citizens on worldwide income regardless of where they live — making Malaysia’s jurisdiction-specific tax advantages meaningless without the right cross-border architecture. For American HNWI investors and tech founders relocating to Southeast Asia, Malaysia’s 1984 bilateral tax treaty, Labuan IBFC 3% corporate rate, territorial personal income tax, and MM2H residency programme create a legitimate arbitrage opportunity unavailable elsewhere in the region.
    This playbook covers the complete US investor Malaysia tax strategy for 2026: FEIE maximisation ($132,900 exclusion), FATCA-compliant banking via HSBC and Labuan private wealth, corporate structuring through US LLC, Sdn Bhd, and Labuan IBFC entities, CFC and GILTI trap avoidance using Check-the-Box elections, MM2H as a residency planning tool, and a full IRS annual disclosure matrix covering Forms 2555, 5471, 8938, FinCEN 114, 8832, and 1116. Includes a jurisdictional benchmark against Singapore, Dubai, and Portugal, and a 90-day implementation roadmap.