DOING BUSINESS IN MALAYSIA IN 2025
Since 2003, Healy Consultants Group has assisted our Clients with registering their business in Malaysia. We can provide the following services to both individual entrepreneurs and multinational corporations: i) Malaysia business registration ii) advisory services and assistance to comply with licensing requirements iii) nominee services for Malaysia resident directors iv) corporate bank account opening in Malaysia v) visa strategies and vi) office rental solutions.
| 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 |
| 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 |
Malaysia business setup summary
- Foreigners can form a company in Malaysia within one week;
- The appointment of one director ordinarily resident in Malaysia is required before company incorporation. Most of our Clients request us to provide nominee services to meet this requirement;
- Malaysia is home to several special economic zones for export-oriented businesses. See this page for further information on Malaysia’s free zones, and the tax incentives available;
- Foreigners willing to do business with customers based out of Malaysia can register a legally tax-exempt Labuan company;
- Many of our Clients obtain a Malaysia residence permit through the Malaysia My Second Home program.
Press the link headings below to read detailed, relevant, up to date information on Malaysia company registration.
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Benefits and problems
Benefits of Malaysia company registration
- Malaysia has one of the largest and best-performing economies in ASEAN:
- The country is the economic bloc’s third-largest economy;
- The economy grew by 4.3% year-on-year in 2019;
- GDP per capita is the third-highest in ASEAN;
- Malaysia’s strategic location offers easy access to Asian markets, facilitating regional expansion.
- Entrepreneurs forming a company in Malaysia can access a range of incentives:
- 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;
- Companies granted Pioneer Status enjoy a five-year partial exemption from income tax. Applications received from companies located in Peninsular Malaysia’s Eastern Corridor enjoy 100% tax exemption on their statutory income during the five years;
- To attract foreign investors and encourage Malaysia business, the Malaysia government developed industrial parks, including free industrial zones, technology parks, and Multimedia Super Corridor (MSC). There are investment incentives such as Pioneers status, BioNexus status and Multimedia Super Corridor (MSC) status where companies can enjoy tax free for a number of years.
- Malaysia has a growing ‘halal’ economy:
- Halal Parks – designed to ease business registration procedures in Malaysia and provide incentives for halal-related manufacturing sectors;
- Malaysia is a gateway between the Islamic world and the west, making it the perfect location for both Islamic and western investors;
- Malaysia is a growing Islamic finance hub, with a large sharia-compliant asset management industry.
- Registering a business in Malaysia is straightforward:
- Our Clients can register a Malaysia LLC in just one week;
- Malaysia company set up requires just US$2 initial share capital;
- Only one director (ordinarily resident in Malaysia) and two shareholders are required;
- Alternatively, our Clients may choose to register a Labuan company which allows them to i) rent office space in Malaysia ii) secure Malaysian visas and iii) open bank accounts in Malaysia. A Labuan company can be setup within one week.
- Our Clients often choose to start a company in Malaysia as a cheaper alternative to Singapore:
- Malaysia’s average monthly salary is US$1,816, compared with US$6,000 in Singapore;
- Prime office rental space in Kuala Lumpur is roughly half the monthly cost of that in Singapore.
- Our Clients can communicate easily in Malaysia:
- English is Malaysia’s second language, and is spoken by 70% of the population. Foreign investors in Malaysia can easily communicate with local employees, customers and suppliers;
- Most business documents are available in English, saving translation costs and time during business registration in Malaysia.
Problems with Malaysia company registration
- All Malaysia companies are legally required to secure a business premise license before leasing office premises in Malaysia. The average timeframe to secure a licence is three weeks from submission of the application. Examples of licences include:
- Signboard licence;
- WRT licence issued by the Ministry of Domestic Trade and Consumer Affairs for trading and wholesale business within Malaysia.
- During the review of the WRT licensing application, there is a 20% probability Malaysian authorities will require one of the directors to travel for a one-hour meeting in Malaysia;
- Because a Malaysian company is required to apply for multiple licences and permits before it can trade, business set up can be delayed by two months;
- Malaysian corporation tax is higher than Singapore:
- Malaysian companies are subject to 24% corporation tax on all annual profits. Additionally, withholding tax of 10% and 15% respectively is applied on all interest and royalty payments to a non-resident;
- A Malaysian company must appoint at least one resident director. If required, Healy Consultants will provide a professional, passive nominee director service for an annual fee of US$3,350;
- Government tenders favour local individuals and companies incorporated and managed by locals. Our Clients may seek to apply for Bumiputera status if their entity is at least 30% owned by Malay nationals or Malay-owned companies;
- Malaysia is ranked 51st out of 180 on the Corruption Perceptions Index 2019. High corruption increases the costs of setting up and running a business;
- Malaysia is ranked poorly by the World Bank as the world’s 126th best country for Starting a Business;
- Malaysia’s workforce suffers from low productivity, meaning that foreign investors face challenges in recruiting suitably efficient and economically-productive local talent;
- The Malaysia employment visa application process is long, taking between six months and one year;
- Malaysia levies a Sales and Services Tax (SST). Unlike Goods and Services Tax (GST), SST is borne by manufacturers/service providers, so is an additional cost burden;
- A company importing or exporting goods requires a licence, which can be obtained from the Ministry of International Trade and Industry (MITI);
- It is becoming more difficult to open a corporate bank account in Malaysia. Due to increased anti-money laundering regulations, banks conduct more thorough Know Your Client (KYC) checks. Authorised bank signatories must also attend the bank in person to sign account opening forms, after which it takes between two and three weeks for an account to be opened.
- Penalties issued by SSM for late filing of annual returns and financial statements are very high: i) US$12,400 for late annual return filing ii) US$124,000 for late financial statements filing. Consequently, most of our Clients engage our firm for annual accounting and tax services, to be sure that these filings are completed in a timely, accurate and complete manner.
- Malaysia has one of the largest and best-performing economies in ASEAN:
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Best uses for a Malaysia company
Foreign-owned companies can invest without restriction in almost every business sector in Malaysia. A Malaysian company is ideal as:
- An Asia Pacific regional headquarters because:
- Malaysian companies pay no tax on dividends received from foreign subsidiaries;
- A Malaysian holding company has access to 68 double taxation avoidance agreements, which reduce withholding taxes and therefore overall tax burden;
- Malaysia is strategically-located at the heart of South East Asia, in close proximity to emerging and growth markets such as China, Singapore, Indonesia, Vietnam, Thailand and India.
- A financial and investment services company because:
- Malaysia-based fund managers are can market and trade their financial products to corporate and retail investors in i) Singapore and ii) Thailand. To do so, they must submit an application to the Security Exchange Commissions in these countries. This cross-border facility should be extended to Indonesia and the Philippines by 2020;
- In order to support the development of the Malaysian investment sector, foreign ownership rules are being relaxed. For example, the foreign ownership limit of stock brokerages has increased from 49% to 70%, while Malaysian wholesale fund management companies can now be 100% foreign-owned.
- A manufacturing and distribution company because:
- Malaysia has an abundance of cheap raw materials such as palm oil, rubber, timber, oil and tin, as well as skilled labour;
- Malaysia has an excellent transportation infrastructure supporting trade, including four major ports and a strategic location on the Straits of Malacca;
- The presence of five export-processing free zones offering zero customs duties and flexible trading laws to foreign companies. These zones are located at i) Pasir Gudang ii) Port Klang iii) Kulim Hi-Tech Park iv) Port of Tanjung Pelepas and v) Bayan Lepas;
- Malaysia is a member of the Association of South East Asian Nations (ASEAN) and has signed 13 free trade agreements. Companies producing processed and raw materials in Malaysia can export them duty free to ASEAN states plus i) Japan ii) South Korea iii) India iv) China v) Australia and vi) New Zealand.
- An Asia Pacific regional headquarters because:
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Useful links for Malaysia
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