Foreign capital regulation
As a general rule, the entry of foreign capital is stipulated by the government agency that has jurisdiction over the industry. Although foreign capital is prohibited or restricted from entering businesses of a certain size or smaller from the perspective of protecting domestic companies, we take a relatively open stance toward foreign capital.
Manufacturing, retail, wholesale, service, etc. can be done with 100% foreign capital except for some. Since 2009, the regulation requiring the holding of "Bumiputera capital", which requires Malay capital participation in some industries, has been abolished. However, if you want to enter a specific business, you need to obtain permission from the competent authority, and in that case, you may be required to have "Bumiputera capital", so prior confirmation is required .
Advance form
There are "local corporations (limited liability companies)", "partnerships", "sole proprietors", and "branches" that can carry out commercial activities. The only non-profit activity is the "representative office". Private businesses and partnerships are not a common form of business for foreigners. Branch offices are also permitted in the case of joint projects with the government, but they are not a general form of entry for foreigners.
< Local corporation >
Capital: Although there is no minimum capital stipulated by the Companies Act, the minimum capital for obtaining a work permit for expatriates is 100% foreign capital.
In the case of 500,000 ringgit. 1 million ringgit for distribution, service and restaurants.
Shareholders: 1 or more people management: residential one director or more persons, the Company Secretary 1 person
< Representative office >
Activities are non-profit activities such as market research and feasibility studies for establishing a local corporation. The validity period is 2 years in principle, and it is necessary to renew each time. Annual operating expense requirement of RM300,000.
Flow from establishment of a local corporation to acquisition of a work visa
01 /
Company name registration / establishment registration
Register the establishment with the Malaysian Corporate Commission (CCM) through the company secretary.
Determine and register shareholders, directors, business content, capital, etc. The registered address will be the address of the company secretary.
02 /
Bank account opening / capital transfer
Submit the registration documents of 01 to the bank and open an account.
After paying the capital, submit the payment certificate to the company secretary and register it with CCM.
03 /
Decision of business establishment ・ Acquisition of business license (BPL)
Once the office is decided, apply for a business license to the local government (city, county, etc.) where the office is located.
Permit validity period: Usually renewed annually (depending on each municipality)
04 /
Obtain various licenses according to the business content
Obtain licenses from each government agency according to the business you are doing.
In industries with foreign capital restrictions, it is necessary to confirm with the relevant government agency in advance before registering the establishment.
05 /
Obtain a company registration (ESD) / working visa for immigration
The new company first registers with the Immigration Office (ESD: Expatriate Services Dividion).
Then apply for an individual work visa from ESD.
It usually takes more than half a year from the establishment of a company to the acquisition of a work visa. In particular, license and visa applications tend to take a long time, so we recommend that you proceed efficiently.
Preferential treatment
The main incentives for investment are as follows
Pioneer status: Tax exemption of 70% of statutory income for 5 years for investment incentive industries, specific regions, manufacturing industries, etc.
Investment Deductions (ITA): Eligible capital expenditures (factories, machinery, equipment, etc.) apart from regular capital allowances (tax depreciation)
60% of the income deduction limit is granted
Reinvestment Deduction (RA): If a company that has been in operation for 36 months makes an additional investment, 60% of the qualified capital expenditure will be covered by income.
Grant exemption. Can be offset by 70% of statutory income in each year
Principal Hub: If recognized as a regional headquarters, a corporate tax rate of 0%, 5% or 10% will be given depending on the scale and content of the business.
Granted
Multimedia Super Corridor (MSC):
When establishing in a certified cyber city in Malaysia as a base for IT development, the licensed company can be used for up to 10 years.
Corporate tax exemption for 70-100% of target income over (5 years + 5 years), confirmation of necessary employment quota for foreign intellectual workers
Insurance, etc.
Automation Capital Allowance Expenditure:
20% + 20% of eligible capital expenditures when labor-intensive manufacturing invests in machinery for automation
80% accelerated depreciation and 100% tax exemption. From 2020, the service industry will also be covered, such as software
Applies to
Other incentives due to the latest tax reform