Malaysia Company Formation
Malaysia is a popular jurisdiction for company formation, especially for non-residents. It offers a stable economy, strategic location, and relatively low setup costs. The country also boasts attractive tax incentives and a business-friendly environment, making it an economically sound choice for international entrepreneurs.
The Malaysian authorities have simplified the process of registering a company to the limit.
Time of Indonesia company formation takes 4 weeks.
Popular company types:
- Limited Liability Partnership (LLP)
- Private Limited Company (Sdn. Bhd.)
Malaysia Company Formation Main Characteristics and the basic rules of Company registration in Malaysia
Malaysia, with its strategic location, stable economy, and pro-business environment, is an increasingly attractive destination for entrepreneurs and investors looking to expand their operations in Southeast Asia. This guide provides a comprehensive overview of Malaysia company formation for non-residents, highlighting the benefits, advantages, requirements, procedures, and timelines involved.
A Comprehensive Guide for Non-Residents to Register a Company in Malaysia
Why Choose Malaysia for Your Company Formation?
Malaysia offers a compelling proposition for non-residents seeking to establish a business presence. Here are some key advantages:
- Strategic Location: Situated at the heart of Southeast Asia, Malaysia provides easy access to a vast and growing market.
- Stable Economy: Malaysia boasts a stable and diversified economy with a strong focus on innovation and technology.
- Pro-Business Environment: The Malaysian government actively encourages foreign investment through various incentives and streamlined processes.
- Skilled Workforce: Malaysia has a well-educated and skilled workforce, offering a competitive advantage for businesses.
- Relatively Low Operating Costs: Compared to other developed economies in the region, Malaysia offers relatively lower operating costs, including labor and office space.
- Tax Incentives: The Malaysian government offers various tax incentives to attract foreign investment in specific sectors.
- Modern Infrastructure: Malaysia has a well-developed infrastructure, including modern transportation, communication, and utilities.
Types of Companies for Non-Residents in Malaysia:
Non-residents can choose from several types of companies when forming a business in Malaysia. The most common options include:
- Private Limited Company (Sdn Bhd): This is the most popular choice for foreign investors. It offers limited liability protection to its shareholders and is relatively easy to set up and manage.
- Representative Office: This is suitable for foreign companies looking to establish a presence in Malaysia for market research, promotion, and liaison activities. It cannot engage in commercial activities.
- Branch Office: This is an extension of the foreign company and is allowed to conduct business activities in Malaysia. The foreign company is fully liable for the branch’s debts and obligations.
Benefits and Advantages for Non-Residents:
Forming a company in Malaysia offers several benefits and advantages for non-residents:
- Access to the ASEAN Market: Malaysia is a member of the Association of Southeast Asian Nations (ASEAN), providing access to a market of over 650 million people.
- Repatriation of Profits: Foreign companies can freely repatriate profits, dividends, and capital without restrictions.
- 100% Foreign Ownership: In many sectors, non-residents can own 100% of the company’s shares.
- Access to Funding: Malaysian banks and financial institutions offer various financing options for foreign-owned companies.
- Ease of Doing Business: Malaysia has consistently improved its ranking in the World Bank’s Ease of Doing Business index.
Requirements for Malaysia Company Formation:
The requirements for Malaysia company formation vary depending on the type of company being formed. However, some common requirements include:
- Company Name Approval: The proposed company name must be approved by the Companies Commission of Malaysia (SSM).
- Registered Office Address: The company must have a registered office address in Malaysia.
- Shareholders and Directors: A private limited company (Sdn Bhd) must have at least one director who is a resident of Malaysia.
- Paid-Up Capital: The minimum paid-up capital requirement is typically RM1.
- Memorandum and Articles of Association: These documents outline the company’s objectives, rules, and regulations.
Procedure for Malaysia Company Formation:
The procedure for Malaysia company formation typically involves the following steps:
1. Name Search and Approval: Submit the proposed company name to SSM for approval.
2. Registration of Company: Prepare and submit the
Memorandum and Articles of Association, along with other required documents, to SSM for registration.
3. Appointment of Company Secretary: Appoint a qualified company secretary to handle the company’s statutory compliance matters.
4. Opening a Bank Account: Open a corporate bank account in Malaysia.
5. Obtaining Necessary Licenses and Permits: Obtain any necessary licenses and permits required to operate the business.
6. Registration with Relevant Authorities: Register with relevant authorities such as the Inland Revenue Board (IRB) for tax purposes and the Employees Provident Fund (EPF) and Social Security Organisation (SOCSO) if employing staff.
Timeframe for Malaysia Company Formation:
The timeframe for Malaysia company formation can vary depending on the complexity of the business and the efficiency of the documentation process. Generally, it takes approximately 1-2 weeksto register a private limited company (Sdn Bhd) once all the required documents are submitted. Obtaining necessary licenses and permits may take additional time.
How Our Professionals Can Help You:
Navigating the complexities of Malaysia company formation can be challenging, especially for non-residents. Our team of experienced professionals can provide comprehensive assistance throughout the entire process, including:
- Company Structure Advice: We can advise you on the most suitable company structure for your business needs.
- Name Search and Approval: We can assist with the name search and approval process.
- Document Preparation: We can prepare all the necessary documents for company registration.
- Company Secretarial Services: We can provide ongoing company secretarial services to ensure compliance with statutory requirements.
- License and Permit Applications: We can assist with obtaining the necessary licenses and permits.
- Bank Account Opening: We can guide you through the process of opening a corporate bank account.
- Tax and Accounting Services: We can provide tax and accounting services to ensure compliance with Malaysian tax laws.
Conclusion:
Malaysia company formation offers a gateway to a thriving Southeast Asian market and a host of benefits for non-residents. By understanding the requirements, procedures, and timelines involved, and with the assistance of our experienced professionals, you can successfully establish your business presence in Malaysia and capitalize on the opportunities it offers. Contact us today to learn more about how we can help you achieve your business goals in Malaysia. We are your trusted partner for a seamless and efficient Malaysia company formation experience.
FAQ on Taxation in Malaysia
1. What is Corporation Tax in Malaysia?
Corporation tax in Malaysia is levied on the income of resident companies at a standard rate of 24%. Small and medium-sized enterprises (SMEs) with paid-up capital of RM2.5 million or less benefit from a reduced rate of 17% on the first RM600,000 of chargeable income. The tax is applicable to both local and foreign companies operating in Malaysia.
2. How is Income Tax calculated in Malaysia?
Individual income tax in Malaysia is progressive, ranging from 0% to 30% based on income brackets. Tax residents must file their returns annually and can claim various deductions, such as for education, medical expenses, and investments. The personal tax rate for income up to RM5,000 is 0%, while income exceeding RM2 million is taxed at 30%.
3. What is VAT in Malaysia?
Malaysia implements a Goods and Services Tax (GST), known as VAT in other countries, at a standard rate of 6%. However, as of September 2018, the country has suspended GST in favor of Sales and Service Tax (SST), which consists of two components: a sales tax of 5% to 10% on goods and a service tax of 6% on certain services.
4. What is Dividends Tax in Malaysia?
Dividends distributed by Malaysian companies are generally exempt from withholding tax for residents, under the single tier system. However, foreign investors may face a withholding tax rate of 15% unless reduced by treaties. Corporate shareholders are also exempt from tax on dividends received from resident companies.
5. Are there other taxes in Malaysia?
Yes, Malaysia has various other taxes, including property tax, stamp duty, and excise duties. Property tax is levied at varying rates depending on local council policies. Stamp duty applies to property transactions and is calculated based on the value of the property. Excise duties target specific goods, such as alcohol and tobacco, and vary by product type.
FAQ: Company Registration in Malaysia for Non-Resident
What is the process for company formation in Malaysia for non-residents?
The process for non-residents to form a company in Malaysia involves several steps. First, you need to decide on the type of company you want to establish, typically a private limited company (Sdn Bhd). Next, you must choose a unique company name and submit it for approval. After that, you will need to prepare the necessary documents, such as the Memorandum and Articles of Association, and appoint a local director. It’s essential to register your company with the Companies Commission of Malaysia (SSM) and obtain necessary licenses depending on your business activities.
Do I need a local director for my company in Malaysia?
Yes, according to Malaysian law, all companies must appoint at least one resident director who is a Malaysian citizen or a foreigner with a valid work permit. This local director will be responsible for managing the company and ensuring compliance with local regulations. This requirement is crucial for non-residents looking to establish a business in Malaysia.
What are the costs associated with forming a company in Malaysia?
The costs for forming a company in Malaysia can vary based on several factors, including the type of business entity and the services you choose. Typical costs include registration fees, local director fees, company secretary fees, and additional expenses for licenses or permits. On average, the total cost can range from RM1,500 to RM5,000 or more, depending on the complexity of your business.
How long does it take to register a company in Malaysia?
The registration process for a company in Malaysia usually takes between 1 to 2 weeks if all documents are in order. The timeline can vary based on the completeness of your application and the efficiency of the relevant authorities. It is advisable to work with a professional service provider to ensure a smooth registration process, especially for non-residents unfamiliar with local laws.
What are the tax implications for non-resident companies in Malaysia?
Non-resident companies operating in Malaysia are subject to various tax obligations, including corporate income tax on income derived from Malaysia. The standard corporate tax rate is 24%, but there may be lower rates for resident companies with a new venture. Additionally, non-residents may be subjected to withholding taxes on certain types of income. It is recommended to consult with a tax advisor to understand your specific obligations and any applicable tax treaties.
Can a foreign company operate in Malaysia without registering?
No, a foreign company cannot operate in Malaysia without registering it as a legal entity. Engaging in business activities without proper registration can lead to legal repercussions and penalties. To operate legally, non-residents must follow the company formation process and ensure compliance with Malaysian laws, including securing necessary licenses and permits for their business activities.
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This publication is provided for information purposes only. This info should not be treated as a substitute for a tax or legal consultation or legislation. You should not act on the basis of the information contained in this publication without having obtained individual advice from the professional expert.
BRIS GROUP does not assume responsibility for any damage resulting from decisions made by the reader on the basis of this publication.
About Malaysia
Capital: Kuala Lumpur
Region: is a Southeast Asian country occupying parts of the Malay Peninsula and the island of Borneo.
Currency: The Malaysian Ringgit (MYR)
Time Zone: GMT+8
Dial Code: +60
Abbreviations: MY
Helping Your Company Thrive in Malaysia With us, starting and running a business in Malaysia will be easy and efficient!
- Full support of the company’s registration in Malaysia: from the preparation of documents to their submission.
- Remote registration: all processes are online, wherever you are.
- Secretary and Treasurer: we can take on these important roles.
- Nominal directors and shareholders: we will ensure the confidentiality of your information.
- Help in opening a bank account: we will simplify this complex process.
- Registration for taxes, VAT and EORI: ensure all requirements are met.
- Website development: we will create a professional online representation for your business.
- Logo creation: we will design a unique and memorable logo for your brand.
- Full administrative support of the company: we will take over routine tasks.
- Mailing address organization: we provide a reliable mailing address for your business.
- Organization of the virtual office: we will ensure the professional image of your company.
- Telephone answering service: we will answer calls on behalf of your company.
- Accounting, audit and reporting: ensure accurate and timely accounting.
- Preparing and filing a VAT declaration: let’s save you the trouble.
- Interaction with local authorities: take over communication with state institutions.
- Trademark registration: protect your brand.
- More Emphasis on Customer Input.
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