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guide for foreigners

Other than the key facts to know before setting-up a private limited company in Malaysia, we have listed out below additional information that a foreigner should know if they wish to set-up a company in Malaysia:-

DIRECTORS

To set-up a private limited company, at least 1 resident director is required. 
Resident is defined as any person above 18 years old, who has principal place of residence within Malaysia.

Usually, foreigners who set-up private companies in Malaysia, go through either one of the following routes:-
  1. Nominee Directors - These are professional directors who act as your resident director at a fee;
  2. Application of Expatriate Work Permit

APPLICATION OF EXPATRIATE WORK PERMIT

This is usually the route taken by owners who wish to be present in Malaysia personally to oversee its company's interests and investments, or companies who wish to transfer its personnel to Malaysia to carry out the company's policies and also to supervise the local staff.

The minimum capital requirement to apply for work permit is as follows:-
  • Locally owned companies - RM250,000 (this is for local companies who wish to hire expatriate)
  • Jointly owned by Foreigner and Local - RM350,000
  • 100% owned by Foreigner - RM500,000
Companies for distribution of merchantability and restaurants - RM1,000,000

The minimum salary of the expatriate should be at least RM5,000 per month. For expatriate with salary of RM8,000 and above, automatic will be given upon submission of complete documents.

Having said the above, there are some positions that are not eligible for expatriate status (most regulated by the Construction Industry Development Board Malaysia). For detailed listing of the positions, please refer to here.

MALAYSIAN INVESTMENT DEVELOPMENT AUTHORITY (MIDA)

On case to case basis, depending on the sector of business, MIDA provides incentives and expatriate posts to companies.

Incentives provided by MIDA are as follows:-
  • Pioneer Status - partial/ full exemption of the statutory income for a period up to 10 years; or
  • Investment Tax Allowance - partial/ full exemption on the qualifying capital expenditure incurred within 5 years from the date the capital expenditure is incurred.
Investment Tax Allowance is more beneficial to companies with high intensive capital expenditure.

Activities promoted by MIDA are such as:-
  • High Technology Companies;
  • Biotechnology Industry;
  • Production of Selected Machinery and Equipment;
  • Research & Development; and 
  • many more. 
Please go to MIDA's official website for more details on the promoted activities.

corporate tax rate

Malaysia's corporate tax rate is as follows:-

Companies with paid-up capital of not more than RM2.5 million
On first RM500,000 - 18%
Subsequent Balance - 24%

Companies with paid-up capital of more than RM2.5 million
- 24%

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