Company Formation Processes in Malaysia

Setting Up a Company in Malaysia

Why Set Up a Company in Malaysia?

• Strategic Location: Situated in the heart of Southeast Asia, Malaysia is a central hub for regional trade.
• Economic Stability: It boasts a strong and stable economy, characterized by low inflation rates and healthy growth.
• Business-Friendly Environment: Offers various incentives and tax advantages to attract foreign investors.
• Advanced Infrastructure: Modern logistics and communication infrastructure make doing business easier.

Types of Companies in Malaysia

The main types of companies that can be established in Malaysia are:

• Private Limited Company (Sdn. Bhd.): The most common company type, offering limited liability.
• Branch Office: Operates as an extension of the parent company.
• Representative Office: Does not conduct commercial activities but only represents the parent company.
• Joint Venture: Partnerships established between local and foreign partners.

The Company Formation Process in Malaysia

The process of setting up a company requires following specific steps:

Company Name Registration

• Name Selection: Check if the company name is unique and appropriate.
• SSM Approval: Obtain name approval by applying to the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia, SSM).

Company Registration

• Required Documents: Prepare documents such as the Incorporation Form, and the Memorandum and Articles of Association.
• Application: Register your company by applying to the SSM online or in person.

Licenses and Permits

• Business License: Obtain the necessary licenses according to your business's field of activity.
• Special Permits: You may need additional permits if you plan to operate in specific sectors.

Setting up a company in Malaysia offers significant opportunities thanks to its strategic location, business-friendly policies, and advanced infrastructure. With proper planning and professional consulting services, you can complete this process smoothly.

Malaysia stands out as an attractive destination for foreign investors with its strong economy, strategic location, and business-friendly policies. Establishing a company in Malaysia provides the opportunity to do business in both local and international markets. In this guide, we will cover the process of setting up a company in Malaysia step-by-step.

Opening a company in Malaysia presents great opportunities due to its strategic location, business-friendly policies, and developed infrastructure. With the right planning and professional advisory services, you can navigate this process seamlessly. By following this guide, you can take the first steps toward establishing a successful business in Malaysia.

Tax Rates in Malaysia

Malaysia stands out as an attractive country for investors with its business-friendly policies and tax advantages. The tax system in Malaysia covers both individual and corporate tax liabilities. In this article, we will discuss the tax rates in Malaysia and the impact of the tax system on businesses.

Corporate Tax Rate

The standard corporate tax rate for companies in Malaysia is 24%. However, lower rates may apply to small and medium-sized enterprises (SMEs):

• For the first MYR 600,000 of profit for SMEs: 17%
• Profit exceeding MYR 600,000: 24%

These rates are applicable to local companies registered and operating in Malaysia.

Goods and Services Tax (GST)

On June 1, 2018, Malaysia abolished the Goods and Services Tax (GST) and replaced it with the Sales and Service Tax (SST). The SST consists of two components:

• Sales Tax: Applied at rates ranging from 5% to 10%.
• Service Tax: Applied at a rate of 6%.

SST is applied to the sale and provision of goods and services and is a tax collected on consumer spending.

Personal Income Tax Rates

Personal income tax rates in Malaysia vary according to an individual's annual income, following a progressive system. As of 2024, the applicable rates are:

• 0 - 5,000 MYR: 0%
• 5,001 - 20,000 MYR: 1%
• 20,001 - 35,000 MYR: 3%
• 35,001 - 50,000 MYR: 8%
• 50,001 - 70,000 MYR: 14%
• 70,001 - 100,000 MYR: 21%
• 100,001 - 250,000 MYR: 24%
• 250,001 - 400,000 MYR: 24.5%
• 400,001 and above: 25%

These rates apply to individuals residing in Malaysia.

Tax Incentives and Exemptions

Malaysia offers various tax incentives and exemptions to attract foreign investors. The main incentives include:

• Pioneer Status: Offers a five-year tax exemption or a 70% tax reduction to companies operating in new and pioneering sectors.
• Investment Tax Allowance (ITA): Provides a 60% tax deduction for specific investments.
• Special Economic Zones (SEZs): Companies operating in these zones are offered additional tax advantages and incentives.

The tax system in Malaysia offers attractive opportunities for both local and foreign investors. By having information on corporate tax rates, personal income tax, withholding tax, and various incentives, you can effectively manage your business's financial obligations. By taking advantage of the tax benefits in Malaysia, it is possible to grow your business and achieve a competitive position in the regional market. 

Company Setup in Malaysia with World Company Setup

Malaysia is an attractive destination for foreign investors with its business-friendly policies, strategic location, and advanced infrastructure. World Company Setup offers a comprehensive service to facilitate your company formation process in Malaysia. 

Set Up Your Company Now Ministry of Trade Overseas Company Formation Incentives