Startup
& Growth
You got your Company accounts ready and business is up and running. What other compliances that the Company needs to be aware of?
Foreign company setup
Businesses intending to setup operations in Malaysia can choose one of the following options depending on its business needs. Below is a comparison of the common setup options.
| Subsidiary | Branch Office | Representative Office | |
|---|---|---|---|
| Permitted Activities | All activities of trade allowed | Trade must be same as head office | Market research and coordination activities only |
| Ownership | Can be hold locally or foreign ownership | 100% owned by head office | Not applicable |
| Requirements | Minimum: – 1 shareholder (100% local or foreign ownership allowed) – 1 resident director with principal residential address in Malaysia | A Malaysian resident agent is required as compliance officer of the Branch Office | Research expenditure to be financed from outside Malaysia |
| Statutory Compliance: | |||
| Audit | Annual submission | Annual submission | Not applicable |
| Tax Returns | Annual submission | Annual submission | Not applicable |
| Annual Filing | Annual submission | Annual submission | Not applicable |
| Tax Treatment | – Malaysian corporate tax – Entitled to SME preferential tax treatment (18%) – Entitled to tax incentives | – Malaysian corporate tax – Non-resident tax (24%) – May incur witholding tax | Not applicable |
Malaysia allowed 100% equity ownership for foreign investors in most industries that and non national strategic areas. Some industries may impose restriction of foreign ownership of equity of a Company such as capital requirements, regulatory approval before commence of business.
Companies intending to operate in Malaysia on a long basis should consider setting up a local Company to enjoy better tax treatment. A Branch Office and Representative Office is suitable for short term Company presence in Malaysia.
