Malaysia company registration

DOING BUSINESS IN MALAYSIA

Since 2003, Healy Consultants Group assists our multi-national Clients’ with registering their business in Malaysia including i) Malaysia company registration ii) securing regulatory licenses iii) nominee services for Malaysian resident directors iv) multi-currency corporate bank account opening in Malaysia v) accounting and tax support and vi) office rental solutions.

Choose Healy Consultants for your Malaysia company setup needs and benefit from our customized services, expertise and exceptional support.

Contact us today to explore how we can support your business in Malaysia.

Malaysia company formation guide: Table of contents

Benefits and problems with doing business in Malaysia

Advantages with Malaysia company registration

  • The country is a cost-competitive location within Southeast Asia, with an abundance of natural resources, including oil and rubber, timber and minerals and palm oil.
  • Through free ports Malaysian businesses can trade duty-free. Malaysia has over 500 industrial parks and 18 Free Industrial Zones (FIZs), offering exemption from customs to foreign enterprises.
  • The Approved Major Exporter Scheme allows traders and manufacturers full sales tax exemption on their import or purchase of goods. To qualify, annual sales must exceed RM10 million and at least 80% of their output must be exported.
  • Malaysia is a member of the World Intellectual Property Organisation (WIPO) and a signatory to the Paris and Berne Convention which govern intellectual property rights.
  • Pioneer Status incentive is an exemption from income tax on 70% of statutory income for a period of 5 years. Smaller manufacturing companies with paid-up capital below RM500,000 manufacturing high-tech products and other promoted goods, are eligible for Pioneer Status and Investment Tax Allowance incentives.
  • The Domestic Investment Strategic Fund is a matching grant designed to offer incentives to established companies within the manufacturing and services sectors, boasting a minimum of 60% Malaysian equity ownership. This fund supports and encourages reinvestments, encompassing activities such as expansion, modernisation, and diversification including initiatives like training, R&D, outsourcing, international standards, and technology licensing or acquisition. The fund is accessible to businesses in priority sectors such as aerospace, food security, machinery and equipment, and services. For example, if you are investing in smart-manufacturing, RM245 million is available under the Domestic Investment Strategic Fund (DISF) to upscale facilities.
  • A company awarded the Malaysian Investment Tax Allowance (ITA) receives a 60% allowance on qualifying capital expenditure, including approved factory, plant, and machinery expenses incurred within five years from the initial qualifying expenditure date. This allowance can be offset against 70% of the company’s statutory income for each assessment year. Any unused allowance can be carried forward to subsequent years until fully utilized. The remaining 30% of the statutory income is subject to taxation at 24. This incentive aims to encourage investment in capital assets and boost economic growth by providing tax relief on qualifying expenditure for eligible companies.
  • Labour productivity in Malaysia is significantly higher than in neighbouring Thailand, Indonesia, the Philippines or Vietnam
  • The country has a network of trade deals with India, China, Asia-Pacific and East Asia to help you further expand your market. Malaysia has already established multiple bilateral and Free Trade Agreements (FTAs) with countries such as Australia, Chile, Japan and New Zealand.
  • The geographical position of Malaysia allows businesses quick access to Asian markets including Singapore, Thailand, Indonesia and Brunei. There are five international airports in Malaysia, with air cargo facilities and well-maintained highways. Next to one of the world’s busiest shipping lanes (Straits of Malacca), providing access to the global supply chain via two key Malaysian ports, Klang and Tanjung Pelepas.
  • Malaysia is successful in becoming a major and cheaper alternative to its neighbour, Singapore. Office rental costs are also significantly higher in Singapore at US$71.43/sq m per month. In Kuala Lumpur, the average rental cost is only around US$19.50/sq m per month.
  • As a former British colony, English is widely spoken, especially in business. With nearly 70% of the population speaking English, all business and taxation related documents are available in English. The country’s political structure and legal framework are largely based on British systems. The country’s legal system provides protection and enforcement of contractual rights that create certainty for businesses.
  • Malaysia has two mega free-trade agreements, namely the Comprehensive and Progressive Agreement for Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) agreement.
  • After India and China, Malaysia is the third best destination in the world for outsourcing and offshoring, according to the Global Services Location Index from A.T. Kearney. To date the country has attracted more than 5,000 overseas companies from more than 40 countries to establish their operations in Malaysia.
  • Digitalisation remains a top priority for the Malaysian Government. In the coming decade, Digital technology is expected to be the new driver for the country’s economy, and its contribution is projected to reach 22.6% of GDP by 2025. Its five-year plan is targeting RM 50 billion of investments in the digital economy and attracting 50 Fortune 500 tech companies to land and expand in Malaysia by 2025.
  • The Malaysia Digital Economy Blueprint (Blueprint) and established MyDIGITAL, demonstrating the government aspirations to successfully transform Malaysia into a digitally-driven, high income nation and a regional leader in the digital economy. Several global IT businesses have outsourced their production processes to Malaysia because of its advantageous location. Examples of international businesses operating in Malaysia are IBM, Intel, Google, and others.
  • Through the Malaysia Digital Economy Corporation (MDEC), the government is focusing on initiatives to develop capabilities around emerging technologies such as i) Big Data Analytics (BDA) and ii) Artificial Intelligence and iii) financial technology and iv) data centres and cloud services v) and robotics. Two digital initiatives introduced by MDEC include MyDigitalWorkForce Work In Tech (MYWiT) – RM100 million training and hiring incentive programme to upskill and subsidise talents and businesses and the Digital Investment Office (DIO) – a fully-digital collaborative platform to coordinate and facilitate all digital investments.
  • The Cradle Investment Programme 300 (CIP300) targets aspiring entrepreneurs in sectors such as ICT and other technology fields. This program offers up to RM 300,000 to these startups looking to develop and promote their innovative services. Since 2003, the program assisted more than 900 startup businesses.
  • The Technology Acquisition Fund (TAF) is a hybrid grant and loan scheme that assists eligible Malaysian companies procure foreign technologies and integrating them into their existing business and manufacturing activities. This applies to businesses in the priority technology clusters identified by MOSTI, such as aerospace, medical devices, pharmaceuticals, advanced electronics, and renewable energy.
  • Specific incentives are introduced to attract investment into food projects, both at farm level as well as at production/processing level. These will enhance the supply of raw material for the food processing sector, thus reducing reliance on imports of such raw materials. A company which invests in its subsidiary company engaged in food production activities, can be considered for tax deduction equivalent to the amount of investment made in that subsidiary for that year of assessment. The subsidiary company undertaking food production activities can be considered for full tax exemption on its statutory income for 10 years of assessment for new project or 5 years of assessment for expansion projects.
  • To attract Biotechnology companies, the Malaysian Government offers an exemption of 100% statutory income derived from a new business or an expansion project that is equivalent to an allowance of 100% qualifying capital expenditure incurred for 5 years.
  • A concessionary tax rate of 20% on statutory income from qualifying activities for 10 years upon expiry of tax exemption period; and
  • Exemption from import duty and sales tax on raw materials/components/machineries/equipment.
  • Double deduction on expenditure incurred for i) R&D and ii) and promotion of exports.

Problems with Malaysia company registration

  1. Opening a multi-currency corporate bank account is difficult and slow, requiring the bank signatory to travel to Malaysia.
  2. The Malaysian corporate income tax rate is 24%, one of Asia’s highest tax rates.
  3. The Foreign Exchange Administration Rules place some restrictions on the repatriation of a foreign currencies including capital, profits, dividends and interest.
  4. It is likely our Client will need a high paid-up share capital is required. For example, a locally owned company venturing into wholesale business can obtain a Wholesale, Retail, and Trade (WRT) license with a paid-up capital of MYR 250,000. By contrast, a 100% foreign-owned company seeking the same license must have a MYR 1,000,000 paid-up capital. To employ expatriate Staff, the minimum paid-up share capital is US$ 210,000.
  5. Before legally operating your business in Malaysia, it is important to secure multiple Government business license including i) general licenses and ii) industry/sector-specific licenses and iii) activity-specific licenses. Check out the MalaysiaBiz portal for suggestions re the specific business licences needed. As a condition of license approval, it is often necessary to appoint a Malaysian resident director or a Bumiputera shareholder.
  6. Depending on the industry and the entity, there are limits on the foreign investment in certain sectors including the need for minimum ownership by certain indigenous ethnic groups in Malaysia, known as Bumiputera ownership. These limits on equity ownership limits may be imposed as a condition to obtaining licences in the relevant sectors. For example, a 50% Malaysian ownership is required of companies operating in specific sectors including i) agriculture and ii) education and iii) telecommunications and iv) financial services and v) and oil and gas and vi) architectural and engineering services and vii) employment agencies and viii) security services and ix) freight forwarding and logistics services and x) Power and electrical producers.
  7. Despite efforts by the Malaysian government to tackle it, bribery and unethical practices persist. Corruption in the Malaysian judiciary carries a medium risk for our multi-national Clients’. Bribes and irregular payments are sometimes exchanged in return for obtaining favourable court decisions. Corruption is a problem in Malaysia, and it can be a barrier to doing business in the country.
  8. Compared to other OECD countries, employee productivity is low because of i) the shortage of skilled and talented manpower and ii) low adoption of technologies and iii) the professional mindset of employees and iv) lack managerial and technical expertise. For example, only 27% of the labor force has tertiary education.
  9. Securing employment visas for expatriate Staff is difficult. The visa application process is long, taking between six months and one year. Companies that intend to hire expatriates are required to advertise job vacancies via the JobsMalaysia Portal for one month. Only companies that are unable to find suitable local candidates after the 30-day period may proceed with their application to hire expatriates. Malaysia’s new government plans to reduce the country’s dependency on foreign workers.
  10. It can be difficult to dismiss employees in Malaysia. It is common for employees to approach the Industrial Courts claiming unfair dismissal. The burden is on the employer to prove that the dismissal was with just cause. If an employee is dismissed without just cause, he can seek either i) reinstatement and back wages and ii) back wages plus compensation in lieu of reinstatement of one month’s salary for each year of service.
  11. Because of full employment in Malaysia, employee retention among SME’s is the biggest challenge for small businesses.

Types of business entities in Malaysia

Healy Consultants assists our multi-national Clients’ with Malaysia company set up including choosing the optimum corporate structure and entity. There are several ways of doing business in Malaysia, the most common being the setting up of a limited liability company (also known as Sendirian Berhad or “Sdn. Bhd.”). Foreign companies can also register a branch in Malaysia, or a representative office.

The Malaysia Limited liability company (SDN BHD)

  • A private limited liability company (also known as Sendirian Berhad or “Sdn. Bhd.”) is the most popular type of Malaysia subsidiary. Companies can incorporate this type of subsidiary with 1 shareholder and 1 director. The subsidiary can be registered with 100% foreign ownership. If needed, Healy Consultants can provide our Clients with nominee services for resident director in Malaysia
  • After incorporation of the company, Healy Consultants will register the company with the Inland Revenue Department for corporate tax and employer registration. If needed, we can also register the company for GST
  • Our Clients may also wish to apply for various licenses in Malaysia, the most common being the Wholesale Retail Trade license (WRT). This license requires a paid up capital of US$1,000,000 and the approval process takes up to 2 months. Once secured, our Clients will be able to engage in various operations including i) retail and wholesale trade; and ii) restaurant and franchise business
  • A subsidiary and a private limited company (Sdn. Bhd.) are quite similar. However, setting up a subsidiary can be difficult and rigorous compared to incorporating a private limited company (Sdn. Bhd.). More documents are needed such as board of resolution from parent company to approve the incorporation of a subsidiary company, memorandum of appointment or power of attorney authorising the person residing in Malaysia to accept the notices on behalf of the parent company, statutory declaration by the agent of the parent company, company particulars of parent company certified by the appointed company secretary.

The Malaysia free zone company (EPZ company)

  • Foreigners willing to start export-oriented manufacturing and service businesses can register their entity in an export processing zone. While there is no official minimum paid-up capital requirement, the free zone authority w take such amount as a criterion to assess the application, so we usually recommend our Clients to invest a minimum of US$125,000. We can also provide nominee services for our Clients unable to appoint the one resident director required for all newly registered Malaysian company
  • For further information on the different export processing zones available in Malaysia and their tax benefits and requirements, please visit our Malaysia free zone section.

The Malaysia international trading company (Labuan company)

  • For entrepreneurs only planning to trade with overseas customers, the Malaysia regulations provide an attractive legally tax exempt business vehicle: the Labuan company, registered with the Labuan International Business and Financial Center. Unlike mainland Malaysia companies, such entity does not require the appointment of resident director; and
  • For our readers interested to read more about this tax exempt strategy, Healy Consultants has prepared a specific section on such business entity; and
  • Best uses: A Labuan company i) enjoy 3% corporation tax on annual net profits but ii) must submit financial statements to independent statutory annual audit. Under some conditions, it can also be a good entity to open a marketing office in Labuan, Kuala Lumpur or Johor Bahru.

Steps for incorporating business in Malaysia through a Labuan company

Pre-incorporation procedure
  1. Consultation: Following a face-to-face meeting or conference call, Healy Consultants Group and the Client agree on: i) specific business activity and license requirements ii) target company names and their availability, and iii) share capital requirements;
  2. Reserve name: Once formally engaged, our dedicated Labuan relationship manager will conclude a business name search with the Labuan Companies Registrar (IBFC) and reserve several options in order of preference. If available, we file the name reservation and settle the RM50 reservation fee;
Incorporation procedure
  1. Document preparation: Our team prepares i) Memorandum and Articles of Incorporation ii) Declaration of compliance Form 6 and iii) director/shareholder consent Form 24. In addition, we prefill all other required forms and email them to our Client for e-signature. The Government fee for form submission is RM6,000;
  2. Company Incorporation: We submit signed documents to IBFC to complete incorporation of the new company. The company is registered within eight business days, after which we email the Certificate of Incorporation (COI) to our Client;
Post-incorporation procedure
  1. Tax registration: Following company formation, Healy Consultants Group registers our Client’s company for tax, completing and submitting Form CP600C to the Inland Revenue Board;
  2. Corporate bank account opening: Once above is completed, we open a local Malaysian corporate bank account with our Client’s preferred local or international bank. Thereafter, Healy Consultants Group and our Client agree upon and courier the original corporate bank account forms to the company’s agent in Labuan. We work with internationally recognised banks including Standard Chartered, DBS and local banks such as Maybank and CIMB. Immediately after bank account opening, our Client deposits the initial share capital of the company;
  3. Internet banking activation: Having received the corporate bank account number, we request the bank to activate internet banking and issue tokens to the company directors. This process is typically completed within one business week;
  4. Support services: If required, our team can offer support services including i) securing employee visas ii) locating office premises iii) registering trademarks
  5. Engagement completion: The Labuan company incorporation engagement is considered complete. We courier a company kit to our Client, including original corporate documents, unopened bank correspondences and a Client feedback survey.

Other considerations

  • A Labuan company can lease office premises in Kuala Lumpur and/or Iskandar Malaysia, Johor Bahru;
  • As per the LBATA Amendments 2019, a Labuan company can now issue sales invoices to Malaysia customers and conduct sales in Malaysian Ringgit. Moreover, all other global income can be booked into the Labuan company;
  • All Labuan trading companies dealing with Malaysia resident companies are subject to 17% corporate tax on chargeable income below RM500,000 and 24% for income above this threshold;
  • All Labuan companies can secure Malaysia employment visas for staff;
  • To curb tax evasion and other harmful tax practices, since January 2019 Labuan companies have been subject to new economic substance requirements. Companies operating in certain sectors must now hire full-time employees, and meet minimum annual operating expenditure requirements in Labuan;
  • Companies which do not meet substance requirements are liable to pay a tax rate of 24% on taxable profits, as per the Income Tax Act 1967. Companies operating under the regulations of the Labuan Business Activity Tax Act 1990 are taxed at 3% of audited profits.
  • All Labuan companies must always secure and maintain an office space in Labuan, if they plan to hire expatriate staff;
  • In addition to the annual Labuan Government fees, an annual fee of RM7,500 will be payable to the Malaysia Government.

Work permit considerations

  • To be eligible for a Malaysia work permit, an expatriate employee of a Labuan company must be: i) Top management (Managing Director, Principal Officer) ii) Chief Executive Officer, Chief Financial Officer, Chief Operating Officer iii) Middle management (Manager, Assistant Manager) iv) Professional (Accountant, Lawyer, Consultant, Underwriter) v) Technical expert (IT Specialist, other specialist related to Labuan trading activity);
  • The employer must have a valid address in Malaysia;
  • The applicant must have the technical and academic qualification, professional certificate or relevant working experience related to the position applied.

The Bumiputera company

  • Entrepreneurs establishing a limited liability company in Malaysia can apply for Bumiputera status if at least 30% of the shares are held by native Malay individuals or other Bumiputera corporations. If this requirement is met, the company is then eligible for special grants, discounts, and incentives such as cheaper business licenses, special bank agreements, native reservation of land, and discounts when purchasing or renting land.

The Malaysia branch office

  • Setting up a branch is more appropriate for a foreign company which plans to operate in Malaysia on a short-term basis and is not carrying out wholesale or trade retail businesses. A branch does not have a separate legal personality, so its liabilities are those of its parent company. The branch office can engage in business activities, which involve trade, invoicing, and signing contracts.
  • A branch of a foreign company is required to have at least 1 person resident in Malaysia to be the authorised agent in Malaysia. A branch of a foreign company in Malaysia must keep the records of its Malaysian operations in Malaysia. The appointed agent shall be answerable for the acts, matters and things, as are required to be done by the foreign company under the Companies Act 2016; and be personally liable for all penalties imposed on the foreign company for any contravention of the Companies Act 2016.
  • Branch registration can be done by filing the required documentation with Suruhanjaya Syarikat Malaysia (SSM).
  • The required supporting documents include: A certified copy of the certificate of incorporation or registration of the foreign company in its place of origin, a certified copy of its charter/statute/memorandum and articles of association, or other instruments constituting or defining its constitution, memorandum duly executed by the foreign company stating the powers of the local directors, where the foreign company has directors resident in Malaysia who are members of the local board of the directors, memorandum of appointment for the appointment of the agent in Malaysia, which must be verified by statutory declaration and stamped, memorandum of appointment, or power of attorney, under the seal of the foreign company, executed so as to be binding on the company, stating the name and address of one or more persons resident in Malaysia (not including a foreign company), authorised to accept on its behalf service of process, and any notices required to be served on the company, following registration by the CCM.
  • Additionally, the branch office is required to comply with a number of reporting requirements under the Companies Act 2016 including i) notifying the SSM when changing share capital and corporate structure, ii) filing annual balance sheets and audited accounts of the parent and branch company, iii) filing annual return within one month of the AGM and iv) keeping account records for a minimum of 7 years in Malaysia.

The Malaysia representative office

  • This Malaysia business setup is only allowed to engage in business activities including market research and promoting the business of the parent company. Consequently, a representative office cannot sign contracts or conduct business in Malaysia, because it is not a permanent business setup in Malaysia; and
  • The establishment of a representative is suitable for foreign investors who wish to explore the business environment in Malaysia before making investment decisions, e.g. market research, feasibility studies, promotional and liaison work on behalf of its principal entity. The proposed operational expenditure of a representative must be at least RM300,000 per annum. The representative office should be financed by funds emanating from sources outside Malaysia; and
  • The procedure to establish a representative office is fast and relatively straightforward. An application with the required supporting documentation must be submitted to the Malaysian Investment Development Authority (MIDA) which will issue authorisation if the legal requirements are met. The process generally takes an average of six weeks and when issued the authorisation is usually valid for two years depending on the merits of the application; and
  • Employees are generally limited to one expatriate, who is subject to income tax at the usual rates in Malaysia. Application may be made to MIDA for additional work permits for other expat employees, should additional employees be required.
  • Permissible activities for a representative/regional office include i) planning or co-ordinating business activities and ii) undertaking research and product development and iii) other activities that will not result directly in actual commercial transactions.
  • Under the guidelines issued by MIDA, a representative/regional office is not allowed to i) engage in any form of commercial activity and ii) lease warehousing facilities and iii) sign business contracts for a fee and iv) participate in the daily management of any entity within its corporate group in Malaysia.

Comparison of popular company setup solutions in Malaysia

Compare different Malaysia entities Tax resident LLC Tax exempt LLC Free zone LLC Bumiputera company Representative office
Best use of company? All purposes International trading/ holding Manuf/ Logistics Joint venture with Malaysian national Marketing/
research
How soon to invoice Clients? 1 month 2 weeks 1 month 2 weeks 5 weeks
How soon can you hire staff? 1 month 2 weeks 1 month 2 weeks 5 weeks
How soon can you sign a lease agreement? 1 month 2 weeks 1 month 2 weeks 5 weeks
How long to supply corporate bank a/c? 2 months 2 months 2 months 2 months 3 months
How long to supply co. reg / tax numbers? 1 month 2 weeks 1 month 2 weeks 5 weeks
Corporate tax rate on annual net profits? 24% 3% 24% 24% 0%
Limited liability entity? Yes Yes Yes Yes No
Government grants available? Yes No No Yes No
Govt approval required for foreign owners? No No Yes No No
Res. director/partner/ manager required? Yes, 1 No Yes, 1 Yes, 1 No
Min. paid up share capital? US$2 US$1 US$125,000 US$2 None
Can bid for Government contracts? Yes No Yes Yes No
Corporate bank account location? OCBC KL Public Bank Labuan SCB KL Maybank OCBC KL
Can secure trade finance? Yes No Yes Yes No
GST payable on sales to local customers? 6% 0% 0% 6% 0%
Average total business set up costs? US$ 16,130 US$12,000 US$20,050 US$12,680 US$13,465
Average total engagement period? 4 months 3 months 4 months 4 months 4 months

See full table

Accounting and tax considerations Tax resident LLC Tax exempt LLC Free zone LLC Bumiputera company Representative office
Statutory corporate tax payable? 24% 3% 24% 24% 0%
Legally tax exempt if properly structured? No Yes No No Yes
Group HQ tax incentives? Yes No Yes Yes No
Must file an annual tax return? Yes Yes Yes Yes No
Must file annual financial statements? Yes Yes Yes Yes No
Must appoint an auditor? Yes Yes Yes Yes No
Access to double taxation treaties? Yes No Yes Yes No
WH tax on payments to foreign s/holders? 0% 0% 0% 0% 0%
Company Registration Tax resident LLC Tax exempt LLC Free zone LLC Bumiputera company Representative office
Res. director/partner/manager required? Yes, 1 No Yes, 1 Yes, 1 No
Min. number of shareholders/partners? 2 1 5 2 Parent company
Maximum shareholding for foreigners? 100% 100% 100% 63% 100%
Min. statutory paid up share capital? US$2 US$1 US$2 US$2 None
Security deposit kept with government? No No No No No
Shelf companies available? Yes Yes Yes Yes No
Time to incorporate a new entity? 1 week 1 week 1 week 1 week 1 week
Can easily convert to a PLC? Yes No Yes Yes No
Public register of s/holders and directors? Yes No Yes Yes Yes
Can have preference shareholders? Yes Yes Yes Yes No
Business Considerations Tax resident LLC Tax exempt LLC Free zone LLC Bumiputera company Representative office
Good entity for trademark registration? Yes Yes Yes Yes No
Can secure an import and export license? Yes No Yes Yes No
Can be wholly foreign owned? Yes Yes Yes No Yes
The entity will likely be regulated by? SSM Labuan IBFC SSM SSM MIDA
Monthly GST reporting to the Government? Yes No No Yes No
Maximum number of staff allowed? No limit No limit No limit No limit 1 expatriate
Expatriate to local staff ratio? None None 3 to 1 None 1 to 1
Residence visa for business owner? Yes Yes Yes Yes Yes

Sponsorship by a local citizen required? No
Our Client must travel to Malaysia? No
Our Client must travel to Malaysia or Singapore branch for corporate bank account opening? Yes
Temp. physical office solutions available? Yes
You need local resident as bank signatory? No
Min. number of directors/managers? 1
Must sign an office lease agreement? No
S/holder/director docs attested/translated? No
Foreign director needs personal tax no.? No
Foreign director needs a residence visa? Yes
Other useful information
What will be included in my customer sales invoice? (click link)
Malaysia has signed free trade agreements? Yes
Malaysia is a member of WIPO/TRIPS? Yes
Malaysia is a member of the ICSID? Yes
Average customs duties suffered? 8%
Govt foreign investment approval required? No
Average monthly office rent? (US$/sq m) 30
Minimum statutory monthly salary? MYR1,200 (~USD297)
Average US$ salary for local skilled staff? US$700
US$ deposit interest rate (year average)? 3.43%
Overseas remittance currency controls? Yes
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


Steps to incorporating company in Malaysia

Incorporation of a company in Malaysia and opening of its corporate bank account are straightforward processes, which can be completed in five weeks. Our Client will not have to travel to the country, provided that a Power of Attorney is issued to the Malaysia incorporation agent who will then complete all procedures on his behalf. The procedures are as follow:

Pre-incorporation planning

  1. Before Healy Consultants proceeds with Malaysia business incorporation, our Firm requests our Client to i) settle the fees payable for the engagement and ii) sign and email us back our engagement letter and iii) provide us all requested due diligence documents from each shareholder, director and beneficial owner of the company;
  2. Healy Consultants’ Malaysia Incorporation Team performs a company name search with the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia – SSM). If available, we complete Form PNA 42 to reserve the name on your firm’s behalf. Name reservation approval from SSM normally takes 1 to 3 working days.
  3. Healy Consultants drafts a detailed Malaysia LLC incorporation engagement plan for our Client, including corporate bank account opening steps. This engagement project plan maps out, week by week, each step to engagement completion, optimizing transparency and making sure that our Client’s expectations will be met throughout the project;

Incorporation procedure

  1. After the corporate structure is agreed with our Client, Healy Consultants will complete incorporation Form A for Client signature and courier return. Thereafter we prepare the corporate documents to incorporate the company;
  2. Our team emails the Memorandum and Articles of Association and director and shareholder consent forms, to our Client for his signature in front of notary public and courier return to us. Assuming our Client provides the original signed documents to us in a timely manner, Healy Consultants’ Incorporation Team liaises with the SSM to complete company incorporation in Malaysia;
  3. Our team emails the Memorandum and Articles of Association and director and shareholder consent forms, to our Client for his signature in front of notary public and courier return to us. Assuming our Client provides the original signed documents to us in a timely manner, Healy Consultants’ Incorporation Team liaises with the SSM to complete company incorporation in Malaysia;
  4. 4On the Client’s behalf, Healy Consultants Malaysia incorporation team files a register of company’s shareholders, directors, managers, and secretaries with the SSM.

Post-incorporation

  1. Healy Consultants registers our Client’s company for corporate tax by completing and submitting Form CP 600C with the Inland Revenue Board of Malaysia. Tax registration will be completed within 5 working days;
  2. Healy Consultants’ Banking Team completes corporate bank account opening in Malaysia for our Client, together, including world-class multi-currency internet banking facilities. We works with internationally recognized banks such as HSBC, Standard Chartered, and Citibank and local banks such as Maybank, Public bank, CIMB bank, RHB bank to provide corporate bank account services. Healy Consultants’ Banking Team will also liaise with the bank to prevent our Client having to travel for bank account opening interview. Immediately after the bank account opening, our Client is required to deposit the proposed share capital of the company. Our company secretary will provide all certified corporate documents as well as the board resolution to proceed with bank account opening;
  3. After opening a bank account, you will need to use it to get a Sales and Services Tax (SST) Number. The SST is required before the company can commence operations, and is obtained by submitting the company’s information such as its email address and registration number to the Royal Malaysian Customs.
  4. In order to operate your business in Malaysia, you will also need to get a health and safety certificate from the Malaysian Health Services Authority (MHSA).
  5. After establishing a company in Malaysia as a foreigner, hiring local employees entails registering their Employees Provident Fund (EPF) profile within 7 days of the first employment, either at a physical counter or online through the official website. EPF registration is mandatory for employers to contribute to the employee retirement benefit scheme based on their monthly wages. Subsequently, the company is required to register the Social Security Organisation (SOCSO) profile within 30 days of hiring the first employee, via email application to idportalperkeso.gov.my. SOCSO registration is also obligatory as it provides social security protection to private sector employees in accordance with the Employees’ Social Security Act 1969.
  6. Healy Consultants will provide the company with a legal registered address. However, for the company’s business address we recommend the Client should provide their own. Alternatively we can provide a virtual address at an additional cost.
  7. Following engagement completion, Healy Consultants couriers a company kit folder, to our Client’s preferred international address, containing the following corporate documents including original corporate documents, unopened bank correspondence, and a Client feedback survey to assess the quality of our Malaysia company incorporation services.
  8. The company must register with the Employees’ Provident Fund within 7 days of hiring its first employee. This is done by submitting certified copies of the application Form KWSP 1, Form 49 to provide details of your directors and members, a certified copy of the identity card of one of the directors, a copy of the first month’s paycheck either in cheque or bank draft, and a copy of the Certificate of Registration from the SSM.

Malaysian company resident director services

Every Malaysian company requires at least one individual director resident in Malaysia. When our Clients are unable to comply with this requirement, Healy Consultants provides professional passive nominee resident director.

Who requires a resident director?

  1. The Malaysian Companies Act Section 122, Division 2, states that every Malaysian incorporated company must appoint at least one director that is resident in Malaysia before the company can be established;
  2. Most of our Clients require Healy Consultants to provide one professional passive nominee resident director for their Malaysian company. Our annual fee for the same amounts to US$4,200 per nominee (click link);

Who is considered a resident in Malaysia?

  1. A “Malaysian resident” is defined as a person who resides in Malaysia for at least 182 days in a calendar year, according to the Income Tax Act 1967. This includes i) foreigners holding a valid Malaysian work permit or ii) permanent residents;

Malaysia corporate bank account services

Healy Consultants Group helps multi-national Clients open multi-currency corporate bank accounts in Malaysia for both local and overseas companies.

Without bank signatory travel, our Asian team will project manage the multi-currency corporate bank account opening process.

Malaysia corporate banking problems and solutions

Malaysia banking problem Solution

Bank refuses to onboard a foreign company which does not have a physical office in Malaysia, or Malaysian customers or suppliers

Healy Consultants Group will open an international corporate bank account with a top tier bank outside Malaysia (e g New York, Germany, Liechtenstein, Austria, Bulgaria, South Africa, Australia, London, South America or Dubai).

Healy Consultants Group has a guaranteed corporate bank account approval policy.

Bank insists that the bank signatory travel to Malaysia for a one-hour bank interview.

Healy Consultants Group Client travel policy will apply (click link). Our staff will organise the bank meeting in our Malaysia office and assist our Client during the bank interview(s).

Global banks continue to tighten corporate bank account opening procedures, their internal compliance departments completing more thorough due diligence of Clients. Consequently, our Clients should expect Malaysia bank account approval to take up to three months.

If our Client requires a bank account at short notice, we recommend an immediate Malaysia solution (Malaysia company plus already-approved international corporate bank account).

Like the majority of international banks, it is common for Malaysian banks to close corporate bank accounts without giving an open, transparent reason to their customers. To close a customer bank account without giving the bank signatory an opportunity to explain ‘unusual transactions activity in the corporate bank account’ is an unfair, unreasonable action which places our multi-national Clients' businesses under stress

We recommend our multi-national Clients open multiple multi-currency corporate bank accounts for their entity. It is unwise to open one corporate bank account and have your business be dependent on one bank.

As we advance deeper into a global depression, it will become more common for banks to experience financial difficulties. Consequently, multi-national Clients should expect i) small banks to go bankrupt and ii) small to medium-sized banks to be bought over by top tier banks. The number of banks operating in each country will get smaller, exposing our multi-national Clients to financial risk.

For each of their entities, we recommend our multi-national Clients open multiple multi-currency corporate bank accounts across multiple countries. Spread your funds across multiple corporate bank accounts in multiple top-tier banks in multiple different countries. Avoid small banks including PSPs FSPs and digital banks. Ensure each bank offers customer deposit insurance.

The majority of Malaysian banks only provide telephone support during Malaysia business hours. This is inconvenient for multi-national Clients in Europe or the USA.

Healy Consultants Group staff assist our multi-national Clients with bank communication, regardless of time zones.

Considerations when opening a bank account in Malaysia

  • It is possible for both locally incorporated and foreign (i e non-Malaysian) companies to open a corporate bank account in Malaysia. However, it has become increasingly difficult for foreign companies without a permanent establishment (physical office premises with lease agreement stamped at the tax authority) in Malaysia to open a local account, unless they have existing Malaysian customers or suppliers.
  • Depending on our Client’s business and nationality, there is a probability that Malaysian banks will request a bank signatory to travel for a one-hour bank interview as part of bank AML/CFT obligations.
  • Global banks continue to tighten corporate bank account opening procedure. Consequently, our Clients should expect the bank account approval period to take up to three months.
  • If our Client is not comfortable with only a Malaysia corporate bank account, Healy Consultants Group can open an international corporate bank account outside Malaysia. Examples include New York, Germany, Liechtenstein, Austria, Bulgaria, South Africa, Australia, London, South America or Dubai. All banks will be top-tier banks in these countries, with excellent internet banking services.
  • Some Malaysia banks prefer to communicate directly with our Client and will not put Healy Consultants Group in the loop for security purposes. In this case, Healy Consultants Group will assist our Client to prepare answers to the bankers’ questions and requests.

Documents required for Malaysia corporate bank account opening

Documents required to open a Malaysia corporate bank account include i) valid passport ii) proof of address and iii) company registration documents and iv) lease agreement and proof of business in Malaysia.

Malaysia non-travel banking solution for foreign companies

Preliminary approval received from banks Bank option 1 Bank option 2 Bank option 3
Our recommendation in order of preference 1 2 3
Can A/C be opened for your foreign company? Yes Only Singapore-incorporated No
Internet banking available Yes Yes Yes
Does our Client need to visit bank? No Yes, either in Malaysia or Singapore Yes
Challenges Review of documents can take up to six weeks Transactions will be done by phone or email. Can be done online but bank will call to verify Stringent due diligence procedures
How long to receive corporate bank A/C number 6-8 weeks 4 weeks 6 weeks
Initial deposit at corporate bank A/C opening US$2,000 RM25,000 (or equivalent) US$10,000
How long to receive A/C numbers (after A/C is approved) 1 week 1 week 1 week
Your dedicated relationship manager (RM) will be TBP TBP TBP
Will your RM act on email instructions from you? Yes Yes Yes
Will your RM act on phone instructions from you? Yes Yes Yes
Daily transaction limit None None None
Our rating of the bank’s customer service Good Good Good
International corporate ATM card issued Yes No No
Corporate credit card issued No No No
Can multicurrency transactions be viewed online via internet banking Yes Yes No
How long to receive internet password and login name (after account opening) 2 weeks 2 weeks None
Can you make third party payments online Yes Yes Yes
Our rating of internet banking facility Good Excellent Good
Corporate cheque books issued with the bank account No No No
One time account opening fee None None None
Monthly account maintenance fee (assuming min. balance is maintained) None None None

Malaysian corporate tax summary

  • The Malaysian corporation tax rate is 24% of annual net profits from the audited financial statements. Small and medium enterprises (SMEs) enjoy an income tax of 15% on the first MYR150,000 of chargeable income, 17% on the next MYR150,001 up to MYR600,000 and 24% on the remaining chargeable income. SMEs are companies with a paid-up capital of not more than MYR2.5 million (US$572,000), turnover of less than MYR300,000 or less than 5 full-time employees. The preferential rate for SMEs will not be applicable if more than 50% of the paid-up capital is directly or indirectly owned by a related company.
  • Unutilised business losses can be carried forward for a maximum period of 10 consecutive years and offset against annual net profits from any business source.
  • The taxation system in Malaysia is territorial in nature. All income accrued in, derived from or received in Malaysia from outside of Malaysia, is liable to income tax. However, foreign sourced income received in Malaysia from outside Malaysia by any person is exempted from income tax in Malaysia.
  • Any dividends distributed by the Malaysian entity are exempt in the hands of the shareholders. There is no withholding tax on Malaysian dividends. Under the Income Tax Act, dividends received from foreign companies by a Malaysian company do not suffer Malaysian corporation tax.
  • Interest paid to a foreign corporate shareholder is subject to a withholding tax of 15%, which can be reduced if a double tax treaty exists. Royalties paid to foreign corporate shareholders are subject to withholding tax of 10%, which can be reduced if a double tax treaty exists.
  • The default rate of sales tax is 10% and is imposed on taxable goods manufactured in Malaysia that are subsequently sold or used by a registered manufacturer or imported into Malaysia by any person. All goods exported from Malaysia are exempted from sales tax. A manufacturer of taxable goods whose total sales value of goods manufactured over a 12-month period exceeds or is expected to exceed RM500,000 is liable to register not later than the last day of the month following the month when the threshold is reached.
  • The rate of service tax is 8% effective from 1 March 2024 for all taxable services including digital services. Service tax is a consumption tax levied and charged on i) any taxable services (including digital services) provided in Malaysia by a registered business and ii) any imported taxable services acquired by a business in Malaysia and iii) any digital services provided by a foreign registered person to a Malaysian consumer. Service providers outside Malaysia who provide online services to Malaysian consumers will be required to register in Malaysia and charge service tax, if the total value of digital services provided to Malaysian consumers for a 12-month period exceeds or is expected to exceed the prescribed registration threshold of RM500,000.
  • There is no capital gains tax on gains from the sale of investments or capital assets. However, the sale of land and buildings attracts a 30% capital gains tax. In addition, Starting 1 January 2024, company, limited liability partnership, trust body and co-operative society require to file capital gain tax return form with LHDN.
  • Malaysia entered into over 80 double tax treaties, of which 74 are in force, including with China, Japan, the UK, many EU countries and the US. A full list of the countries can be found on the Inland Revenue Board website (www.hasil.gov.my). To avoid double taxation by doing business in Malaysia, Healy Consultants will assist secure the Certificate of Residence (COR) for our Client’s Malaysian company. For companies with e-residence access, Healy Consultants will file a COR application online. Otherwise we will complete and file Form STM1 manually to the Kuala Lumpur branch of the Inland Revenue Board of Malaysia (IRB), together with signed Form 49 and relevant company documents included IRB checklist.

Malaysia company legal and compliance considerations

  • The Inland Revenue Board (IRB) is the responsible regulatory body for the administration of direct taxes, whilst the Royal Malaysian Customs Department (RMCD) administers customs and excise duties and sales and services tax.
  • Within 7 months after the closing of accounts, Malaysian companies are required to submit a corporation tax return. ‘E-filing’ or online filing of tax returns via the Internet is encouraged by the IRB.
  • Within 30 days of the beginning of the new accounting year, Malaysian companies are required to furnish to the Director General of Inland Revenue (DGIR), estimates of the corporation tax payable for the coming accounting period. Corporation tax is paid via monthly instalments. If certain conditions are met, a newly established Malaysian company is exempted from this requirement for 2 years. For example, the entity must have a minimum paid-up capital of RM 2.5 million.
  • Within six months of its financial year-end, annual audited financial statements must be signed off by the directors. All amounts shown in the financial statements and directors’ reports shall be presented in the Malaysian currency. The directors must present a set of financial statements in accordance with the approved accounting standards issued or adopted by the Malaysian Accounting Standards Board (MASB) and the requirements of the CA 2016. The following categories of private companies may qualify for an exemption from an independent statutory annual audit i) dormant companies and ii) zero-revenue companies and iii) companies with revenue less than RM100,000 and total assets less than RM300,000 with less than 5 employees.
  • No later than 30 days from the anniversary of the date of incorporation, Malaysian companies are required to file annual return with the Inland Revenue Board of Malaysia and with the Company Registrar. Failure to file an annual return is an offense and if convicted, the company and its directors will face penalties under sections 165 and 169 of the Companies Act.
  • A company is a tax resident in Malaysia if the management and control of its business is exercised in Malaysia. Management and control is considered to be exercised at the place where the directors hold their meetings. A company is tax resident in Malaysia for the basis year for a year of assessment if at any time during the basis year, the management and control of its affairs was exercised in Malaysia. Generally, a company would be regarded as resident in Malaysia if at any time during the basis period for a year of assessment, at least one meeting of the Board of Directors is held in Malaysia concerning the management and control of the company.
  • Malaysian laws contain transfer pricing provisions that govern transactions between related companies, requiring them to be conducted at arm′s length. All companies with intercompany transactions must furnish transfer pricing documentation complying with the Malaysian TP Guidelines (MTPG) (click link for more details). Companies that fail to timely complete this filing can be subject to a Government penalty, of up to US$ 24,000.
  • There are no controlled foreign company rules in Malaysia.
  • Malaysia is a federation made up of 13 states and the federal territories of Kuala Lumpur, Putrajaya and Labuan. 9 of these states are headed by hereditary rulers, the Sultans, who serve as constitutional heads of state. The remaining 4 states are headed by the Yang Di-Pertua Negeri (governors) who are appointed for fixed terms of office to serve as constitutional heads of state. Each state has its own written constitution and an elected legislative assembly. Each State Government is led by a Menteri Besar (Chief Minister), who is appointed from among the members of the legislative assembly. The division of powers between the various State Governments and the Federal Government is defined by the Federal Constitution, which provides for a measure of autonomy for the 13 constituent states.
  • The Malaysian court system is substantially based on the British legal system and principles of common law. There is a parallel system of state Syariah Courts which has limited jurisdiction over matters of state Islamic law. The Syariah Courts have jurisdiction only over matters involving Muslims.
  • Under the Monthly Tax Deduction (MTD) system, payroll taxes are collected from employees through compulsory monthly deductions from their remuneration by the 15th of the following month. Total remuneration including benefits in kind and the value of accommodation provided to employees is subject to MTD.
  • In Malaysia, all employees are required to file an annual income tax return that discloses their wages. The deadline for filing these taxes is April 30 of the following year. Failure to submit this form by either the employer or the employee can result in Malaysian government penalties. The tax return form can be completed online.
  • The Employees Provident Fund Act 1991 requires employers and employees to make monthly contributions to the EPF to secure payments to employees at the age of 60 or earlier in the case of incapacity or upon permanent departure from Malaysia. Contributions are mandatory for employees who are Malaysian citizens or permanent residents. Expatriates and foreign workers, who are not Malaysian citizens or permanent residents, are not required to contribute to EPF although they may elect to do so. The standard rates of contribution by an employer for working personnel are 12% or 13%, depending on income threshold, and 9% by the employee.
  • All employers who hire foreign workers are required to register and contribute to EIIS under SOCSO. A monthly contribution must be made for each eligible employee. SOCSO is an insurance scheme that covers the Employment Injury and Invalidity Pension Schemes. It is mandatory for all private sector employers to make monthly contribution for each of their employees to the Employment Insurance System (EIS).
  • Employers that fall under the industries listed by HRDF are required to register with the Human Resources Development Fund (HRDF) and contribute in respect of their employees who are Malaysian citizens.

Malaysian company annual renewal steps

  • Healy Consultants Group will send renewal reminder email, along with a renewal invoice and bank account details, to our Client;
  • Healy Consultants Group will acknowledge our Client’s funds transfer, and will send an email with a paid invoice and re-engagement letter and engagement details;
  • Healy Consultants Group’s Accounting Team will complete the accounting and tax deliverables for our Client’s company.

Malaysia employment visas and immigration

Healy Consultants assists our Client to apply for employment and resident visas with the Immigration Department of Malaysia to allow them to live and work in Malaysia. We are proud to say that our approval rate is still 100%. Healy Consultants’ fee to assist our Client obtain a work permit is US$4,950.

Factors when hiring foreign staff in Malaysia

When hiring foreign workers, several aspects of local employment laws should be considered. The following is an overview of the most important information:

  • For international investors planning to start a Malaysian company with local staff, the minimum age for an IT position is 21 years, and for management posts is 27 years;
  • If an investor forms a limited company in Malaysia with a paid up capital of more than US$2 million, the company can apply for five employment visas for foreign staffs;
  • The criteria for the eligibility to sponsor the employment of foreign workers in Malaysia by non-export orientated industries are: i) total sales of at least MYR2 million (US$520,000) and ii) minimum paid-up capital of MYR100,000 (US$26,000);
  • If your company is active in the manufacturing, service and construction sectors, it is possible to hire citizens from Turkmenistan, Uzbekistan and Kazakhstan;
  • Note that non-Malaysian staff that reside in Malaysia only require Entry Permits and are exempt from applying for any other type of Pass;
  • Note that the company must apply for Visit Passes, should it wish to hire non-Malaysians for short-term projects.
  • If the company is 100% foreign owned the minimum paid-up capital required is RM1,000,000 (US$246,000);
  • The company needs to be in operation for at least 6 months prior to application for Employment Pass for expatriate workers;
  • If the company falls under the Non-Regulated Service Industry, a WRT license is required prior to submitting an application for Employment Pass;
  • Although not a statutory requirement, it is advisable to have at least 4/5 local employees prior to submitting the EP applications.

Different types of work visas available in Malaysia

Malaysian employment pass

  • Malaysian employment pass applies to investors, skilled workers, professionals and senior management of both local and foreign companies;
  • Employment pass for expatriates with key posts can be considered where the company foreign paid-up capital is at least MYR500,000;
  • To support the employment pass application, we recommend expatriates to earn monthly wages of at least MYR5,000. Automatic approval will be given to expatriates who are paid RM8,000 and above per month if they meet certain criteria;
  • Before any Malaysian manufacturing company can hire expatriate staff, it is necessary to register with the Expatriate Services Division (ESD), which can be done after company formation;
  • The process can take up to one year depending on the license requirements of the company;
  • Realistically, the company must have a minimum paid-up capital of RM1,000,000 (US$246,000) prior to submission of EP applications;
  • The government reverts multiple times requesting for additional documents, depending on the scope of activities provided by the company;
  • Business should be active and registered for tax prior to initiation of the expatriate visa application.

Malaysian entrepreneur visa

  • Entrepreneurs interested in Malaysia company formation or are looking to invest in Malaysia can apply for an investor visa. This visa allows entrepreneurs to live in Malaysia and manage their business;
  • The 6th D-8 Summit for the D-8 countries, namely Malaysia, Bangladesh, Indonesia, Iran, Egypt, Nigeria, Pakistan, and Turkey was held in 2008 and agreed on the simplification of visa procedures for the businessmen of the D-8 Member states.

Malaysia My Second Home visa (MM2H)

  • Foreigners that wish to retire or live with their families in Malaysia may apply for the Malaysia My Second Home program. The program grants foreigners and dependents a 10-year multiple entre visa, renewable;
  • Applicants will be required to prove that they have the financial means to support their life in the country. As they are not allowed to work full time in Malaysia, all income must be foreign-sourced;
  • We at Healy Consultants Group can assist our Clients to assess if they meet all the necessary requirements, as well as to submit a high quality application to the Malaysia My Second Home Department.

Benefits of MM2H

After approval, Our Clients will be able to enjoy the following benefits from MM2H:

  • All applicants are allowed to invest in Malaysia and oversee their own businesses;
  • They can additionally purchase residential properties priced at above RM500,000;
  • Category 2 applicants (50+, see below for further details) can also work part-time;
  • All beneficiaries of the MM2H program can bring their immediate family to Malaysia and apply together. Their children in age of going to school (up to 21 years old) will be given student pass to further their studies in Malaysia (public or private institutions that Healy Consultants can assist to choose);
  • Can bring over a car, their maid, personal belongings and pets, tax free.

How to apply for MM2H

MM2H is open to all citizens of countries regardless of race, religion, gender or age.

The main documents required for the application include: i) Copy of Passport ii) Letter of good conduct from your relevant government agency iii) Last 3 months’ bank statements and pay slips and iv) Resume of the applicant. All of them can be presented in English. For a full list of documents, kindly refer to the Government website.

Processing time is about 3 months for applications which are not selected for financial verifications.

Financial requirements to apply for MM2H

Category 1 (under 50 years old)

  • Our Clients aged less than 50 years old are eligible provided that they open a fixed deposit account in Malaysia of US$78,800 (MYR300,000) at any Malaysian bank;
  • After one year, it is possible to withdraw up to 50% of the fixed deposit for approved expenses: house purchase, education for children in Malaysia and medical purposes;
  • A minimum balance of US$39,400 (MYR150,000) must be maintained in the account from the 2nd year onwards and throughout the stay in Malaysia under this program.

Category 2 (50+ years old)

  • Our Clients aged more than 50 years old can choose to i) open a fixed deposit account in Malaysia of US$39,400 (MYR150,000) with a local branch of any bank; OR ii) show proof of monthly offshore government pension of at least US$2,630 (MYR10,000);
  • After 1 year, they can withdraw up to US$13,134 (MYR 50,000) of the initial fixed deposit for approved expenses (house purchase, education for children in Malaysia and medical purposes);
  • They must however maintain a minimum balance of US$26,270 (MYR100,000) from the second year, onwards and throughout stay in Malaysia under this program.

Medical requirements for MM2H

Our Clients will have to i) undergo a health check at a private hospital in Malaysia and ii) purchase a valid medical insurance policy covering their whole stay in Malaysia. It is however possible to request a waiver from medical insurance requirement.

While forming a company is not necessary to obtain a residency permit under the MM2H Program, if required, Healy Consultants will be happy to offer our client company registration services in Malaysia.Healy Consultants can assist our Clients to i) assess their eligibility to the MM2H program ii) assist them to subscribe to a medical insurance and gather all other supporting documents required for the application iii) prepare and submit a high quality MM2H application for you and your dependents, iv) choose the bank offering the best rates for a fixed term deposit, v) find the most appropriate property investment options (if required) and iv) assist in locating the best schools (if required).

Fees and timelines for Malaysia company setup

Fees to setup Malaysia companies

Malaysia company setup costs in Year 1 amount to US$3,830 and annual company costs in Year 2 and thereafter amount to US$1,470. The average fee per Malaysia engagement is US$16,130 as outlined in the table below. There fees include Malaysia company incorporation, opening corporate bank accounts and all government fees.

Different Malaysia entity types Cost Draft invoice
Tax resident LLC US$16,130 View invoice PDF
Legally tax exempt LLC US$12,000 View invoice PDF
A Malaysia Free zone company US$20,050 View invoice PDF
Branch of a foreign company US$23,010 View invoice PDF
Representative office US$13,465 View invoice PDF
Malaysia Bumiputera company US$12,680 View invoice PDF
Malaysia LLP US$13,080 View invoice PDF
Malaysia Trust US$16,650 View invoice PDF
Malaysia fast nominee LLC US$24,930 View invoice PDF
Malaysia LLC without travel US$29,980 View invoice PDF
Malaysia annual renewal US$13,695 View invoice PDF

Timelines for Malaysia company setup

The average Malaysia company formation engagement period is 14 weeks as outlined below:

Service LLC Free zone Bumiputera LLP Branch RO
Engagement planning 2 weeks 2 weeks 2 weeks 2 weeks 2 weeks 2 weeks
Company incorporation period 4 weeks 4 weeks 2 weeks 5 weeks 6 weeks 5 weeks
Bank account approval 4 weeks 4 weeks 4 weeks 4 weeks 4 weeks 4 weeks
Internet banking approval 2 weeks 2 weeks 2 weeks 2 weeks 2 weeks 2 weeks
Engagement completion 2weeks 4 weeks 4 weeks 3 weeks 2 weeks 3 weeks
Total engagement period 14 weeks 16 weeks 16 weeks 16 weeks 16 weeks 16 weeks

Malaysian free zones

Registering a company within a Malaysian free zone offers multiples tax benefits and allows foreign investors to use such entities to export their products across Southeast Asian markets. Malaysia free zones are notably suitable for foreign companies intending to use Malaysia as a regional manufacturing or distribution base. Malaysia offers several free zones, the most popular being: i) Pasir Gudang free zone ii) Port Klang free zone iii) Kulim Hi-Tech Park iv) Port of Tanjung Pelepas free zone and v) Bayan Lepas free zone.

Port Klang Free Zone

  • Located in Port Klang town, the largest gateway by seas into Malaysia, the free zone is a 1000 acre free industrial and commercial zone providing mainly international cargo distribution and consolidation facilities;
  • The free zone also permits local and international companies to establish manufacturing facilities to engage in production of goods mainly for export purposes;
  • Port Klang is a fully integrated free zone complete with a number of amenities allowing investors and entrepreneurs the option of either leasing the existing facilities or establishing new ones;
  • Other facilities within the free zone include light industrial and warehousing units, customs centre, forwarding agents, business complexes, industrial land and trade offices among others;
  • Best uses: Being a multifaceted free zone, Port Klang is suitable for investors and entrepreneurs keen to establish either a manufacturing base, warehousing or international cargo distribution.

Port of Tanjung Pelepas free zone

  • PTP Free Zone is majorly a container terminal situated in an 810-hectare piece of land located in South-West Johor between the intersection of the East and West International trade routes near Malaysia-Singapore second crossing;
  • The free zone has also allocated at least 500 hectares of land for warehousing, distribution and logistics activities as well as light, medium and heavy manufacturing industry;
  • PTP also offers modern state of the art facilities for storage of goods and merchandise for redistribution, packing, repackaging, grading or repair;
  • Investors established in PTP will enjoy a single layer processing of declarations and submissions as well as easy and simple movement and transhipment of goods between the local free zones;
  • Best uses: PTP is recommended for investors looking to establish a manufacturing base for export oriented products. Due to its proximity to Singapore, it is a perfect space to establish a distribution base for products intended for international export.

Malaysia free zone company formation considerations

  • Tax free environments including tax exemptions, on custom duties, taxable services, and imports/exports on selected equipment and raw materials;
  • Free ports in Malaysia are in close proximity to deep sea ports, airports, highways, and railways. Therefore, companies can enjoy an efficient and extensive transport network, as free zones serve as a nodal point for land, air, and sea transport;
  • Malaysian government does not impose stringent foreign exchange controls and investors are free to repatriate their earnings abroad without any limitation;
  • To establish a presence in a free zone, companies are required to rent a physical office space within the preferred free zone. Most free zones have readymade business complexes;
  • Companies within the free zone enjoy simplified and flexible import and export procedures and cost-effective measures for industrial, manufacturing and commercial activities;
  • Other benefits of operating within a free zone include the absence of customs duty on products imported into the free zone for re-exportation purposes.

Table comparing different Malaysian industrial free trade zones (FTZs)

Malaysia free zones Pasir Gudang Port Klang Port Tanjung Pelepas Bayan Lepas Kulim Hi-Tech Park
Our ranking in order of preference 1 2 3 4 5
Summary at a Glance
Total year 1 engagement set up costs? US$20,050 US$20,050 US$20,050 US$20,050 US$20,050
Total subsequent yearly costs (incl. audit and tax)? US$6,470 US$6,470 US$6,470 US$6,470 US$6,470
Minimum paid-up share capital required (USD)? US$125,000 US$125,000 US$125,000 US$125,000 US$125,000
Free zone mostly popular in which industry? Manufacturing Logistics Logistics Manufacturing Hi-Tech Manufacturing
Total engagement period? 3 months 3 months 3 months 3 months 3 months
Exempt from corporation tax and GST? Depending on activity Depending on activity Depending on activity Depending on activity Depending on activity
Exempt from import and export tax duty? Depending on activity Depending on activity Depending on activity Depending on activity Depending on activity
100% foreign owned? Yes Yes Yes Yes Yes
Average monthly warehouse rental (per sq. m.)? US$17 US$23 US$24 US$20 US$19
Manufacturing allowed in the free zone? Yes Yes Yes Yes Yes
Incorporation requirements
Branch office or LLC recommended? LLC LLC LLC LLC LLC
How long to secure a corporation number? 5 weeks 5 weeks 5 weeks 5 weeks 5 weeks
Special permit or license required? Yes Yes Yes Yes Yes
How long to secure the license? 3 months 4 months 3 months 3 months 4 months
Foreign investor approval required? Yes Yes Yes Yes Yes
Our Client must travel? No No No No No
Must maintain an office in the zone? Yes Yes Yes Yes Yes
Public register of shareholders & directors? Yes Yes Yes Yes Yes
Tax and accounting considerations
Global sales exempt from corporate tax? Yes Yes Yes Yes Yes
Must register for GST/VAT? No No No No No
Global sales exempt from GST/VAT? Yes Yes Yes Yes Yes
Social contributions payable to employees? 11% 11% 11% 11% 11%
Corporation tax payable on local sales? 24% 24% 24% 24% 24%
Annual audited financial statements? Yes Yes Yes Yes Yes
Government grants for manufacturing? Yes Yes Yes Yes Yes
Access to how many double tax treaties? 74 74 74 74 74
Average customs tax on imports? 7.7% 7.7% 7.7% 7.7% 7.7%
Bank account characteristics
Healy Consultants’ preferred bank? Standard Chartered HSBC Standard Chartered Citibank Standard Chartered
Do I travel to open the bank account? No No No No No
Minimum deposit (USD)? US$1,000 US$5,000 US$1,000 US$10,000 US$1,000
Can open US$, €, £ corporate bank account? Yes Yes Yes Yes Yes
US$, €, £ corporate visa debit cards? Yes Yes Yes Yes Yes
Country currency controls in place? No No No No No
Corporate ATM card available? Yes Yes Yes Yes Yes
WEF bank rating out of 144 35 35 35 35 35
WEF ease of getting credit out of 144 2 2 2 2 2
Logistics considerations
Can rent premises outside free zones? Yes Yes Yes Yes Yes
Can make sales to overseas Clients? Yes Yes Yes Yes Yes
Allowed to make sales to local Clients? Yes Yes Yes Yes Yes
What regulatory licenses required Industry Premise License ZB4 License Operator License LMW Warehouse License
Average local monthly salary? US$500 US$500 US$500 US$500 US$500
Can the entity hire expatriate staff? Yes Yes Yes Yes Yes
How long to get work permit approved? 3 months 3 months 3 months 3 months 3 months
Monthly office rental (per sq. m.)? US$20 US$17 US$15 US$15 US$17
Average annual Industrial space rent per 1000 sq ft US$60,000 US$84,000 US$82,000 US$72,000 US$67,000
Allowed to import raw materials? Yes Yes Yes Yes Yes
Allowed to export goods? Yes Yes Yes Yes Yes
Proximity to large port? 1km 1km 1km 19km 44km
Proximity to international airport? 41km 20km 22km 1km 42km
Proximity to train network? 2km 1km 17km 35km 21km

Summary table to assist you in choosing the best Malaysian state to start your business.

Malaysia States Johor Kuala Lumpur Penang Selangor
Summary
Preferred city for incorporation of the company? Johor Bahru Kuala Lumpur George Town Shah Alam
Business output market size? (in US$ billions) 23 37 16 56
Market size relative to the economy? 7% 11% 5% 17%
Local purchasing power (GSP per capita)? US$7,900 US$24,950 US$12,000 US$11,850
Total population? (in millions) 3.6 1.8 1.8 6
Most popular business sector? Manufacturing Services Manufacturing Manufacturing
Average labour monthly salary? US$500 US$650 US$470 US$500
Specific attractive Government incentives available? Yes Yes Yes Yes
Time zone? (ahead of GMT) +8 hours +8 hours +8 hours +8 hours
How many tax exempt free zones available? 2 0 1 1
Average labour monthly salary? US$500 US$650 US$470 US$500
Literacy rate? (% of population) 98.5% 98.8% 94.1% 98.7%
Hub for the headquarters of Global Firms? No Yes No No
Airport with direct flight to Europe, Asia and America? No Yes No Yes
Logistical considerations
Attractive State for a manufacturing business? Yes No Yes Yes
Attractive State for a e-business? Yes Yes Yes Yes
Attractive State for an export-oriented service business? Yes No Yes Yes
CBD monthly office rental per sq m? US$20 US$30 US$17 US$17
Average monthly warehouse rental per sq m? US$10 US$15 US$10 US$11
Average monthly electricity prices? (per Kwh) US$0.18 US$0.22 US$0.15 US$0.20
Frequency of power outages (minutes per year) 76 87 75 83
Proximity of sea port to the main city? 26km 45km 2.9km 17km
Proximity of airport in kilometres to the main city? 41km 60km 21km 48km
Proximity of rail in kilometres to the main city? 2 km 3km 5km 4km
Number of international tourists? (in million) 2.8 11.6 5.7 6.6
Average annual inflation rate? 3.3% 2.7% 2.7% 2.7%
Average unemployment rate? 3.1% 3.3% 1.6% 2.4%
Quality of internet broadband and Wi-Fi? Good Good Good Good
Corporate banking and finance considerations
Is the main city a financial services hub? No No No No
How many global banks are based in the state? 6 10 6 4
How many Malaysian banks with local branches? 8 8 8 8
Recommended Bank for corporate banking? Standard Chartered HSBC Citibank
Standard Chartered
Client to visit bank for account opening? No No No No
Quality of bank customer services? Good Very Good Good Satisfactory
Quality of online banking services? Very Good Excellent Excellent Very Good
Does the State have a reputable financial district? No Yes No No
Does the State have a local Stock Exchange? No Yes No No
Are there Private Equity Funds/VCs in the State? No Yes Yes Yes
Employment considerations
Minimum monthly wage? US$250 US$250 US$250 US$250
Average pension and insurance benefits (% of salary)? 12% 12% 12% 12%
Average skilled labour monthly salary? US$690 US$750 US$650 US$700
Average unskilled labour monthly salary? US$320 US$370 US$310 US$350
Mandatory labour unions? No No No No
Minimum notice to dismiss employees? 4 weeks 4 weeks 4 weeks 4 weeks
Minimum redundancy indemnity? 10 days 10 days 10 days 10 days
Is there a large expatriate community in the main city? Yes Yes Yes Yes
International schools for children of expatriate employees? Yes Yes Yes Yes
Golf courses near the main city of the State? Yes Yes Yes Yes
General availability of bars and restaurants? Yes Yes Yes Yes
Will I find European F&B products in the supermarkets? Yes Yes Yes Yes
Mercer Survey Ranking for global cities? 100 75 Not ranked Not ranked
Is the main city of the State safe for expatriates? Yes Yes Yes Yes
Is it easy to convert my driving permit? Yes Yes Yes Yes
Literacy rate? (% of population) 96% 99% 94% 98%
Computer literacy rate? (% of population) 64% 76% 65% 73%
Accounting and tax considerations
Monthly and annual tax filing required? Yes Yes Yes Yes
Government grants for manufacturing? Yes Yes Yes Yes
Tax holidays available? Yes Yes Yes Yes
Monthly state tax filing if registered for payroll tax? Yes Yes Yes Yes
Tax incentives for manufacturing start-ups? Yes Yes Yes Yes
Tax incentives for construction start-ups? Yes Yes Yes Yes
Tax incentives for IT software start-ups? Yes Yes Yes Yes
Average customs duty of export products? 5% 5% 5% 5%
Average customs duty for imported products? 8% 8% 8% 8%
Local corporation tax? (%) 24% 24% 24% 24%
Local GST/VAT? (%) 6% 6% 6% 6%
Payroll tax rates? (%) 11% 11% 11% 11%

Opening a manufacturing company in Malaysia

Malaysia’s manufacturing sector has continued to attract investment with foreign capital accounting for at least 60% of the total number of investments approved by the Malaysian Investment Development Authority (MIDA). To setup a manufacturing establishment in Malaysia, Healy Consultants assists our Clients by i) incorporation of a fully foreign owned subsidiary ii) obtaining the necessary government licenses iii) securing an office space and industrial space iv) hiring of qualified foreign or local labour and iv) locating agents and suppliers for raw materials.

Advantages of setting up manufacturing operations in Malaysia

  1. Malaysia is one of the leading manufacturing destinations in the ASEAN region because:
    • Malaysia’s manufacturing industry is a crucial driver of the country’s economy, constituting at least 25% of the country’s GDP. The sector registered a sales value growth of 22.2% in the second quarter of 2017 to reach approximately US$15 billion;
    • Malaysia has established itself as a major hub for solar equipment manufacturing, attracting leading global companies from over 40 global jurisdictions. The country is also among the leading manufacturers of photovoltaics equipment in the world;
    • Malaysia exhibits significantly low business operations costs compared to its regional neighbours. For instance, the average wages in manufacturing sector in Singapore is US$3,250 compared to a monthly average of US$600 in Malaysia;
    • Malaysia also offers an educated, productive and young workforce which is convenient for manufacturing businesses. The country’s median age is 27 years, lower than most of the ASEAN countries, and a high literacy rate of 94%;
    • Malaysia was ranked as the world’s best manufacturing destination in 2015 by Cushman & Wakefield, evaluating jurisdictions on at least 30 sub-categories based on risks, manufacturing conditions and costs;
    • The ongoing trade war between USA and China is forcing global entrepreneurs and MNCs to look for alternative manufacturing jurisdictions like Malaysia, Vietnam, Thailand and Mexico.
  2. The Malaysian Government offers multiple incentives to manufacturing companies including:
    • Manufacturing companies engaged in the production of promoted goods or activities may qualify for i) 100% tax exemption for 5years and ii) Investment Tax Allowance of 60% on the qualifying capital expenditure under the Pioneer Status;
    • Companies investing in the Automotive industry will enjoy i) 100% pioneer status or income tax allowance for a period of 10 years ii) exemption of up to 50% on excise duty iii) Research and Development (R&D) grants and customized training;
    • Qualifying companies can be entitled to i) a reinvestment allowance of 60% of qualifying capital expenditure and ii) a possibility of offsetting the reinvestment allowance against 100% of its statutory income;
    • Companies headquartered in Malaysia enjoy i) reduced corporate income tax rate over a period of 10 years ii) exemption from customs duty on imported components, raw material and selected finished products and iii) flexibilities on foreign exchange administration.
  3. Other available tax incentives and considerations for manufacturing companies in Malaysia include:
    • Under the Promotion of Investment Act 1986 a manufacturing company may be entitled to a 60% allowance on the company’s expenditures on plant, factory, machinery and other equipment used on approved projects over a period of 5 years;
    • Company granted Pioneer Status may enjoy exemption from corporate income tax on 70% of its income for a period of 5 years starting from when the company’s production level reaches 30% of the company’s total capacity;
    • Eligibility for incentives is dependent on the type of product or activities a company is involved in. Qualifying products and activities are termed as promoted products or promoted activities;
    • Manufacturing companies seeking to enjoy these incentives must first submit an application through the Malaysian Investment Development Authority (MIDA) and obtain the government approval.

Disadvantages of setting up manufacturing operations in Malaysia

Our Clients establishing manufacturing companies in Malaysia will face challenges operating their business because:

  • Malaysia has a shortage of local labour and relies mostly on imported cheap labour from the neighbouring countries including Bangladesh and Indonesia among other ASEAN countries;
  • Manufacturing companies looking to maximize on cheap labour will have to endure the strenuous process and costs of applying for work permits for multiple foreign migrant workers;
  • Starting a business in Malaysia and subsequent application licenses and permits can be a long and tedious process spanning at least 3 to 4 months especially for foreign investors;
  • Certain approvals including i) for exemptions from customs duty ii) status of Research and Development (R&D) iii) expatriate posts and iv) approval of manufacturing licenses may take up to 6 months from the date of submission of application;
  • The minimum paid up capital required for foreign owned manufacturing companies looking to hire expatriates is set at MYR500,000 (approx. US$125,000). The number of expatriate posts will be considered by MIDA based on the merits of each case.

Videos on Malaysia company formation

Malaysia corporate services – client case studies

  • A data management company based in Malaysia needed a nominee resident director

    Since 2003, Healy Consultants Group assists multinational Clients with business setup in Malaysia including i) company incorporation ii) corporate bank account opening iii) company secretary and legal registered office iv) regulatory license applications v) tax registration vi) assistance to source physical office premises or virtual office address and vii) employee recruitment and visas.

    On 1 December 2021, our Singapore Client approached us to appoint a new nominee resident director for their Malaysia subsidiary. Their existing director was planning to resign soon and they hence immediately needed a replacement to comply with Malaysian regulations.

    After a phone call with me, our Client settled Healy Consultants Group’s Malaysia nominee professional passive resident director fees.

    • Engagement planning

      • The Client engaged us on 13 December 2021. We agreed on a payment instalment plan for the engagement. Upon payment of the first installment on 7 January 2022, we sent our Client a receipt, and we were then able to begin the engagement.
      • Immediately thereafter, we conducted a video call to agree i) engagement deadlines and mile stones ii) due diligence requirements iii) the scope of the nominee appointment and iv) potential engagement challenges.
      • I then e-mailed our Client an updating listing i) the documents required to advance the appointment of our nominee resident director ii) a breakdown of deliverables for this engageemnt iii) an estimated timeline to complete the engagement and iv) any expected engagement problems and solutions.
      • Simultaneously to the above, our Singapore Client supplied us the required Know Your Customer (KYC) due diligence (DD) documents.
      • My staff and I were now ready to project manage the Malaysia engagement.
    • Malaysia nominee resident director

      • Before proceeding with the appointment, I supplied our Client with the i) DD documents of the nominee resident director and ii) nominee resident director agreement.
      • Simultaneously, I contacted the Client’s Malaysian company secretary and provided them the same documents.
      • There were some delays as the Client changed their company secretary, as we had to reach out to the new secretary.
      • On 3 March 2022, our nominee resident director signed all required board resolutions and couriered the physical documents to the Client’s company secretary in Malaysia.
      • Within one week, I successfully completed the appointment and supplied my Client with an extract of commercial registrar as evidence of the same.
      • Throughout the engagement, I also supplied our Singapore Client with a weekly detailed engagement status update, including i) quality deliverables and ii) problems and solutions.
    • Engagement completion

      • For staff learning purposes, our Singapore Client supplied us engagement feedback.
      • Our Business Website Department also requested a professional reference from our Client as well as an online review.
  • Deregistration of a Malaysian company

    Since 2003, Healy Consultants Group assists Clients with the deregistration of their Malaysian companies. In this case, our Client, a Malaysian investment holding company, contacted Healy Consultants in 2018 to legally deregister their company after its financial year ended on 31 October 2018.

    Engagement planning

    • In March 2018, we sent the Malaysia company deregistration invoice to our Client. The Client settled the invoice in April 2018.
    • We then e-mailed our Client an engagement project plan to legally deregister the company within six months of the completion of the company audit for the financial year-end 31 October 2018. This project plan outlines i) documents required from our Client to complete Malaysian company deregistration ii) a breakdown of weekly and monthly deliverables iii) timeline to complete the engagement and iv) any expected engagement problems and solutions;
    • This detailed project plan helps our multinational Clients visualise the engagement over the coming months. Consequently, our Clients can prepare the necessary documents to efficiently and effectively complete the required renewal steps in a timely manner.
    • Due to a delay in the completion of the previous year’s audit report, the 2018 audit report was only finalized in June 2020. This consequently incurred late filing penalties with the Companies Commission of Malaysia (SSM), which had to be settled before the Application to Strike Off Company can be submitted.

    Engagement challenges and solutions

    • Our Client was late in filing their audit report for the financial years 2017 and 2018 with SSM. As a result, they had accumulated multiple penalties on the directors totaling MYR25,000. As usual, Healy Consultants contacted SSM to professionally and aggressively negotiate for a reduction in these penalties for our Client.
    • Due to multiple lockdowns in Malaysia during the Covid-19 pandemic, SSM officers were slow to respond to our requests for a discount on the penalties, as they were working from home and had limited access to records.
    • Through sheer persistence on the part of Healy Consultants, SSM eventually agreed to reduce the penalties to MYR6,000 in October 2020. This translated into a more than 75% reduction on penalties for our Client.
    • After our Client paid the reduced penalties, we were able to prepare the documents for the company shareholders to pass a resolution to enable to Company Secretary apply for the Application to Strike Off Company with SSM.
    • In March 2021, Healy Consultants received confirmation from SSM that the Client’s Malaysian company had been successfully dissolved.

    Unexpected situation with the Inland Revenue Board of Malaysia

    • In October 2021, months after the company was struck off, our Client received a notice from the Inland Revenue Board of Malaysia notifying them of tax penalties relating to previous years, amounting to MYR2,000.
    • My team and I assessed the situation as being unfair to our Client, because the company was already been legally struck off. I therefore recommended to our Client that we file a formal objection to the Malaysian tax penalties.
    • Our Client agreed with my recommendation, and over the following three months, we aggressively and skillfully negotiated with the Inland Revenue Board of Malaysia the legality of the tax penalties. Through multiple email exchanges and phone call calls with Inland Revenue Board of Malaysia officers, we reiterated the fact that as the company was deregistered, there was no legal basis to serve tax penalties on the company. During the exchanges, we supplied LHDN with documentation from SSM showing the company was gazetted as struck off from the companies register.
    • In January 2022, the Inland Revenue Board of Malaysia agreed with the facts presented by Healy Consultants and agreed to waive the tax penalties. We managed to obtain a statement from Inland Revenue Board of Malaysia confirming the company had no outstanding tax amount and they closed our Client’s tax file number from their records. We shared confirmation of this with our Client.
    • Our Client is now relieved of the financial burden of tax penalties significantly reduced. So happy is our Client that they have recommended their business partners to Healy Consultants Group.

    Engagement Completion

  • 2019 and 2020 accounting and tax obligations for Malaysian branch of foreign company

    Background

    • Our Client’s company was incorporated in Malaysia in May 2018 as a branch of foreign company. The company is headquartered in Singapore and the ultimate holding company is based in the USA. The Client’s main business activity is selling software licenses on behalf of the parent company, as well as consulting and maintenance services.
    • The company provides its Malaysia customers with i) laboratory automation software and ii) maintenance of the same software.
    • The Client’s customers are mainly in the pharmaceuticals, public health and clinical research fields.
    • The Client requested our assistance to complete annual statutory accounting and tax obligations for the 2019 tax year.

    Engagement planning

    • Healy Consultants Group prepared and emailed our Client an engagement advancement proposal, including a formal invoice for the agreed services. Thereafter, we prepared a detailed engagement project plan mapping out a step-by-step route to engagement completion. We also prepared a quality business plan.

    Accounting and tax obligations 2019

    • Once we received payment from the Client, we sent out a detailed email including an overview of the project plan and requesting documents required to complete the accounting and tax obligations.
    • As soon as the Client had forwarded the audited financial statement 2019 to us, our accounting team began the preparation and submission process of the accounting and tax obligations.
    • Healy Consultants’ accounting team sent i) the resolution to lodge the financial statement and ii) the tax computation document to our Client for approval. Once approved, both items were sent to the Client for signature.
    • We then requested our Client to send the original, signed copy of the documents to Healy Consultants Group’s Malaysia office, where we filed them with the Companies Commission Malaysia (CCM) and Inland Revenue Board Malaysia (IRBM).

    Engagement Completion

    • Once the above was completed, Healy Consultants accounting team sent a summary of obligations to the Client attached with i) signed financial statements ii) annual return form iii) tax return form iv) paid renewal invoice and v) engagement summary.

    Engagement problems

    • As the Client’s company is a branch of foreign company, it was not required to appoint a nominee director and company secretary. However, it was required to appoint a registered agent with a company secretarial background.
    • However, one of our previous employees had not confirmed the above with our Malaysian supplier when the appointment of registered agent was effected. As a result, the company annual return could not be filed.
    • As a result, we have consulted the Companies Commission of Malaysia (SSM) and conducted extensive research to resolve this problem. Upon their advice, we have set up Malaysian Business Reporting System (MBRS) account and were able to file the Client’s Annual Returns for 2019 and 2020 before the deadline.
  • Florida-based worldwide wholesaler and distributor sets up Malaysia LLC

    Background

    • In July 2020, our Client approached Healy Consultants Group to set up an LLC in Malaysia and open a corporate bank account for the new entity.
    • The company had initially set up a subsidiary in Hong Kong to tap into the Chinese market and wanted a bank account in Malaysia. This proved to be difficult to secure so we recommended setting up a Malaysia entity to increase the chances of account opening with a Malaysia bank.

    Engagement planning

    • We prepared and emailed our Client a detailed engagement advancement proposal. This included a formal invoice itemising costs for agreed services including i) Malaysia company registration ii) tax and VAT registration and iii) corporate bank account opening.
    • Our proposal also included costs breakdown, time frame and accounting and tax liabilities. All fees were agreed upfront.
    • Our Client paid the first instalment fees for us to begin the Malaysia company setup process.
    • Healy Consultants Group prepared and emailed our Client a draft corporate structure and business plan for review, amendment and email return.

    Malaysia company registration

    • Healy Consultants Group prepared and emailed our Client the legal registration documents for i) signature and ii) courier return to our Malaysia office, because the Companies Commission of Malaysia (SSM) does not accept digitally-signed documents.
    • Our Client signed and couriered all required documents to Malaysia.
    • Once we received payment and ensured all required due diligence documents had been received, we began the company registration process. We reserved the proposed company name and submitted the application to register the company.
    • Within two weeks of submitting the company registration application, we obtained the Certificate of Incorporation, Constitution and company profile, and immediately emailed our Client scan copies of the same. Within two weeks, we received and emailed the client the new Malaysian company’s tax registration details. Company registration was now complete. We also appointed an auditor and tax agent for the new Malaysian entity.

    Malaysia corporate bank account opening

    • Healy Consultants Group approached our Client’s preferred bank, together with multiple Malaysia banks, to secure in writing their interest in welcoming a corporate bank account opening application from our Client.
    • Our Client’s preferred bank immediately provided the forms for us to complete and be signed by our Client’s authorised signatory. Our Malaysia company secretary prepared the required resolutions for account opening.
    • Our Client then signed all the documents and couriered to the bank relationship manager for further processing.
    • Healy Consultants Group received the signed documents and submitted to the banker for account opening. Account was approved and opened (USD and MYR accounts) within two weeks. Within two weeks of that, the RMB account was also opened.
    • Our Client could now sign contracts, issue invoices, receive funds and pay suppliers through their bank account.

    Engagement completion

    • Once the above was complete, Healy Consultants Group’s Malaysia office prepared the company kit including all registration documents in readiness for courier to our client once the account for their Hong Kong entity is opened.
  • Malaysia Employment Pass application for expatriate workers

    Background

    Healy Consultants Sdn Bhd began the process of application for two expatriate staff in January 2018. The two staff wish to live and work in Malaysia. The entire process took one year and 4 months to complete. Paid-up capital required for a 100% foreign owned company to proceed with the EP applications is RM1,000,000 (US$242,000).

    Step 1- Registration on the Employment Services Division website

    Healy Consultants Sdn Bhd registered on the Expatriates Services Division website (ESD) and created an account for our company. Healy Consultants purchased our company’s certified profile from SSM website and uploaded the profile on the ESD portal. We then completed and submitted the organization registration form provided by ESD.

    Step 2 – Application for the WRT license

    Healy Consultants Sdn Bhd is a Business and Management Consultancy company and hence in Malaysia falls under the unregulated services sector. We were therefore required to apply for the WRT license. Healy Consultants prepared and submitted all the required information about the company as required on the checklist provided. ESD reverted multiple times requesting for additional information to complete the application process and secure the license. The verification and validation of the submitted information took 6 months.

    Step 3 – Company activation

    Once the above process was completed, ESD sent Healy Consultants Sdn Bhd an approval letter with the login details for the ESD portal, organization and facilitation package for printing and acceptance. We then proceeded with company activation by logging into the ESD account to complete the information requested. We were requested to provide details of the company’s employees who will be in charge of the portal. Thereafter, we printed the Letter of Undertaking (LOU) on our company letterhead and got this signed by the director, endorser and submission officers as appointed, stamped with the company stamp and returned to ESD in Putrajaya Kuala Lumpur for further processing.

    Step 4 – ESD company portal rollout

    Upon approval of the LOU, the ESD rolled out the company’s expatriates’ services portal and we were now able to submit EP applications for our staff. We applied for the company’s expatriate annual projection via the ESD portal and received the approval within three working days. Healy Consultants submitted the documents required in Annex D of this webpage and paid the visa fees. ESD reverted requesting for some amendments and further documents. Once all documents and information was successfully submitted, the processing took 5 working days.

    Step 5 – EP approval and endorsement

    Upon approval of the EPs, Healy Consultants proceeded to initiate the pass endorsement process at the respective State Immigration Office. This must be completed within 6 months from date of approval. The appointed Endorser as per the company’s LOU submitted the following documents for issuance of the employment pass:

    • Approval Letter (printed from ESD system);
    • DP11 Form (printed from ESD system);
    • Payment (this fee will depend on the number of years the EP is approved for and the exact amount required will be indicated on the portal);
    • Applicant’s original passport;
    • Company authorization letter with copy of Identification card (front and back) / Passport Bio data page plus latest valid pass.

    After the submission of all documents mentioned above, the visa endorsement was completed immediately, and the passports handed back to the endorser to give back to the respective applicants.

    • Registration of a branch office in Malaysia of an Australian company

      Background

      • Our Client is recognized as the global leader in providing enterprise scale laboratory automation solutions. Our Client has developed a unique and proven suite of product capabilities that encompass method execution in an integrated and enterprise ready solution;
      • As part of their global expansion, our Client approached Healy Consultants Group requesting professional corporate services for registration of their branch in Malaysia to provide services in laboratory automation solutions for their local Clients in Malaysia.

      Engagement planning

      • After detailed discussion with our Client and thorough study of their business profile, Healy Consultants Group and our Client agreed to indeed register a branch office of their existing Singapore entity;
      • As a branch Office in Malaysia is required to appoint one resident representative originally residing in Malaysia, our team proposed and appointed one of our nominee resident representatives to comply with the statutory requirement;
      • Healy Consultants Group drafted a detailed project plan outlining the steps of the engagement and their estimated completion time. Thereafter, we emailed our Client a business plan, the proposed corporate structure and the project plan for their confirmation.

      Branch registration

      • As part of our compliance requirement, our Client confirmed and couriered us all requested KYC documents and our Incorporation team prepared the registration forms for our Client’s completion and signatures;
      • Upon confirmation of our Client’s preferred corporate structure and name of the branch office, Healy Consultants Group proceeded with reservation of the parent company’s name with Suruhanjaya Syarikat Malaysia (SSM). After securing the company name, Healy Consultants Group submitted the quality Branch Office registration package to SSM;
      • During the process, Healy Consultants Group’s Singapore office and Malaysia office closely liaised with SSM to ensure the entity is timely registered with the Malaysia Company Registrar;
      • Upon successful registration of the Branch Office, Healy Consultants Group emailed electronic Certificate of Registration as well other incorporation documents to our Client.

      Tax Registration

      • Immediately after the Branch Office was officially registered, Healy Consultants Group proceeded to register the entity for corporate tax with Inland Revenue Board (IRB);
      • Unlike the LLC tax registration, which can be done electronically, tax registration forms must be submitted to IRB in physical form for a Branch Office. Within 1 week from the submission of the quality tax registration forms, IRB approved the corporate tax and employer tax numbers of the Branch entity.

      Corporate bank account opening

      • As our Client’s Singapore company has an existing corporate relationship with a leading Singapore bank, Healy Consultants Group recommended our Client to continue banking with the same bank in Malaysia. To ensure timely approval of corporate bank account numbers, Healy Consultants Group started liaising with the bank in Singapore and Malaysia from the beginning of the engagement;
      • Healy Consultants Group requested our Client’s existing Relationship Manager in the Singapore bank to refer our Client to the bank in Malaysia to open the bank account smoothly. Our team closely liaised with the the Malaysia bank officer and submitted a quality corporate bank account opening package to the bank;
      • To avoid our Client travelling to Malaysia and since our Client is based in Australia, the Client was required to visit the bank’s Australia Branch for verification purposes;
      • Within 3 weeks from the submission of the quality corporate bank account opening documents, Healy Consultants Group secured multi-currency corporate bank account without the need for our Client to travel to Malaysia.

      Conclusion

      • Throughout the engagement, including i) branch registration; ii) tax registration and iii) multi-currency corporate bank account opening process, Healy Consultants Group has aggressively and skilfully liaised with bank officers, third parties and company registrar officers and tax authorities in Malaysia to hasten the complete Branch Office setup;
      • Upon completion of the engagement, Healy Consultants Group couriered a complete company kit, including i) corporate bank account details with e-banking tokens ii) incorporation documents and iii) tax registration details to our Client’s preferred mailing address.
    • A US company starts business in Malaysia

      Background

      Engage in Malaysia business registration case studyOur Client is a US money remittance Firm, which allows its customers to remit money across the globe via its online portal. To make the transfer successful, our Client works with global banks, which receive the funds locally and remit to a bank in the destination country. In Malaysia, our Client planned to setup a subsidiary to offer similar services to the local population. To fulfill these objectives, the company directors approached Healy Consultants in September 2016.

      Engagement planning

      In the initial stages, our Client mentioned they only needed Healy Consultants’s assistance with setting up the Malaysian entity and liaising with the Central Bank to secure more information about the licensing processes. Immediately, Healy Consultants approached the Malaysian Central Bank to clarify the possibility of securing licenses. Further to the detailed conversation and research, Healy Consultants reverted to the Clients with the licensing requirements and processes.

      Thereafter, Healy Consultants prepared a detailed project plan for the engagement, highlighting the fact the money remittance companies face additional scrutiny from the Malaysian Government due to money laundering and terrorism financing concerns. However, given our prior experience with Malaysian company setup, Healy Consultants assured our Client we could their Firm.

      Company incorporation

      Our Client provided the “proposed” company name and corporate structure. Healy Consultants immediately proceeded to reserve the company name with the SSM (Suruhanjaya Syarikat Malaysia) After receiving the name approval, Healy Consultants prepared the corporate documents, including the company constitution for the director’s and shareholder’s signature, notarization and courier return. Once we received all signed documents, and approved all documents were in order, we submitted the same to the SSM. Within 1 week, we received the Certificate of Incorporation for the Malaysian company, which we scanned and emailed to the Client.

      Tax registration

      With the company registered, Healy Consultants proceeded to register the Malaysian company for corporate tax with the IRB (Inland Revenue Board). For this purpose, Healy Consultants submitted the complete online application to the IRB, after approval from the Client. Within 1 week, Healy Consultants received the tax registration number, which was immediately forwarded to the Client.

      Virtual office & company secretarial services

      Additionally, our Client engaged Healy Consultants to provide Malaysian company secretarial and virtual office service for their company. This move has enabled our Client to more effectively operate their business in Malaysia.

    • Formation of a contract research organization in Malaysia

      Background

      Our Client, an Indian contract research organization (CRO) providing clinical trials services to the pharmaceutical industry, contacted Healy Consultants in April 2015 to register subsidiaries in Malaysia and Taiwan. The purpose of business setup in these two countries was to supervise clinical trials to be conducted in these two countries. Our Client hence wanted Healy Consultants to both complete the formation of the subsidiary and to prepare an engagement strategy agreement to determine what may be the licensing requirements for the Malaysian company to be allowed to conduct such activities.

      Engagement planning

      Healy Consultants confirmed that the optimal type of business entity would likely be a private limited company, locally known as a Sendirian Berhad. As our Firm estimated that we would need around three weeks to complete the research necessary to assess applicable regulations over the organization of clinical trials in Malaysia, we agreed with our Client to register the company immediately, without waiting for the outcome of the search.

      All Malaysian companies are required to appoint two resident directors. We assisted to appoint two nominees to fulfill this requirements, while our Client would still keep a majority on the Board of the company, by appointing three additional foreign directors.

      Company formation

      After receipt of the scanned incorporation forms and other documents required from our Client, we submitted an application to register a new company with the Malaysia Companies Registrar (SSM), which was subsequently approved within the three following business days.

      We also confirmed with multiple lawyers that no further licensing was required for the company and prepared a quality engagement strategy document for our Client.

      Corporate bank account opening

      In order to assist our Client to open a corporate bank account in Malaysia, we contacted an international bank preferred by our Client. After reviewing our application, the front desk reverted to request additional due diligence information on the reasons accounting for the Group structure of our Client: a majority of the shares of his company were indeed held by a venture capital fund, with multiple layovers of holding companies, the Cayman Islands and the United Kingdom. As often when a successful company benefits from investment from a private equity fund, determining the beneficial ownership was a tricky task. This unfortunately caused engagement delays.

      After a couple of weeks without an answer from our Client’s preferred bank, we convinced him to consider other reputable international banks. After several weeks of negotiations and assistance from Healy Consultants, we finally managed to convince the Malaysian branch of a reputable Singaporean bank to accept our Client as a customer. The engagement was hence successfully completed.

      Engagement completion

      We couriered a company kit to our Client and received excellent feedback with regards to the services provided by Healy Consultants. For more information on this engagement and/or to obtain the contact details of our Client, please contract our French Director of our Clients Engagements Department, Mr. Simon Guidecoq.

    • Wealthy businessman buys Malaysia property

      Background

      Peter is a wealthy individual who lives in Singapore with his wife and two teenage children. He works as a senior manager at an offshore bank in Singapore, and owns property in Singapore, the UK, Spain and Australia. Peter approached Healy Consultants in April 2006 with a tax enquiry relating to the sale of a property in Australia. During the course of the meeting in our Singapore office, however, he also mentioned his intention to purchase an apartment in Kuala Lumpur, Malaysia.

      Engagement planning

      Several of our Clients approach Healy Consultants with a view to Asia property purchase. As in many Asian countries, the Malaysian property market has become increasingly attractive to foreign investors in recent years. The Malaysian ringgit remains undervalued against the US dollar, and Malaysian property is half the cost of its equivalent in neighbouring Singapore. In addition, the government is actively encouraging foreign property investment through initiatives such as the ‘Malaysia: My Second Home’ scheme.

      As a busy businessman, Peter required a professional consultant to project manage the entire property purchase. This would include finding suitable properties, liaising with developers, supervising the solicitors, and obtaining a competitive mortgage from a bank. Aidan Healy, managing director of Healy Consultants, outlined to Peter our capabilities, gained from previous similar engagements as well as Aidan’s personal experience of buying high-end property in Kuala Lumpur. Aidan also highlighted from the outset the legal and tax implications of Malaysian property purchase, as well as the advantages and potential pitfalls, including the fact that Malaysian banking and construction laws often lack transparency. With the scope of the engagement clear, Healy Consultants e-mailed Peter the next day with a clear quotation.

      Peter reverted to Healy Consultants within one week with his go-ahead, clarifying his budget and the specifications for the property. Peter also sent to our Singapore office the required due diligence and a signed Client Engagement Letter, and remitted the engagement fees to our bank account, enabling our team to start the engagement. At this point, our Singapore team, in consultation with our Malaysia office, prepared a detailed Engagement Project Plan, outlining the project steps and deliverables from Healy Consultants, as well as likely timeframe.

      Corporate incorporation

      The first task was for our Malaysia office to find high-end Kuala Lumpur properties which met Peter’s specifications. In particular, he was keen on one of the new developments adjacent to KLCC Park in central Kuala Lumpur. Carol, our Client Relationship Officer in the city, visited six apartments in one day, and met the developers of a further four properties which had yet to be completed. Carol also took digital photographs of the apartments, and collected prospectuses and information sheets from the developers. Within two days, she had prepared a shortlist of five apartments which she believed would be of interest to Peter, and sent the details of each to him in Singapore for his consideration.

      The next step was to arrange a property viewing and/or developer meeting for Peter. Peter traveled to Kuala Lumpur, where he was met at his hotel by Carol and transported to each property. Carol also organised for Peter to meet Healy Consultants’ solicitor in Kuala Lumpur. Upon his return to Singapore, Peter considered his options, and within one week had communicated to Healy Consultants his intention to purchase a 2,500 sq ft, three bedroom apartment on the 32nd floor of a prestigious condominium development close to the Petronas Twin Towers. To secure the property, Peter was required to pay a 2% deposit to the developer, and he sent a cheque to Carol who passed it to the developer.

      Corporate banking

      With this objective now clear, Healy Consultants next task was to find a bank which would provide the most competitive mortgage. Although Peter’s preference was for a Singapore dollar mortgage with an international bank in Singapore, Malaysian property regulations state that mortgages can only be arranged in ringgit through a Malaysian bank. With this in mind, Healy Consultants’ Malaysia staff contacted the top Malaysian banks with a view to arranging a mortgage for the property on Peter’s behalf. Having received from our team details of Peter’s financial status and assets, mortgage representatives from each bank visited our Kuala Lumpur office to outline details of the mortgage they could offer. Our staff collated this information and prepared a detailed comparison table of the two mortgages offered, which they presented in an e-mail to Peter.

      On the same day Peter responded, instructing our staff to assist in arranging a mortgage with the bank which offered him 90% finance at an interest rate of 6.75%. The following week, a member of the mortgage team at the chosen bank visited our office in Kuala Lumpur to assist with preparing the mortgage application form. Once this had been completed, the application form was couriered to Peter in Singapore for his signature, and the following day he returned the document to our Singapore office, from where it was forwarded to the bank in Kuala Lumpur. The bank approved the mortgage application within three weeks. In the meantime, our Malaysia solicitor had negotiated a sale and purchase agreement which was mutually acceptable to both the developer and Peter. Once the financing for the property had been approved, Peter signed the sale and purchase agreement, and lodged 10% of the purchase price. The remaining 90% will be paid at a timescale as agreed with the property developer.

      Healy consultants assisted with signing title deeds, supervising solicitors, arranging tenants etc.

      Going forward, Peter intends to purchase another property in Singapore, and has expressed his intention to engage Healy Consultants to help him do so.

    • Risk management expert opens Kuala Lumpur base

      Background

      Onyx Procurement Malaysia Sdn Bhd is an international procurement company delivering services to a broad spectrum of sectors including transport, aviation, construction and civil engineering firms; blue chip companies, governmental procurement departments and non-profit organisations.

      Onyx Procurement Malaysia Sdn Bhd was incorporated by Healy Consultants in 2005 to provide security and risk management strategies to multinational corporations, governments, non government organisations (NGOs) and individuals. The company has suppliers from both the European Union (EU) and the US and is working with Malaysian government departments and agencies.

      Corporate banking

      Healy Consultants was able to complete the formation of Onyx Procurement Malaysia Sdn Bhd in a timely and efficient manner, and also provided a range of post-incorporation support services. Areas of support for Onyx Procurement Malaysia Sdn Bhd included:

      1. Healy Consultants worked with our Client to identify the accounting and tax implications of incorporating a Malaysian company, including highlighting the most relevant and important aspects of the Malaysia Companies Act 1965 regarding shareholder, director and minimum capital requirements. Our team also highlighted the corporate and personal tax liabilities as stipulated by the Inland Revenue Board of Malaysia;
      2. Healy Consultants completed corporate bank account opening in a reputable global bank on behalf of our Client, without the need to travel;
      3. Healy Consultants provided two resident directors to legally complete company incorporation in accordance with the Malaysia Companies Act 1965. In addition, we assisted our Client with GST and FIC registration and provided our Client a local virtual office.
    • Switzerland based company expands business in Malaysia

      Background

      Normet Group is based in Switzerland, providing advanced solutions for selected customer processes in underground mining and tunneling. The management team has a diverse array of industry specific knowledge and experience therefore the firm has a unique capacity to attract investment and expand its marketing throughout the world.

      Normet Group approached Healy Consultants to help them expand their business in Malaysia. Malaysia was chosen as the location for Normet Group because the company has potential contract in Malaysia. They wish to incorporate the company as soon as possible to win the bid. Healy Consultants assisted Normet Group by providing a range of professional assistance from the beginning until the end of the Malaysian company set up in efficient way and Normet Group is very happy with Healy Consultants’ service.

      Engagement planning

      Bill approached Healy Consultants and advised that their company would like to expand to Malaysia. He advised that he would require assistance in company incorporation, nominee resident director, also a full virtual office support for the Malaysian company. Healy Consultants sent Bill a detailed cost proposal to set up the Malaysian company. Bill is happy with Healy Consultants pricing and service and signed the engagement letter with Healy Consultants on the next day.

      As promised, Healy Consultants started to incorporate the company once he provided necessary due diligence and remitted the engagement fees to our bank account. At this point, our Singapore team, in consultation with our Malaysia office, prepared a detailed Engagement Project Plan, outlining the project steps and deliverables from Healy Consultants, as well as likely timeframe.

      Company incorporation

      Healy Consultants was able to complete the company incorporation of Normet Underground Technologies Sdn Bhd in a timely and efficient manner. Services provided by Healy Consultants to complete incorporation including to conduct a name search to determine whether the proposed name of the company is available for registration. And also submitted the required documents in a speedy and efficient manner within the time period to SSM such as the certified copy of the certificate of incorporation of the foreign company, the Memorandum and Articles of Association that defined its constitution, declaration of compliance.

      Nominee director

      In accordance with the Malaysia Companies Act, every Malaysian Company shall have at least two directors who are ordinarily residents in Malaysia. To avoid inconvenience to our Client, Healy Consultants appointed two Malaysia resident employees to act as the nominee directors of Normet Underground Technologies Sdn Bhd. To enable Normet Group has a better understanding about our nominee directors, Healy Consultants i) provided Normet Group due diligence documents of two Malaysia resident directors ii) arranged both party to meet personally. Normet Group is very happy with such arrangement.

      Virtual office services

      Healy Consultants provides ongoing support for Normet Underground Technologies Sdn Bhd such as providing a Malaysia virtual office service which includes telephone answering and mail-forwarding, thereby enabling the company to conduct business more efficiently in Malaysia.

      Engagement completion

      The whole company incorporation process takes approximately four weeks to complete from start to finish.
      In November 2013, Healy Consultants provides Bill with a complete company kit including i) Original Business registration certificates and ii) Original Tax Registration Certificates. For our continuous improvement, Healy Consultants also emailed George an Engagement Feedback Survey for his completion.

    Contact us

    For additional information on our business registration services in Malaysia, please contact our in-house country expert, Mr. Simon Guidecoq, directly:
    client relationship officer - Simon