Frequently Asked Questions about Malaysia

The following are some of the most frequently asked questions about Malaysia Company Formation:

What are Malaysia's corporate tax rates?

Is income sourced outside Malaysia subject to tax?

Does Malaysia have any double tax agreements in place?

What is the definition of a 'Malaysia-resident' Company?

Are there any other taxes levied on a Malaysian Company?

How private is a Malaysian Company?

Are there any restrictions on ownership of a Malaysian Company?

What are the reporting requirements for a Malaysian Company?

Does the Malaysian government offer any incentives to invest in the country?

Who is eligible to receive these incentives?

What is the minimum number of directors required to form a Malaysian Company?

What are Malaysia's corporate tax rates? Resident and non-resident Malaysian Companies pay corporate tax of 25% on income accrued in or sourced from Malaysia.
Is income sourced outside Malaysia subject to tax? Offshore income remitted by Companies resident in Malaysia is typically tax-free in Malaysia.
Does Malaysia have any double tax agreements in place? Yes, the country has signed double tax treaties with 65 countries.
What is the definition of a 'Malaysia-resident' Company? A Company is considered to be tax resident in Malaysia if the control and management of its businesses or one of its businesses is exercised in Malaysia.
Are there any other taxes levied on a Malaysian Company? A Malaysian Company is liable to a withholding tax of between 10% to 20% on the following types of payment made to a non-resident: interest, royalties, contract and other service fees, lease rentals (for movable property) and technical fees.
How private is a Malaysian Company? A register of directors is available for public viewing.
Are there any restrictions on ownership of a Malaysian Company? No. Foreigners are eligible to own 100% of a Malaysian Company.
What are the reporting requirements for a Malaysian Company? A Malaysian Company must submit an annual tax return and audited financial statements to the Malaysian Registrar of Companies (ROC).
Does the Malaysian government offer any incentives to invest in the country? Yes. Those who invest in the manufacturing sector benefit from tax incentives under two broad categories:
	Pioneer Status - Pioneer Status is awarded to investors who set up Companies in the so-called 'Eastern Corridor' of Peninsular Malaysia. Under the Pioneer Status, investors enjoy a 100% tax exemption on their statutory income during their five-year exemption period.
	Investment Tax Allowance - eligible investors receive a tax allowance of 60% on qualifying capital expenditure (such as factory, plant, machinery or other equipment used for the approved project) incurred within five years of the date on which the first qualifying capital expenditure was incurred.
Who is eligible to receive these incentives? Investors who plan to promote or develop new and emerging technologies; investors who plan to engage in strategic projects that involve heavy capital investments with long gestation periods, deploy high levels of technology, and have a significant impact on the economy; and small-scale manufacturing investors who set up a Malaysian Company with shareholders' funds of a maximum of RM500,000 (US$137,000) and holding at least 60% in equity.
What is the minimum number of directors required to form a Malaysian Company? Every Malaysian Company must have a minimum of two directors who are resident in Malaysia.

For additional information on any of our Malaysia corporate services, please email email@healyconsultants.com or telephone us at (+65) 6735 0120.

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