Malaysia (Labuan) or United Arab Emirates: where should your business be based?
The United Arab Emirates ranks higher in the index, 01 against =03. Which suits you depends on where the owners live, what the company is for and how it will be run.
Pillar by pillar
Doing business, side by side
Tax
Labuan trading activity is taxed at 3% of chargeable profits, and qualifying non-trading (holding) activity at 0%. Failing the substance tests means 24% for that year. Labuan entities located in Labuan are outside sales and service tax.
Profits up to AED 375,000 are taxed at 0%. In a free zone the 0% rate reaches qualifying income only, and VAT is charged at 5%.
Set-up
Labuan FSA approves incorporation within 24 hours of complete documents, fee payment and due diligence clearance. The fee is USD 300 to USD 1,500 by paid-up capital, and the annual fee is USD 1,000 from 2026.
Set-up typically costs AED 10,000 to 50,000 in total, depending on mainland or free zone, the activity and any licences. Capital must be fully paid at incorporation.
On the ground
A licensed Labuan trust company must incorporate the company, and it needs a resident secretary and a registered office in Labuan. To keep the 3% rate it needs fit and proper full-time staff working in Labuan and minimum annual spending there.
A mainland company needs no resident director or secretary, but it must appoint an auditor. Free zone requirements vary from one zone to another.
Ownership
Beneficial ownership information is not on a public register. It is held through the Labuan trust company and is available to Labuan FSA and other authorities.
The beneficial ownership register is open to the authorities only. Each company must name a UAE-resident individual as the contact for its register.
Residence
A Labuan company can sponsor an employment pass for a director or employee paid at least RM10,000 a month, and all pass holders can bring dependants. MM2H is the alternative, from a USD 150,000 deposit and a home worth RM600,000.
An investor or partner can hold a five-year green residence visa on the trade licence. A ten-year golden visa needs capital or a partner's share of AED 2 million.
Living and working
Currency
Malaysian ringgit (MYR). Labuan entities are not subject to Malaysian exchange control and can trade in any currency.
UAE dirham, pegged to the US dollar.
Time zone
UTC+8 all year, with no daylight saving.
UTC+4.
Personal tax
Residents pay progressive rates up to 30% on taxable income above RM2 million, and non-residents pay a flat 30%. Dividends above RM100,000 a year are taxed at 2% from 2025.
The UAE does not levy income tax on individuals.
Flights
Kuala Lumpur International Airport serves 143 destinations with 71 airlines, according to Malaysia Airports in 2026. Labuan has its own airport with domestic flights to Kuala Lumpur.
Dubai International served 217 destinations in 99 countries at the end of H1 2026; London is 6 hrs 50 mins by British Airways.
Language
Arabic is the official language; English is allowed in some Dubai Courts circuits, and the DIFC Courts sit in English.
Malaysia (Labuan) vs United Arab Emirates: common questions
Malaysia (Labuan): Labuan trading activity is taxed at 3% of chargeable profits, and qualifying non-trading (holding) activity at 0%. Failing the substance tests means 24% for that year. Labuan entities located in Labuan are outside sales and service tax. The United Arab Emirates: Profits up to AED 375,000 are taxed at 0%. In a free zone the 0% rate reaches qualifying income only, and VAT is charged at 5%.
Malaysia (Labuan): Labuan FSA approves incorporation within 24 hours of complete documents, fee payment and due diligence clearance. The fee is USD 300 to USD 1,500 by paid-up capital, and the annual fee is USD 1,000 from 2026. The United Arab Emirates: Set-up typically costs AED 10,000 to 50,000 in total, depending on mainland or free zone, the activity and any licences. Capital must be fully paid at incorporation.
Malaysia (Labuan): A licensed Labuan trust company must incorporate the company, and it needs a resident secretary and a registered office in Labuan. To keep the 3% rate it needs fit and proper full-time staff working in Labuan and minimum annual spending there. The United Arab Emirates: A mainland company needs no resident director or secretary, but it must appoint an auditor. Free zone requirements vary from one zone to another.
Malaysia (Labuan): Beneficial ownership information is not on a public register. It is held through the Labuan trust company and is available to Labuan FSA and other authorities. The United Arab Emirates: The beneficial ownership register is open to the authorities only. Each company must name a UAE-resident individual as the contact for its register.
Malaysia (Labuan): A Labuan company can sponsor an employment pass for a director or employee paid at least RM10,000 a month, and all pass holders can bring dependants. MM2H is the alternative, from a USD 150,000 deposit and a home worth RM600,000. The United Arab Emirates: An investor or partner can hold a five-year green residence visa on the trade licence. A ten-year golden visa needs capital or a partner's share of AED 2 million.
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