"Company registration in Malaysia" is a popular query among entrepreneurs looking to scale their business and enter the Asian market. In recent years, the country's economy has shown a trend of growth, leading to an increase in investments in Malaysia. This article will discuss the primary legal formalities of the registration process and the available business forms for foreigners.
Why should you register a company in Malaysia?
Malaysia is considered one of the most dynamically developing business environments in Southeast Asia. A liberal market policy fosters trade and economic development, while numerous government incentives contribute to continuous growth. The registration of a company in Malaysia is characterized by the following features:
- Positioned as a thriving business hub in the heart of Southeast Asia.
- The company registration process is notably streamlined.
- Opening a business comes with a comparably low price tag when measured against other Asian nations.
- Remote company registration is permissible in Malaysia.
- Malaysia has established several agreements to prevent double taxation in collaboration with other nations.
- Dividends distributed outside Malaysia remain exempt from source taxation.
- Malaysian corporations enjoy unrestricted repatriation of capital, profits, dividends, and royalties.
- The government offers a range of incentives and advantages to foster business initiation and capital investments.
- Malaysia is the preferred choice for foreign entrepreneurs, especially owing to the robust investor protection guaranteed by local laws.
Registering a foreign company in Malaysia can be done in a minimal amount of time if you seek assistance from specialized experts providing legal support for businesses.
One of the key advantages of registering an offshore company in Malaysia is the ease of doing business. According to the World Bank ranking, the country holds the 12th position out of 90 countries in this regard. Among the most promising sectors for foreigners are:
- The tourism industry.
- Establishing a business in the financial sector.
- The real estate industry offers extensive opportunities for business.
- Creating an IT company in Malaysia.
It's worth noting that the information technology sector in the country is rapidly growing, accounting for 19.1% of the GDP. Enterprises in hardware, software, or cloud computing have good prospects for expansion. With over 500 business parks, Malaysia becomes an attractive destination for IT investments. As a significant leader in the region in digital technologies, e-commerce, and mobile applications, Malaysia is also a crucial financial center, especially in Islamic finance.
How to open a business in Malaysia?
Before establishing a company in Malaysia, it is essential to carefully review the legislative requirements. The primary law governing the registration and activities of enterprises is the Companies Act 2016. The main regulatory body overseeing business activities is the Suruhanjaya Syarikat Malaysia (SSM).
Foreign entrepreneurs looking to open a business in Malaysia can choose from the legal forms permitted by the law, which are discussed below.
LLC registration in Malaysia
A Private Limited Company (SDN BHD) is the most popular form of business available to non-residents in Malaysia. To register an SDN BHD in Malaysia, you need to:
- Appoint at least one director.
- Deposit a minimum investment of 2 USD into the company's account.
- Appoint a local secretary.
An SDN BHD is a separate legal entity that can earn income, own property, enter into contracts, and file lawsuits on its behalf, separating the owners' liabilities from the company's obligations. Information required for company registration includes:
- Copies of the identification documents of all founders.
- Proposed company name.
- Description of the planned activities.
- Confirmation of a registered address in the country.
- Addresses of directors/founders.
- Detailed information on the corporate rights to be acquired by each participant.
Creating a Limited Liability Partnership (LLP) in Malaysia presents an appealing alternative. Essential prerequisites encompass:
- Engaging a minimum of 2 partners.
- Appointing 1 compliance officer, who must be a resident of the country.
Partners may be individuals or legal entities, and no residency criteria apply. Notably, there exists no mandatory capital threshold for initiating this business framework. The entity is recognized for its tax transparency, eliminating the obligation to submit financial statements. Nonetheless, partners are required to disclose the income derived from the partnership in their income tax declarations.
Choosing to set up a branch in Malaysia emerges as an attractive choice for international corporations. The branch, devoid of an independent legal identity from its foreign parent, intricately intertwines the foreign parent company with the legal obligations, financial liabilities, and contractual commitments assumed by the branch. Moreover, every managerial decision executed by the branch requires explicit approval from the overseeing parent company, ensuring a centralized decision-making process.
Taxation for the branch exclusively applies to income generated within the Malaysian jurisdiction, capitalizing on mutually beneficial double taxation avoidance agreements where Malaysia stands as the contracting party. This strategic positioning proves to be advantageous for foreign entities embarking on market entry. Alternatively, the establishment of a representative office remains a viable avenue, albeit constrained to non-commercial pursuits.
Embarking on a business venture in Malaysia necessitates a comprehensive understanding of the tax landscape. The nation implements the following tax structures:
- A corporate income tax rate of 24%, with potential reductions based on specific criteria.
- Withholding tax rates stand at 10% for royalties and 5% for interest.
- Sales tax, varying between 5% and 10%, is contingent upon the classification of goods.
For aspiring entrepreneurs delving into the Malaysian business sphere, a nuanced comprehension of these tax dynamics is imperative.
In summary, Malaysia emerges as a sophisticated and fiercely competitive player in Southeast Asia. With a business-friendly atmosphere that cements its status as a top-tier global hub for offshore manufacturing investments, Malaysia has successfully captured the attention of over 5,000 foreign companies hailing from more than 40 countries. Its allure on the international business stage is undeniable.
The pathways for registering a company in Malaysia present a spectrum of options, granting entrepreneurs the flexibility to choose structures that align with their vision. For a more profound grasp of this complex terrain, individuals are encouraged to connect with the experts at TKDeal. Through tailored consultations, these specialists delve into the intricate nuances of overseeing foreign investments in Malaysia, providing invaluable insights for those navigating this dynamic business landscape.