The key features of a Representative Office in Malaysia are:-
- it does not carry out any business activities in Malaysia (accordingly it should not receive any income derived from Malaysia);
- only represents its head office/principal to undertake designated functions;
- has its own office premise and facilities;
- it is fully funded from sources outside Malaysia such as its parent company, or from the company's operation outside Malaysia (proposed operational expenditure must be at least RM300,000 per annum);
- does not participate in the management and administration of any joint venture companies, subsidiaries, affiliates or branches in Malaysia;
- does not sign any business contracts on behalf of the parent company or provide services for a fee; and
- does not lease warehousing facilities. Any shipment, transhipment or storage of goods shall be handled by a local agent or distributor.
Examples of permitted activities of a Representative Office in Malaysia are:-
- Conducting market research or surveys;
- Undertaking feasibility studies on investment opportunities in Malaysia and the region;
- Acting as a referral and/or liaison centre;
- Seeking out local agents and/or distribution networks;
- Providing after sales service;
- Planning or coordination of business activities;
- Carrying out manufacturing surveys;
- Identifying sources or raw materials, components or other industrial products;
- Research & development activities;
- Acting as a coordination centre for the company's affiliates, subsidiaries and agents in the region; and
- Other activities which will not result directly in actual commercial transactions.
The Representative Office may also apply for Expatriate Post for the parent company to post its staff to Malaysia. The number of Expatriate Post allowed will depend on the functions and activities of the Representative Office, and only managerial or technical positions will be considered for the position of Expatriate Post.
As the Representative Office is not allowed to carry on business in Malaysia, it is not subject to tax. The Expatriate working in a Representative Office in Malaysia however is subject to normal income tax.
All applications for registration of Representative Office (except for services related to banking, financial and tourism) should be submitted to Malaysian Investment Development Authority (MIDA).
Do contact our trusted personnel at RISS should you need help/ guidance for your application.