Malaysia company registration

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Malaysia company registration

DOING BUSINESS IN MALAYSIA IN 2017

Since 2003, Healy Consultants Group PLC has assisted our Clients with registering their business in Malaysia. We can provide the following services to both individual entrepreneurs and multinational corporations: i) Malaysia business registration ii) advisory services and assistance to comply with licensing requirements iii) nominee services for Malaysia resident directors iv) corporate bank account opening in Malaysia v) visa strategies and vi) office rental solutions.

  • Foreigners can form a company in Malaysia within one week, without the need for a joint venture partner in most industries;
  • The appointment of two directors ordinarily resident in Malaysia is required before company incorporation. Most of our Clients request us to provide nominee services to meet this requirement;
  • Malaysia provides several special economic zones for export oriented businesses. See this page for further information on tax incentives available;
  • Foreigners willing to do business with customers based out of Malaysia can register a legally tax exempt Labuan company;
  • Many of our Clients are also interested to obtain a Malaysia residence permit through the Malaysia My Second Home program.

SummaryTax resident LLCTax exempt LLCFree zone LLCBumiputera companyRepresentative office
Best use of company?All purposesInternational trading/holdingManufacturing and LogisticsJoint venture with Malaysian nationalMarketing &
research
How soon can you invoice Clients/sign sales contracts?1 month2 weeks1 month2 weeks5 weeks
How soon can you hire staff?1 month2 weeks1 month2 weeks5 weeks
How soon can you sign a lease agreement?1 month2 weeks1 month2 weeks5 weeks
How long to supply corporate bank account numbers?2 months2 months2 months2 months3 months
How long to supply company registration/tax numbers?1 month2 weeks1 month2 weeks5 weeks
Corporate tax rate on annual net profits?24%3%24%24%0%
Limited liability entity?YesYesYesYesNo
Government grants available?YesNoNoYesNo
Government approval required for foreign owners?NoNoYesNoNo
Resident director/partner/manager/ required?Yes, 1NoYes, 1Yes, 1No
Minimum paid up share capital?US$2US$1US$125,000US$2None
Can bid for Government contracts?YesNoYesYesNo
Corporate bank account location?OCBC KLPublic Bank LabuanSCB KLMaybankOCBC KL
Can secure trade finance?YesNoYesYesNo
GST payable on sales to local customers?6%0%0%6%0%
Average total business set up engagement costs?US$ 12,580US$10,250US$14,200US$10,580US$10,965
Average total engagement period?4 months3 months4 months4 months4 months

See full table

Accounting and tax considerationsTax resident LLCTax exempt LLCFree zone LLCBumiputera companyRepresentative office
Statutory corporate tax payable?24%3%24%24%0%
Legally tax exempt if properly structured?NoYesNoNoYes
Group HQ tax incentives?YesNoYesYesNo
Must file an annual tax return?YesYesYesYesNo
Must file annual financial statements?YesYesYesYesNo
Must appoint an auditor?YesNoYesYesNo
Access to double taxation treaties?YesNoYesYesNo
Withholding tax on payments to foreign shareholders?0%0%0%0%0%
Company RegistrationTax resident LLCTax exempt LLCFree zone LLCBumiputera companyRepresentative office
Resident director/partner/manager/ required?Yes, 1NoYes, 1Yes, 1No
Minimum number of shareholders/partners?2152Parent company
Maximum shareholding for foreigners?100%100%100%63%100%
Minimum statutory paid up share capital?US$2US$1US$2US$2None
Security deposit to be kept with Government?NoNoNoNoNo
Shelf companies available?YesYesYesYesNo
Time to incorporate a new entity?4 weeks2 weeks4 weeks2 weeks5 weeks
Can easily convert to a PLC?YesNoYesYesNo
Public register of shareholders and directors?YesNoYesYesYes
Can have preference shareholders?YesYesYesYesNo
Business ConsiderationsTax resident LLCTax exempt LLCFree zone LLCBumiputera companyRepresentative office
Good entity for trademark registration?YesYesYesYesNo
Can secure an import and export license?YesNoYesYesNo
Can be wholly foreign owned?YesYesYesNoYes
The entity will likely be regulated by?SSMLabuan IBFCSSMSSMMIDA
Monthly GST reporting to the Government?YesNoNoYesNo
Maximum number of staff allowed?No limitNo limitNo limitNo limit1 expatriate
Expatriate to local staff ratio?NoneNone3 to 1None1 to 1
Can secure residence visa for business owner?YesYesYesYesYes

Sponsorship by a local citizen required?No
Our Client needs to travel to Malaysia for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
Minimum number of directors/managers?1
Must sign an office lease agreement?No
Shareholders & directors documents to be attested/translated?No
Each foreign director needs a personal income tax number?No
Foreign director needs a residence visa?Yes
Other useful information
What will be included in my customer sales invoice?(click link)
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average customs duties suffered?8%
Government foreign investment approval required?No
Average monthly office rental? (US$ per sq m)30
Minimum statutory monthly salary?US$226
Average monthly US$ salary for local skilled employees?US$700
US$ deposit interest rate? (1 year average)3.43%
Overseas remittance currency controls?None
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Excellent
Crowd funding available in this country?Yes

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Benefits and problems of registering a company in Malaysia

Press the link headings below to read detailed, relevant, up to date information.

  • Benefits and problems

    Benefits of Malaysia company registration

    Malaysia business registration advantage

    1. Registering a business in Malaysia is easy because:
      • Our Clients can register a Malaysian LLC within 1 week by depositing a minimal amount of US$2 as the initial share capital. Furthermore, only 2 directors and 2 shareholders will be required;
      • Alternatively, our Clients may choose to register a Labuan company which allows them to i) rent office space in Malaysia ii) secure Malaysian visas and iii) open bank accounts in Malaysia. A Labuan company can be setup within 1 week;
    2. Our Clients often choose to start a company in Malaysia, as the country is a cheaper alternative to Singapore for the following reasons:
      • The average worker in Malaysia is more affordable than in Singapore. In 2014, the average wage in Singapore was US$2,700 (residents only) whilst the average wage in Malaysia was only US$525 (MYR2,300);
      • Malaysia’s monthly office rental space was US$17 per sqm. This is significantly lower than Singapore’s average monthly office rental space of US$68 per sqm;
      • To compete with Singapore’s manufacturing sector, Malaysia provides investment incentives such as a pioneer status, and an investment tax allowance to foreign manufacturing companies;
      • To rival the successful Singapore tourism sector, Malaysia is building hotels, amusement and theme parks, shopping malls, luxurious residential complexes, art galleries and museums. In 2014, Malaysia attracted 27.5 million tourists: more than Singapore (15 million) and generating close to US$25 billion in sales;
      • For all the reasons listed above, several companies operating in Singapore have already relocated some of their operations to Malaysia.
    3. Our Clients find also easy to communicate in Malaysia, even when they are not fluent in Bahasa/Malay:
      • English is Malaysia’s second language, and is spoken by 70% of the population. Therefore, foreign investors interested in Malaysia will easily be able to communicate with local employees, customers and suppliers;
      • Most business documents are available in English, therefore translation costs and time can be saved during business registration in Malaysia.
    4. Malaysia is a great location for members of the Islamic Community who wish to invest in South East Asia:
      • Halal Parks – These parks are designed to ease business registration procedures in Malaysia and provide incentives for all Halal-related manufacturing sectors;
      • Liberal views on Islam – Malaysia can be seen as the gateway between the “Islamic world” and the “Western world” due to their modern Islamic practices. As a result of this, Malaysia’s economy is suited for both Islamic and Western corporations;
      • Islamic Banking – Malaysia has one of the biggest sharia-compliant asset management industry. There is no restriction on repatriation between international Sharia bank accounts.
    5. Investment incentives available for entrepreneurs forming a company in Malaysia include:
      • Smaller manufacturing companies with paid-up capital below RM500,000 and manufacturing high tech products and other promoted goods are eligible for the Pioneer Status and Investment Tax Allowance incentives;
      • Those who are granted Pioneer Status enjoy a five year partial exemption from the payment of income tax; applications received from companies located in the “Eastern Corridor” of Peninsular Malaysia will enjoy a 100% tax exemption on their statutory income during their five year exemption period.

    Problems with Malaysia company registration

    Our Clients setting up in Malaysia must be aware of certain potential issues including:

    1. Our Client’s Malaysian company is required to pay 24% corporation tax on all annual profits. Additionally, withholding tax of 10% and 15%, respectively, will be applied on all interest and royalty payments to a non-resident;
    2. A Malaysian company is required to appoint at least 1 resident director. If required, Healy Consultants PLC will be pleased to provide our professional, passive nominee resident director service for an annual fee of US$3,350;
    3. The Government tenders generally favor local individuals and companies incorporated and managed by locals. Our Clients may seek to apply for Bumiputera status if their entity is at least 30% owned by Malay nationals or Malay owned companies;
    4. Malaysia political climate is currently suffering due to corruption allegations against the Prime Minister and his ruling party. So, our Client need to factor this point, when deciding whether to incorporate in Malaysia;
    5. Lastly, Malaysia is ranked poorly by the World Bank as 112th best country in the world for “Starting a Business” in their annual Doing Business Survey.
  • Best uses for a Malaysia company

    As foreign-owned companies can invest in almost every business sector without restriction, Malaysia offers many opportunities:

    1. Our Client may use their Malaysian company as their Asia Pacific regional headquarters because:
      • There is no tax payable by Malaysian companies for dividends received from foreign subsidiaries;
      • The tax efficiency of a Malaysian holding company is improved by the country’s 68 double taxation avoidance agreements, which reduce withholding taxes and therefore the overall tax burden;
      • Malaysia is also an ideal location for a regional headquarters. Located in the center of South East Asia, Malaysia is in close proximity to many leading Asian markets such as Singapore, Vietnam, Thailand, China, and India.
    2. Our Client may use their Malaysian company to offer financial and investment services because:
      • Malaysia-based fund managers are also allowed to market and trade their financial products both to corporate and retail investors in i) Singapore and ii) Thailand. To do so, they are only required to submit an application to these countries’ Security Exchange Commissions, which will approve it thanks to a fast-track procedure. This cross-border offering facility should be extended to Indonesia and Philippines by 2020;
      • In order to attract foreign investors in Malaysia investment, some laws in regards to foreign ownership are being relaxed. The foreign ownership limit of stock brokerages is to be increased to 70% from 49%. There can now be 100% foreign control in wholesale fund management companies in Malaysia. The limit for unit trust companies has also been increased to 70%.
    3. Malaysia is an excellent jurisdiction for setting up a manufacturing and distribution company because:
      • Because of the abundance of cheap raw materials and skilled labor, Malaysia has an excellent reputation as a manufacturing hub. The country is notably rich in several natural resources such as palm oil, rubber, timber, oil and tin;
      • Distribution of manufactured goods by sea is easy thanks to Malaysia’s four major ports, and an ideal location on the straits of Malacca;
      • Processing and manufacturing companies can make tax savings thanks to Malaysia’s five free zones. These offer foreign companies zero custom duties and flexible trading laws. These five export processing zones are: i) Pasir Gudang ii) Port Klang iii) Kulim Hi-Tech Park iv) Port of Tanjung Pelepas and v) Bayan Lepas;
      • Malaysia is a member of the Association of South East Asian Nations (ASEAN) and has signed over twelve free trade agreements. Companies producing manufactures and raw materials in Malaysia can thereafter export them free of custom duties to the nine other Member States of ASEAN, as well as to i) Japan ii) South Korea iii) India iv) China v) India vi) Australia and vii) New Zealand;
      • To attract foreign investors and encourage Malaysia business, the Malaysia government developed industrial parks, including free industrial zones, technology parks, and Multimedia Super Corridor (MSC). There are investment incentives such as Pioneers status, BioNexus status and Multimedia Super Corridor (MSC) status where companies can enjoy tax free for a number of years.

Frequently asked questions

Download the full Malaysia country report here

Contact us

For additional information on our business registration services in Malaysia, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi
MY Intl. chamber of commerce and industrymicpaMY accountantsmitimfapkfzMY Customsmaicsa