Socowo

Working remotely vs Coworking

Most employee started working remotely due to Covid-19. Remote working allows employees to do their work-related task at home instead of their usual workplace. Employees use electronic media (ie google doc, Staffhub, Slack, Zoom) to manage, communicate and conduct their work with people outside and inside of the company. It is a new style of working for the future generations as technology is advancing at a tremendous speed.

Working remotely means people do not need to commute to the office daily and they could have more time to spend on their job’s tasks at home and they could work from wherever they want. The idea is to give flexibility to the employees so that they could do their work more efficiently. This concept changes the way think about a traditional workplace such as an office. The advantage of working remotely is not only can increase its productivity, but also reduce company fix expenses like renting and maintaining an office.

Nevertheless, working from home decreases the chance for the employees from being able to expand the network with other people. A formal workplace is important when comes to execute private and confidential matter, having e-meeting with super VVIP, or you need physical material for the coming function. A co-working need not you to fully commit to long office leases or hefty deposits. With various options, you can choose what works for you and your task. Go month-to-month or even daily if you’d like. A true working remote shall consist of flexible work location (home and office or formal workplace) and flexible work schedule which depends on the company to produce quality work.

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EXCITING NEWS!
As a company that’s committed to continually enhancing the client experience, the team at SOCOWO are always looking for ways to expand and improve our products, and in line with this ethos, we’ve recently made the decision to add four useful new services to our existing offerings.

The first of these is company e-signage. Moving forward, it will now be possible to display your company name and logo at our main entrance, to make it easier for your clients and suppliers to locate you. This will be displayed on a screen, with each business’ information being shown for three seconds at a time on a continuous loop.

In addition to this, SOCOWO will also be providing a new HR and recruitment service. Turning to the local population to find suitable professionals to meet your employment needs, we will look to assist you in recruiting suitable candidates for the role, to save you the time and effort of having to handle this yourself.

If this were not exciting enough, we’ve introduced a staff attendance report feature too. This will allow your company to easily monitor when your employees arrive at your premises, so that you can track individuals who are consistently punctual or consistently late and manage them accordingly.

Finally, we will be providing a new working space in Kuala Lumpur. Set up to cater to those who occasionally work in the city but are not present on a more permanent basis, it will offer a modern and productive environment outfitted with support staff ranging from legal advisors through to company secretaries.

Together, we hope that these changes will enable us to do even more for our valued clients, to help make your professional lives easier and more efficient. Should you wish to learn more about any of our services, please do feel free to contact our team at admin@socowolabuan.com for further information or to make enquiries.

Yours faithfully,
The SOCOWO team

BUSINESS PROCESS OUTSOURCING (BPO) IN ASIA: Why Not Malaysia

Business process outsourcing has become incredibly popular with companies ranging from small to medium size enterprises, and big corporation over the last two decades. Business process outsourcing (BPO) is the contracting of non-primary business activities and functions to a third- party provider. Broadly speaking, companies adopt BPO practices in two main areas which are back office and front office operations. Back office BPO refers to a company contracting its internal business operations such as accounting, payment processing, IT services, human resources, regulatory compliance, and quality assurance to external professionals who ensure the business runs smoothly. In contrast, front office BPO tasks commonly include customer – related services such as tech support, sales, and marketing.

Benefits of BPO

Cost Effectiveness
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Substantial savings in staffing overhead can be achieved by outsourcing to offshore countries and free up management resources.

Focal Point / Save Time
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Once the internal business operations is successfully outsourced, the management team is able to shift focus into exploring new revenue streams, speed up other projects, and focus on customer relation.

Skilled Professionals
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By hiring specialized BPOs, one can be insured of exemplary services provided by skilled manpower.

Competitive Edge
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All the advantages allows you to have the extra time to focus on your core business, providing you the competitive edge to become a contender amongst your competitors.

BPO IN MALAYSIA

Initial business startup idea and subsequent efforts to bring that vision into fruition. Factors one enterprise would take into consideration before expanding his business overseas usually include market potential, skilled workforce, technical support or natural raw material support, and government incentive to foreign enterprise. According to CEOWORLD MAGAZINE (2019), Malaysia has been crowned as the best country in the world to invest in or do business based on 11 factors*.

Malaysia, strategically located between two market-giants of Asia – India and China enables companies to expand in all directions within Asian market. Labuan with its low tax regime is also seen as a big plus for foreign enterprise to invest in Malaysia. In terms of location, tax regime and maturity of BPO industry, Labuan is a brilliant and rational choice for you to set up your foundation in expanding your business.

* The rankings were based on 11 different factors including corruption, freedom (personal, trade, and monetary), workforce, investor protection, infrastructure, taxes, quality of life, red tape, and technological readiness.

Is Virtual Office a Real Substance?

Business substance is described as the working reality of the corporate structures comprising of office, bank account, personnel, sale proceeds and top management’s decision making. It reflects the legitimacy of a business. The business substance is essentially about having the right infrastructure and personnel in the perfect place at the right time. In other words, the tax authority must see that a company is physically represented and/or is conducting some form of business activities in order to enjoy the tax benefits and incentives.

However, not every mid/offshore company make huge profits. There are some small-scaled international companies who focus on cross border businesses but use offshore company as their corporate structure. For a small scale or start up cross border business, setting up a full set of physical presence may become a burden. This is why virtual office is introduced.

A virtual office is suitable for small-scaled international companies to fulfil substance requirement with minimal cost. Virtual office packages generally include working space, conference area and administration support. Virtual office also enhances reputation and credibility of your company by means of owning legal address and telephone number.

How virtual office become part of your real substance.

Legal address: Business address for your correspondence and business cards.
Call answering: Phone answering to avoid any sale missed out.
Mail and document forwarding: Forward physical documents like contracts and invoices from the legal address to any other companies.
Mail and document receiving: Receive any physical documents from other companies.
Working space: A working space that you can pop in once awhile.
Conference area: a place for you to do decision making.
Virtual support: Local account service, administration services.

The era of an offshore company merely using a registered address are about to become a practice of the past. No matter you are a huge profit-making company, or just a start up cross border business company, an economic substance is a must to prove your business legitimacy. It is also important to remember that virtual office might not be enough to provide sufficient economic substance to your business as it grows bigger, which is why it is important to maintain a balance between going fully virtual and running economic activities in physical space.

Disclaimer: The information provided does not constitute legal advice. You should obtain specific legal advice from a lawyer before taking any legal action. Although we try our best to ensure the accuracy of the information on this website, you rely on it at your own risk.

Redomiciliation: Moving Foreign Entities To Labuan, Malaysia

Labuan is a mid-shore jurisdiction, as part of Malaysia. It is well- supported by a robust, modern and internationally-recognised legal framework enforced by its regulator, Labuan Financial Services Authority (Labuan FSA). This jurisdiction provides a wide range of business and investment structures for cross-border transactions, international business dealings and wealth management demands.

TAX HEAVEN
Previously, reason of people setting up an offshore company is to take advantage of favorable tax law or its less stringent regulatory provisions. However, the growing international push for transparency and exchange of information amongst jurisdictions for tax purpose, with the implementation of common reporting system by most of the country now has push the paper company about to end. Business founder need to prove their operation is truly located in that jurisdiction to enjoy the tax. If you have a business in offshore jurisdiction that with high operation cost, far from your mother, you should consider Labuan, Malaysia. If you have a business in offshore jurisdiction that with high operation cost, you should consider Labuan, Malaysia.

If you have a business in offshore jurisdiction that with high operation cost, you should consider Labuan, Malaysia.

WHY SHIFT TO LABUAN

Tax frаmеwоrk

3% tаx is charged fоr a уеаr оf assessment оn thе net audited profits
Withhоlding taxes on рауmеntѕ tо non-resident реrѕоnѕ
Mоrе thаn 70 tаx trеаtiеѕ раrtnеrѕ (Dоublе Tax Agreement)
100% fоrеign ownership without extra tax

Low Operation Cost

Monthly Expenses Items	Average Price
Fully furnished office includes utilities	RM1300/month	USD325/month
Salary for fresh graduate	RM1500/month	USD375/month
Salary for skilled worker	RM2800/month	USD700/month
Company backed support (account, HR, admin)	RM1500/month	USD375/month
Total	RM7100	USD1775

Additional Cost	Average Price
Air ticket from Kuala Lumpur - Labuan (both way)	RM350	USD88
Accommodation /night	RM160	USD40
Company backed support (account, HR, admin)	RM8000	USD2000

Conclusion

Labuan is considerably more affordable than other off/mid-shore destinations. The island is well situated between China and India as well as many of ASEAN’s financial hubs to take advantage of trade by sea as well as offshore services. If you are the owner of a foreign company looking for a jurisdiction that is low tax regime, low operation cost with access to skilled workers, reasonable price for substance creation, stable political environment and looking to establish in ASEAN, you may look to Labuan as an establishing platform. You can redomiciling your company, set up a brunch or subsidiary in Labuan.

Reasons Behind the Maintenance of Tax Substance

Labuan companies are enjoying the favorable working environment in Labuan. You must be wondering why is Labuan. So, the major reason behind its operations in Labuan is the beneficial tax treatment that is offered by the host country. In this article, we will highlight the reasons for maintaining tax substance in Labuan.

The era when an offshore company could use a mere registered address are about to become a practice of the past, because the local and international tax authorities have modified the offshore businesses maintenance and Income & Profit Laws to bring more transparency in taxation systems.

The increasing importance of business substance is a consequence of the implementation of Automatic Exchange of Information (AEOI) by the Organisation for Economic Co- operation and Development (OECD). The tax authority is also vigilant as it is in continuous monitoring of the tax evasions. Till date, more than 200 tax authority firms are constantly taking interest to reflect their tax systems by sharing the information regarding financial accounts (like brokerage accounts, mutual funds and banks). This will ensure in the transparency of accounts as all your foreign entity accounts will be presented to your local tax authority.

Very often, the company might encounter double taxation when tax resident based in Labuan lacks of economic substance/ tax substance. The company is considered for doing the tax residency with more tax substance’s areas. As a consequence, the Labuan company is subjected to paying tax in foreign corporate and Labuan income tax.

A Closer View at The Business Substance

Some might have not known the business substance clearly so they may encounter following questions:

From where the business is controlled and operated in Labuan?
What is the nature of the business and whether it is working in Labuan or not?
Where are the higher management functions and their roles and duties in the host country?

When and where the meetings of directors are conducted?
Where is the physical appearance of the company, warehouse and its associated establishment?
Do they have hired staff in Labuan?
What are the financial assets of the company in Labuan and its jurisdictions?
Where are the bank accounts of the company?

The business substance is described as the working reality of the corporate structures comprising of office, bank account, personnel, sale proceeds and top management’s decision making (Dig1). It reflects and the legitimacy of the business is proved. The corporate structure is related to these measures in relation to the level of real economic activity or in another way. The business substance is more importantly about the having of the infrastructure and personnel in the perfect place on the right time as well as with the doing of proper things.

Conclusion
Maintaining tax substance is very important for Labuan entities in order to mitigate exposure to foreign tax jurisdiction authority. Companies founder should be aware with missing substance run the risk of (1) double taxation of income within a cross country value chain, and (2) challenges from tax authorities with the risk tax audit, penalties and court cases.

Working remotely vs Coworking

Let’s Go On