Malaysia, known for its strategic location in Southeast Asia, robust economy, and business-friendly policies, is an attractive destination for expatriates looking to establish a business.
If you're considering setting up a business in Malaysia, this guide provides detailed insights into the options available, the legal requirements, and the steps to get started.
1. Choosing the Right Business Structure
Expats have several options when choosing the structure of their business in Malaysia:
- Sole Proprietorship:
Only available to Malaysian citizens or permanent residents. Not typically an option for foreign nationals. - Partnership:
Also limited to Malaysian citizens or permanent residents. - Private Limited Company (Sdn Bhd):
The most popular option for expats. - Requires at least one director and one shareholder (director must reside in Malaysia).
- Offers limited liability and a separate legal identity.
- Labuan Company:
Ideal for international trade, holding investments, or offshore business activities. Labuan companies enjoy special tax benefits and simplified regulations. - Representative Office:
Perfect for foreign companies wishing to conduct market research or promotional activities without engaging in commercial transactions.
2. Incorporation Process: Step-by-Step
Setting up a Private Limited Company (Sdn Bhd) involves several key steps:
- Name Search and Reservation:
Submit your desired company name via the Companies Commission of Malaysia (SSM) MyCoID portal. Once approved, your name is reserved for 30 days. - Prepare Incorporation Documents:
This includes:- Company Constitution (previously known as Memorandum & Articles of Association).
- Details of directors, shareholders, and company secretary.
- Submit to SSM:
All incorporation documents and relevant fees must be submitted online via MyCoID. - Certificate of Incorporation:
Upon approval, you'll receive an official certificate — congratulations, your company is now legally established!
3. Post-Incorporation Requirements
Once incorporated, there are important tasks to complete:
- Open a Corporate Bank Account:
In the company's name, at a recognized bank. - Tax Registration:
Register your company with the Inland Revenue Board (LHDN). - EPF & SOCSO Registration:
Register your employees with Malaysia's social security systems. - Business Licenses and Permits:
Depending on your sector (e.g., food & beverage, education, retail), specific licenses may be required from local authorities.
4. Visas and Employment Passes for Expats
If you plan to actively work in your Malaysian company, you’ll need the correct visa:
- Employment Pass:
Issued for management, technical, or executive roles.
(Your company must be operational and have a minimum paid-up capital before you can apply.) - Professional Visit Pass:
For short-term professional services or training. - Dependent Pass:
For family members accompanying Employment Pass holders.
Important: Immigration rules can change quickly. Always double-check the latest visa requirements when planning your move.
5. Labuan Companies: A Smart Offshore Option
Labuan, Malaysia’s offshore financial center, offers special advantages for expats:
- Flexible Taxation:
Choose between a 24% tax on net profits or a fixed rate of MYR 60,000 annually (as per 2024 regulations). - Ease of Setup:
Simpler regulations, quicker incorporations, and freedom to operate in foreign currencies.
Labuan companies are ideal for businesses focusing on international markets rather than domestic Malaysian activities.
6. Government Support and Incentives
Malaysia actively encourages foreign investors with various programs:
- MIDA (Malaysian Investment Development Authority):
Offers assistance with permits, licenses, and investment advice. - MSC Malaysia Status:
Special tax incentives and grants for IT and tech-related companies. - Manufacturing Incentives:
Attractive tax breaks and grants for companies involved in production and related services.
