Corporate Bank Account Overview
When opening Labuan corporate bank account, which bank should be selected ? However, before that, it is also an important task to “use onshore or offshore“, and “how to use them both properly“.
Since the needs are different for business settlement and investment settlement, we will give advice at the time of incorporation.
Below is a brief description of the general differences between “onshore account” and “offshore account “we consider when open corporate account.
1. Difference between Onshore account and Offshore account
The difference between onshore bank (Kuala Lumpur) and offshore bank (Labuan) is as follows:-
|Onshore Bank||Offshore Bank|
|Target customers||For local customers|
|For global customers|
(Malaysian non resident)
|Transaction object||Domestic transactions and international transactions||International transaction only|
|Currency type||Malaysian ringgit and foreign currency||Foreign currency only|
|Payment Method||Face to face or telephone, fax, e-mail, check, internet banking, etc.||Telephone, fax, e-mail, check, internet banking, etc.|
|Transfer fee||Domestic → Domestic remittance charge|
International → International remittance fee
|International remittance fee|
|Minimum deposit amount||tends to be low overall||tends to be higher overall|
|Tax incentives||Not applicable||Applicable|
|Exchange control regulation||Applicable (treated as resident)||Not applicable (non-resident treated)|
2. What is an Onshore account?
Onshore means a country or region where the legal system of the country extends from a country perspective.
Onshore Bank provides services on the premise of services to local people (local customers = residents of Malaysia). Therefore, onshore banks are premised that customers visit the bank’s direct contact and conduct transactions (Actually, Internet banking is often used).
Main applications of onshore accounts are the main currency (Malaysian ringgit denominated) ① “Payment of local employee“, ② “payment of rent of business property“, ③ “payment of water and utility expenses” etc. It is used for onshore transactions (domestic transactions) which settlement in Malaysia domestically.
Furthermore, since it is possible to open a foreign currency account in addition to the local currency in the onshore account, it can be used as an offshore transaction (international transaction) with foreign countries. Since most banks are compatible with Internet banking, it is possible to move money quickly.
As an attention point of onshore account, the following are listed:-
3. What is an Offshore account?
Offshore means the country or region where the legal system of the country does not extend from a certain country.
Offshore banks are subject to services for individuals and corporations residing in countries around the world (global customers = nonresidents in Malaysia). As a business type is close to the Internet bank, customers can manage accounts by phone or the internet, basically customer do not have to visit bank. All applications are made through a Labuan Trust Company (Actually Labuan ‘s offshore bank does not have a counter).
In offshore banking, services can be used only by mailing, communication, such as telephone, fax, and Internet. There is no need to go to the site in account management (as seen from Malaysia) that it is possible to open an account without going to Labuan (* Not all banks have provided Internet bank, there are some banks dealing only with telephone and e-mail, or check settlement).
The primary use of offshore accounts is “for settlement of international transactions denominated in foreign currencies (excluding domestic Malaysia)” (※ Malaysia Ringgit denominated accounts can not be opened at Labuan Offshore Bank account).
For example, if importing goods from China and exporting goods to Singapore, ① “Pay with Chinese Yuan (foreign currency)” to the import source, ② “Singapore dollar (foreign currency) from the export source” “In this case, transactions in Malaysia are not being done (In other words, this transaction is outside to outside).”
As an attention point of offshore account, the following are listed:-
Should you have any queries, please do not hesitate to contact us.