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Transfer Pricing and How it Affects Financial Reporting

Transfer Pricing and How it Affects Financial Reporting

Transfer Pricing and How it Affects Financial Reporting

The concept of transfer pricing is highly important in companies that are operating as individual strategic units. However, there are many different challenges associated with transfer pricing in Malaysia, and it is crucial for companies to overcome these challenges to ensure the smooth and efficient functioning of the business.

 

The transfer pricing documentation becomes even more critical when an organization has various branches all around the world, especially in areas where the tax rates are continually fluctuating. The transfer pricing documentation is used as a tool to justify these transactions especially when transactions are carried with lower tax jurisdiction and could be misunderstood to have been carried out for tax benefits.

1. Relationship between Transfer Pricing and Financial Reporting

The relationship between transfer pricing documentation and financial reporting is heavily impacted by the uncertainties in the tax positions. International tax rules and regulations also impact the way transfer pricing is conducted and financial statements are prepared. As a result, multinational companies have to consider a variety of international jurisdictions and rules set by the global governing bodies.

 

Most of the surveys and studies indicate that developing countries are restricted in transfer pricing documentation due to a lack of resources. As a result, they are not able to effectively apply transfer pricing. However, most of the challenges of transfer pricing can be avoided by establishing suitable transfer prices for the intra-firm transfer of goods and services. In this way, proper payments are made, and the legal requirements of transfer pricing in Malaysia are also fulfilled.

coins at the graph background

2. Importance of Transfer Pricing in the Modern Era

Transfer price is now defined as the cost paid between two firms for the goods and services that are delivered by multiple entities or a consolidated organization. Nowadays, transfer pricing highly affects the way businesses do international trading. However, the process of preparing the documentation can greatly vary depending on the company’s structure and pricing basis.

3. Transfer Pricing and Tax Authorities

The law is clear that the prices charged by one entity to another in an intercompany transaction that could involve the trade of goods and services should yield consistent results as per the results that would have been produced if uncontrolled taxpayers were engaged in the same transaction in similar circumstances.


In other words, there are some strict guidelines that companies should follow in financial reporting of transfer pricing to make sure the transfer pricing documentation fulfils the legal requirements and is consistent with modern reporting standards.


The entire process of transfer pricing in Malaysia requires thorough documentation by professional regulators and auditors. If there is an error in the transfer value, then the accountants and auditors have to make sure that such changes are shown in the financial statements. Otherwise, there is a very high chance that you will run into legal issues with the authorities and might have to pay the penalty.


Despite the availability of such extensive data about transfer pricing in Malaysia, there is ambiguity around the working of transfer pricing in divisions and how the tax burden should be distributed among the various companies within a group.

completing financial report

In a Nutshell

Although there are many different aspects of transfer pricing and how it affects financial reporting, the following are the three main key points that every auditor should keep in mind for transfer pricing documentation:
  1. Multinational organizations have to pay special attention to transfer pricing because it carries a great tax-compliance risk. If proper tax planning and financial reporting are not performed, companies can face serious legal issues.
  2. The arm’s-length transfer price is generally identified from the areas that create and transfer the value. For instance, factors like risks and assets are analyzed to apply a suitable economic method of transfer pricing in Malaysia.
  3. Transfer pricing provides a significant number of benefits to multinational corporations. However, there is a lot of ambiguity attached to these tax benefits. As a result, it is important that companies ensure that proper transfer pricing documentation is prepared and ensure maximum compliance with the rules and regulations.
For more information about transfer pricing, feel free to get in touch with us.
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Seven Ways to Manage a Payroll System Effectively

Payroll and salaries folders stack with label on black binder on paperwork documents summary report, HR-human resources business and bookkeeping accountancy concept in busy offices
Payroll and salaries folders stack with label on black binder on paperwork documents summary report, HR-human resources business and bookkeeping accountancy concept in busy offices

Seven Ways to Manage a Payroll System Effectively

Payroll management is one of the most important aspects of any type of business and organization. The business owners and HR department need to have a smooth and reliable payroll system so that work is performed accurately and timely. However, payroll management is a complex task because a lot of different aspects need to be considered while managing a payroll system.

Undoubtedly, many HR managers are not familiar with the best practices of executing payroll processes. In this article, we are pleased to share the top seven ways to manage a payroll system effectively.

1. Organizing

Organizing is the key to maximizing the efficiency of your payroll system. When you are dealing with a variety of data and financial numbers, the HR department should make sure that all of the information and financial reports are properly organized.

 

Such organization strategies include developing a comprehensive payroll calendar to keep track of the important deadlines and make sure all of the required forms and payroll taxes are submitted on time.

 

Moreover, such tasks should be divided into sub-tasks, like distributing bonuses or other compensation to the employees. In this way, the payroll and HR services will be streamlined.

2. Use Modern Tools and Technologies

There is a wide range of payroll management systems available in the market. Most of this software is quite similar to each other. However, you should evaluate your own company’s requirements to make sure you are implementing the best suitable software and tools to make the entire payroll management more efficient.

 

Such modern tools allow you to handle functions like employee attendance, forms, compensation details, and many others.

3. Fulfil Legal Requirements

Generally, all of the important details about particular payroll processes are given in Malaysian Law. If you want to maximize the efficiency of your business, you should make sure that you comply with all of the legal requirements. Moreover, you should keep in mind that the payroll-related legislation keeps changing.

 

If you hire the services of a professional accounting firm in Malaysia, you will not have to worry about such changes because they will be fully covered by the firm.

Calculator, business and financial report with the accountant using computer. Accounting concept.

4. Standardization

A major issue associated with payroll systems is that many companies make the mistake of not implementing standard practices. As a result, the entire payroll and HR services are disturbed because everyone keeps changing the processes as per their convenience.

 

This kind of issue is quite easy to solve. All you have to do is make sure that payroll management is streamlined by implementing the best payroll practices. In this way, the managers and the staff will be well-familiar with the way they have to deal with payroll and HR services.

5. Outsource Payroll System

Perhaps, the most important way of effectively managing a payroll system is to outsource your payroll management to an accounting firm. There are numerous benefits to outsourcing your payroll system. It will streamline the payroll and HR services of your company.

It will help your entire company because qualified and competent individuals will be managing the payroll processes, making sure that all of the important payroll tasks are being fulfilled in an efficient and timely manner.

6. Automation

Undoubtedly, payroll management is a time-consuming task. If you perform payroll processes manually, it will take a lot of time, money, and energy. Moreover, there is a greater chance of missing some important deadlines that can result in penalties. On the other hand, if you automate most of your payroll processes, you can easily keep up with the deadlines and make the process more efficient.

7. Distribute Duties

There are many different tasks and responsibilities that are part of the payroll and HR services. You should distribute such duties in a fair and transparent manner to make sure every member of your organization is able to contribute to your company.

 

You should also consider dividing payroll tasks into sub-tasks and distribute them equally among your employees to make sure all of the tasks are being performed within the deadlines.

American African Holding Paycheck Or Payroll Check

In a Nutshell

In the end, you should remember that payroll management is a challenging task for most companies. Nobody expects you to take care of the entire payroll system by yourself.

 

If you choose to outsource your payroll system to an accounting firm in Malaysia, you can make sure that the experts handle the payroll and HR services to enhance the efficiency and productivity of your entire business.

 

For more information, feel free to get in touch with us.

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Auditing in 2021: Planning for the year ahead

Auditing 2021-3
Secretary working in paper archive

Auditing in 2021: Planning for the year ahead

The COVID-19 pandemic has drastically changed the structure of most business processes around the world. As a result, there are many new challenges and aspects that you have to consider in auditing in 2021. The audit firms in Malaysia are also altering their audit and accounting services to make sure auditing is performed without any errors and hassles.

 

The peer-review process has always been a challenging part of auditing. However, audit planning has become more difficult in 2021. Following are some important tips that you should follow to ensure smooth and reliable auditing in 2021.

1. Removing Common Errors

According to a survey, most audits fail because they do not comply with the common rules and regulations. Therefore, it is important that you get professional accounting services in Malaysia so that you can avoid such mistakes and perform auditing as per the best practices.

 

A major part of these audits is the identification of specific risks. If you are getting the services of an accounting firm, make sure that the entire company is thoroughly analyzed, and all of the essential information is properly documented.

 

Moreover, identifying risks in 2021 also involves considering the impact of the pandemic on the global supply chain and the overall finances of a company. The purpose of evaluating these factors is to adjust the audit processes as per the new standards.

Auditing 2021-1

2. Comprehensive Discussions

It is now more important than ever that companies and audit firms conduct thorough analysis and discussions about the changes that have to be made to the audit process while planning for it. Such steps include the analysis of internal and external risks.

 

The primary issue that most companies suffer from is the lack of information or documentation. Generally, companies that have consistent accounting services in Malaysia are able to streamline this process because they compiled all of the important information in the form of quarterly and monthly financial reports.

 

Experts also agree that robust planning meetings are the key to ensuring a smooth audit in 2021. When it comes to conducting a smooth and efficient audit, planning is everything. Therefore, companies need to spend a considerable amount of time on this stage to make sure all of the risks are considered before moving on towards the actual auditing stage.

3. New Risks

It is important to note that the risks associated with auditing in 2021 can greatly vary from company to company due to a lot of factors. Once you hire the services of an audit firm, they will thoroughly evaluate the type of your business processes and come up with an effective auditing plan. Generally, the current situation has greatly increased the uncertainties in auditing. Therefore, organizations have to make sure that all of the different aspects are fully covered in auditing to ensure its success.

Following are some of the proactive measures that can be implemented to reduce the risk associated with auditing in 2021:
  • Evaluate the current practices to identify and respond to any kind of possible employee disengagement.
  • Assess the overall progress on the company’s goals and development plans.
  • Reevaluate the talent risk-mitigation strategies after considering the impact of the pandemic on the business and staff.
  • Ensure that the senior management and HR department is fully-equipped and trained to implement modern tools and technologies to work in unprecedented situations like remote working, and proper plans have been put in place for such circumstances.
  • Assess the feasibility of the current business processes and evaluate their benefits to determine any changes that have to be made in 2021.
  • Ensure fairness and transparency in the organization by sharing and discussing important information with the employees and the managers to make sure all of the important organizational changes are properly communicated.
Auditing 2021-2

In a Nutshell

There is no doubt that auditing is one of the most important parts of any business. The challenges in auditing have increased in 2021, but companies can easily plan for it with the help of professional accounting and audit services in Malaysia. By considering the strategies discussed above, the organizations should have no major issue in conducting a reliable and efficient audit.

 

Since the pandemic is still a developing situation, it is necessary that companies keep visiting their audit planning to ensure that all of the changes are covered. This will ultimately result in the successful auditing of your company. For more information, feel free to get in touch with us.

 

The bottom line is that whether you are running a homegrown group of companies or a multinational enterprise, transfer pricing documentation must be prepared if you are involved in related party transactions. The tax authorities have in recent years made significant changes to the penalty rates, which shows their serious attempts in ensuring that companies comply with the law, especially in regards to Transfer Pricing.

 

For more information, feel free to get in touch with us.

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How Does Transfer Pricing Benefit Your Business?

benefits of transfer pricing-03

How Does Transfer Pricing Benefit Your Business?

Transfer pricing refers to the rules and methods of trade between two companies under common ownership or control. Transfer pricing documentation is a highly important procedure because it provides the company with an avenue to detail out the company’s background, functions, and related party transactions, including pricing and strategy.

 

When the documentation is prepared early, it saves a significant amount of time and manpower when the documentation is requested by the tax authorities for submission.

 

Since transfer pricing has various impacts on an organization and its Group, it is important to review the transfer pricing strategy and documentation to make sure maximum transparency is present all across the business and international trading.

Benefits of Transfer Pricing

Professional accounting services in Malaysia can help organizations in preparing reliable transfer pricing documentation. Following are some of the many benefits of transfer pricing:
  • Transfer pricing enables multinational corporations to gain profits individually for all the divisions/entities/subsidiaries they have.
  • Transfer pricing is also beneficial for large-scale organizations to determine the performance and progress of each division or subsidiary separately. As a result, they can develop suitable strategies to enhance performance in a more targeted way.
  • Apart from compiling the reported profits of each division or subsidiary, transfer pricing documentation is also important for organizations to allocate resources while evaluating the overall cost of each division or subsidiary.
  • A multinational organization often consists of several legal entities. In such a situation, transfer pricing plays a critical role in allocating the profits to the entire organization (including the separate entities) by considering the tax liabilities in various countries.
  • Transfer pricing documentation enables organizations to set the price among different division or subsidiary.
  • Transfer pricing documentation is a legal and reliable method of getting tax advantages for multinational organizations.
  • Organizations can ensure profits are generated for offering goods and services in various countries that have a lower tax rate.
  • A major advantage of transfer pricing documentation for organizations is that it helps in reducing duty cost. As a result, organizations are able to ship goods to high-tariff countries at minimum transfer prices and pay a lower duty base.
benefits of transfer pricing-01

1. Compliance

International trading can be quite tricky, especially when a large-scale organization and its entities are operating in multiple countries at the same time. There is a wide range of rules and regulations that have to be considered during this process.

 

However, if an organization and its entities in different countries have a reliable strategy in place for transfer pricing documentation, they can avoid heavy fees and penalties. This process will make sure that the organization is complying with the rules and regulations. As a result, the organization will be able to run smoothly and efficiently without running into any legal hassle.

2. Performance Evaluation

A transfer pricing documentation allows organizations to evaluate their profits against other players in the same industry. In fact, the purpose of evaluating the profits is to track the progress of the organization and compare them with major competitors. If the organization is making lower profits, then it should consider making some changes in the business processes.

Other than evaluating the performance of an organization as a whole entity, transfer pricing documentation is also helpful in evaluating the performance of each division or subsidiary of the organization. Moreover, it enables the business owners, managers, and supervisors to target the areas that are not performing up to their expectations and make suitable changes to enhance productivity and efficiency.

In short, with transfer pricing documentation, organizations are able to evaluate their performance and determine whether any changes and adjustments are necessary to enhance performance.
benefits of transfer pricing-02

3. Allocation of profits

The fact that different legal entities can be owned by a single corporation makes it important to prepare a thorough transfer pricing documentation. For organizations that engage an accounting service in Malaysia, the accountants will study all of the branches of the organization and ensure that the allocation of profits across the group is done appropriately.

 

It essentially facilitates organizations to set a suitable price among their Group members.

In a Nutshell

The bottom line is that whether you are running a homegrown group of companies or a multinational enterprise, transfer pricing documentation must be prepared if you are involved in related party transactions.


The tax authorities have in recent years made significant changes to the penalty rates, which shows their serious attempts in ensuring that companies comply with the law, especially in regards to Transfer Pricing.


For more information, feel free to get in touch with us.

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How To Hire a New Company Secretary in Malaysia?

how to hire new company secretary

How To Hire a New Company Secretary in Malaysia?

There are situations in which you might not be completely satisfied with the services you are getting from your existing company secretary in Malaysia.

In this case, changing your company secretary should not be difficult if you are familiar with the rules and regulations associated with hiring and replacing the company secretary.


The Companies Act makes it compulsory for every company in Malaysia to appoint at least one company secretary to fulfil various company responsibilities.

It is quite common for companies in Malaysia to change their company secretary.


In general, here are some of the common reasons why companies should consider changing their company secretary:

  • The company secretary is not providing documents like meeting agendas in a timely manner.
  • The company’s directors and stakeholders are not being reminded about the deadlines of different agendas and tasks.
  • The company secretary is providing inaccurate or unreliable advice.
  • The company is paying too much service fees for substandard services.

The following are some of the important factors that you should consider while changing the company secretary:

A. Powers of the Board of Directors

The board of directors takes the final decision about the appointment of the company secretary. Similarly, it has the power of removing the company secretary at any time. However, this decision must be taken after careful consideration and ensuring compliance with the law and the company’s constitution.

Generally, the process starts when the board of directors ask to terminate the services of the company secretary. Next, the company will have 30 days to hire a new company secretary. If the office of a company secretary is left vacant for more than 30 days, the company can be liable for a fine of about RM50,000.
how to hire new company secretary-1

B. Quick Appointment

In order to avoid the fine and other legal issues, most companies remove the existing company secretary and hire a new one simultaneously. As a result, the board of directors is able to meet the deadline of 30 days and ensure smooth functioning of the business as the company secretary will start fulfilling their responsibilities immediately.

It is important that before the company initiates the process of changing the company secretary, the board of directors find a suitable candidate for the job and discuss with him or her about the job requirements and the reasons for changing the previous company secretary. 

 

In this way, the company will be able to make sure that the new company secretary fulfils the general responsibilities and avoid the unpleasant experience with the previous company secretary.

C. Documents Preparation

In order to legally change the company secretary, you will have to prepare certain documents to appoint a new company secretary and change the information of the company. It is the new company secretary’s responsibility to submit the required documents to the relevant authorities and gather all of the essential information and company documents from the current secretary.

 

Preparing the relevant documents can be challenging for a lot of companies, especially ones that are not familiar with this process. Such companies can rely on the professional services provided by accounting firms in Malaysia who have years of experience in dealing with such matters.

Recommendation

It is highly recommended that you change your company secretary after important deadlines such as tax filings and company registration. If you choose to initiate this process in the middle of significant deadlines, you can end up getting involved in legal and compliance issues.

In a Nutshell

There is no denying a company secretary plays an important role in most companies. This is especially true in Malaysia, where companies can be fined for not hiring a company secretary within 30 days of company incorporation.


Therefore, it’s strongly recommended for companies to pay special attention to the factors discussed above to ensure the process of hiring a new company secretary is smooth, efficient, and successful.

how to hire new company secretary-2
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Important Things to Consider for Your Year-End Transfer Pricing Documents

year end transfer pricing documents

Important Things to Consider for Your Year-End Transfer Pricing Document

It is important for companies, especially large organizations to perform a comprehensive year-end financial review and prepare an accurate and reliable transfer pricing document in Malaysia. Whether the review takes place at the end of December, June, or any other month, it must be performed with utmost care and professionalism so that the transfer pricing document is reliable.

 

An annual review is also important to perform transfer pricing risk assessment and determine if you need to make any significant changes to the transfer pricing process. There are different aspects that you must consider during this process. Keep reading to learn about these important factors:

1. Review Intercompany Transactions

It is crucial to review the intercompany transactions to evaluate the volume and cost of each transaction. Moreover, any significant errors should be removed in this review. If your company has made any new transactions during this process, you should add them in as well.

 

Generally, it is highly recommended that you get professional accounting services for a thorough review and the preparation of transfer pricing documents.

2. Financial Results

Companies have to review their financial condition on a daily basis. It includes reviewing the company’s financial records and statements. You should start this process by analyzing the financial involvement in any transactions with the related parties.

 

It also includes determining whether you have met your yearly financial goals. Transfer pricing adjustments have to be made if the inter-company pricing is not within the arm’s length range.

3. Adjustments

Generally, start-ups and small businesses will not have to make transfer pricing adjustments. However, large companies and multinational enterprises have to consider making transfer pricing adjustments due to the complexity of the intercompany transactions.

If you think that adjustments are required, then you will have to determine the amount and find out about any relevant rules and regulations that are applicable to that transaction.

Professionals who have years of experience in dealing with transfer pricing in Malaysia will be able to evaluate suitable adjustments easily.

4. Update Agreements

Generally, start-ups and small businesses will not have to make transfer pricing adjustments. However, large companies and multinational enterprises have to consider making transfer pricing adjustments due to the complexity of the intercompany transactions.

If you think that adjustments are required, then you will have to determine the amount and find out about any relevant rules and regulations that are applicable to that transaction.

Professionals who have years of experience in dealing with transfer pricing in Malaysia will be able to evaluate suitable adjustments easily.
Update Agreement

5. Best Practices for Adjustments

There is no one specific year-end adjustment method that can be applied to all types of intercompany transactions. Instead, companies and transfer pricing experts in Malaysia have to spend a considerable amount of time and resources on determining the local transfer pricing rules and best practices.

 

With thorough research and careful considerations, companies will be able to come up with a reliable transfer pricing policy that will not lead to any severe regulatory risk or an expensive failure.

 

 

Moreover, it is important for the companies to make sure that all of the transactions are as per the arm’s length principle. Moreover, the policy should be flexible enough to accommodate future adjustments as there are situations in which you will have to make further adjustments and update the transfer pricing document.

6. Internal Control System

There is no denying that companies that have designed and implemented an effective internal control system for transfer pricing in Malaysia enjoy more responsiveness and reliability in preparing transfer pricing documents.


While there is no single method that can be applied to all types of companies, there are some tried-and-tested practices of transfer pricing documentation that should be applied by the companies. Businesses have to assess potential deviations from the arm’s length principle on the basis of each transaction.

In this way, they will be able to choose the most suitable method of adjustment.


The importance of an effective internal control system is enhanced by the fact that it facilitates companies in avoiding regulatory issues from the government agencies.

In a Nutshell

year end transfer pricing documents
Generally, start-ups and small businesses will not have to make transfer pricing adjustments. However, large companies and multinational enterprises have to consider making transfer pricing adjustments due to the complexity of the intercompany transactions.

If you think that adjustments are required, then you will have to determine the amount and find out about any relevant rules and regulations that are applicable to that transaction.

Professionals who have years of experience in dealing with transfer pricing in Malaysia will be able to evaluate suitable adjustments easily.
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5 Things to Figure Out Before Registering a Sdn Bhd Company in Malaysia

before registering as Sdn Bhd Company

5 Things to Figure Out Before Registering a Sdn Bhd Company in Malaysia

If you are thinking about starting a business in Malaysia, it’s a good idea to first get familiar with the Malaysian company registration process to ensure you are choosing the right type of company for your business.

 

Generally, a Sendirian Berhad (Sdn Bhd) is the most common type of business entity in Malaysia. It is a legal business entity in which the liability is limited by shares. A Sdn Bhd company is essentially incorporated as a private company with the words Sdn Bhd written with the company’s name.


In this guide, we’ll walk you through the five key things you need to know before registering a Sdn Bhd company in Malaysia.

1. Choosing the Right Company Name

It is important for you to follow the rules and regulations while deciding the proposed company names. Companies Commission of Malaysia suggests the following guidelines for choosing a suitable company name:

 

  • Names should not be misleading, offensive, or blasphemous.

  • Avoid names that suggest a connection with the royal family, government, or authorities.

  • The name must reflect the nature of your business.

  • It should not resemble an existing registered company.

  • Certain activities, such as insurance or banking, require prior approval before being used in a company name.

 

The name of any business plays a critical role in its success, so it is very important that you spend a considerable amount of time to carefully choose a suitable name for your company. All of the relevant details have to be explained in the incorporation form. A strong company name not only ensures compliance but also plays a vital role in your branding and long-term success.

before registering as Sdn Bhd Company-1

2. Defining the Nature of Your Business (MSIC Code)

When registering your Sdn Bhd, you’ll need to specify the nature of your business under the Malaysian Standard Industrial Classification (MSIC) code.

 

If you are unsure of which code applies, it’s best to consult a company secretary or seek guidance from an accounting services provider in Malaysia. This ensures accuracy during registration and avoids delays.

3. Business Address vs. Registered Address

When you are registering a Sdn Bhd company in Malaysia, you need a business address and registered address. Both of these addresses do not have to be the same. Generally, a business address is a location where the business activities are taking place.

 

A Sdn Bhd company in Malaysia must have both a business address and a registered address:

  • Business Address → The location where day-to-day business operations take place.

  • Registered Address → The official address (usually your company secretary’s office) where legal documents and government correspondence are sent.

 

On the other hand, a registered address is typically the office of the company secretary where communication related to the company is handled.

4. Company Directors and Shareholders Requirements

Directors and shareholders play important roles in a Sdn Bhd company in Malaysia. When registering a company in Malaysia, you should make sure the potential shareholders and directors are meeting the eligibility criteria set by the law.

 

The eligibility criteria for being a company director in Malaysia are:

 

  • Both Malaysians and foreigners can become the sole director of a Sdn Bhd company in Malaysia.
  • The age of the company director must be at least 18 years.
  • Director should be residing in Malaysia.
  • The candidate should not be disqualified as per section 198 of the Companies Act 2016.

 

For shareholders:

 

  • A Sdn Bhd can have up to 50 shareholders.

  • Shares are issued based on the company’s paid-up capital.

  • Shareholders must deposit their share value into the company’s bank account once incorporation is completed.

 

If you are a foreigner who does not live in Malaysia, then it is necessary for you to hire at least one resident director for your Sdn Bhd company.

 

On the other hand, a Sdn Bhd company in Malaysia can have up to 50 shareholders. The shares held by each shareholder are declared during the company registration process.

 

Similarly, the value of each share is evaluated on the basis of the total capital of the business. Once the company has fully registered as Sdn Bhd in Malaysia, the shareholders will transfer the amount into the business bank account according to the number of shares they have in the company.

5. Paid-Up Capital Requirement

To register a Sdn Bhd in Malaysia, you must have at least RM1 as paid-up capital. The declared capital must be genuine and available at the time of registration — it is illegal to declare capital that does not exist.

 

In practice, many businesses declare higher amounts (e.g., RM1,000 or RM10,000) to build credibility with banks, suppliers, and clients. A professional corporate services provider can advise on the appropriate paid-up capital for your business needs.

Frequently Asked Questions (FAQ) About Registering Company in Malaysia

The cost varies depending on professional fees and statutory charges. On average, it ranges between RM1,000 – RM3,000.

Yes, foreigners can register a Sdn Bhd, but at least one director must be a Malaysian resident.

With proper documentation, the process can be completed within 5–10 working days.

Typically, you will need:

  • Proposed company name
  • Details of directors and shareholders
  • Copy of IC/passport
  • Registered office address
  • Paid-up capital details

Working with an experienced firm like ShineWing TY TEOH ensures compliance with the Companies Act 2016, accurate documentation, and a smooth registration process.

before registering as Sdn Bhd Company-3

In a Nutshell

These are some of the most important factors that you should consider while registering a Sdn Bhd company in Malaysia. The Companies Act 2016 gives extensive details about the dos and don’ts of company registration.

 

If you choose to rely on professional services provided by accounting firms in Malaysia, the entire registration process will become easy and efficient.

 

Contact us today to learn how we can help you register your Sdn Bhd company in Malaysia.

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Effective Intercompany Agreement for Transfer Pricing

meeting in office

Effective Intercompany Agreement for Transfer Pricing

Many organizations in Malaysia spend a considerable amount of time and money on preparing an efficient and reliable transfer pricing document.

 

Overall, the process of transfer pricing in Malaysia can be quite challenging for companies that do not have access to professional guidance.

 

We hope this article can help companies realize the significance of intercompany agreements and implement the best practices in transfer pricing documentation.

Importance of Intercompany Agreements

The importance of the intercompany agreements should not be taken lightly. Some companies make the common mistake of not paying full attention to preparing effective intercompany agreements.

 

The poor quality of such agreements can result in some serious issues for the companies.

 

The following are the three most important reasons why effective intercompany agreements are necessary for transfer pricing in Malaysia:

1. A transfer pricing document is essential to fully define the scope and arrangements of transfer pricing.

As a result, intercompany agreements are essential to fully formalize and implement the transfer pricing arrangements.

Moreover, the intercompany agreements serve as official and legal evidence for both internal and external stakeholders.
2. Due to rapidly increasing globalization and international trade, the importance of transfer pricing documentation has greatly increased.

More and more countries are now demanding taxpayers to prepare proper documents.
3. Government agencies and taxation authorities also require copies of the intercompany agreements for auditing and legal investigations.

If the companies are not able to provide satisfactory documents, then it can become a legal issue for the company.

Therefore, it is important to have a thorough and up-to-date intercompany agreement to facilitate the entire process of transfer pricing.

Important Components of an Intercompany Agreement

There are several approaches used by various firms to prepare an efficient and reliable intercompany agreement.

The best way to do it is by approaching the agreement from different angles.

Whenever your company is in the process of preparing a transfer pricing document, you will need help from both tax and finance experts and professional legal writers. The following are some of the most important parts of an intercompany agreement:
2 males are shaking hand in office
1. Errors and discrepancies in the legal agreements must be avoided to ensure your company does not run into any legal troubles.

It is important to point it out because such errors are quite common in large companies.
2. An intercompany agreement must be consistent with the entire process of transfer pricing in Malaysia.

The conclusions made in the transfer pricing documentation should be the same in the intercompany agreement.
3. Any legal agreement like an intercompany agreement must be prepared according to the market standards and requirements.

The associated organizations should make sure that the expected terms and conditions are fully followed in the agreement.
Other than the aforementioned three major principles, you should keep in mind that the content of an intercompany agreement is heavily dependent on the overall nature of the transactions between the associated enterprises.

Factors affecting the controlled transactions like licensing, legal contracts, and others can also impact the entire process.

Generally, the basic requirements of an intercompany agreement are:
  • Name of the involved parties
  • Nature of the controlled transactions
  • Legal terms and conditions
  • Details about taxes
  • Information about the governing laws
signing a transfer pricing agreement

In a Nutshell

Ultimately, the goal of having an effective intercompany agreement is to facilitate the process of transfer pricing in Malaysia.


It does not only help you in preparing a thorough transfer pricing document but also allow you to avoid any legal issues associated with these contracts.


Furthermore, such agreements ensure a smooth and healthy partnership between two or more companies, so you should use the best practices available to prepare an effective and reliable intercompany agreement.


For more information, feel free to get in touch with us.

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What to Include in a Quarterly Financial Statement?

discussing the financial report in office

What to Include in a Quarterly Financial Statement?

Preparing annual and quarterly financial statements is a crucial part of a business because such reports are important in evaluating the performance of the business.

Quarterly financial statements indicate the financial condition of the business in a three-month period. In this article, you will learn all the important information regarding quarterly financial statements.

What is a Quarterly Financial Statement?

A quarterly financial statement, or quarterly report, is a type of financial statement that is issued after every three months. It simply means that a company releases four quarterly financial statements in a year.

The purpose of publishing such statements is to summarize the financial health and performance of a business. The law makes it obligatory for most companies to publish quarterly financial statements.

A thorough quarterly report includes a variety of financial reports that represent the financial health and growth of an organization. Moreover, this report includes all of the essential information like the income statement, balance sheet, and cash flow statement.

Importance of Quarterly Financial Statements

Quarterly financial statements are important in helping business owners and managers make smart strategic decisions.

Moreover, they are also useful in attracting investors by showing the financial health and growth of the company.

Shareholders can use quarterly reports for not only learning about the performance of the company but also to compare it with former quarterly financial reports to draw a conclusion on the future of the company.

You can use the process of quarterly reporting to regularly update your business performance. Therefore, the shareholders, directors, and investors will be getting the latest information about your company.

The three most important parts of a quarterly financial report are the income statement, balance sheet, and cash flow statement.
discussing the financial report in office

1. Income Statement

An income statement represents the profits and losses of a company. Preparing the income statement of a multinational enterprise can be quite challenging as there are numerous aspects that need to be considered in this process.

 

The process can be made easier by getting the professional services of an accounting firm in Malaysia.

 

Typically, it involves calculating the sales and total income of the business in a quarter. The amount of the closing stock is subtracted from the amount of opening stock and net purchases.

 

The difference between the total sales and calculated amount will represent the gross profit or loss of the company in the quarter. Other financial data, like operating expenses, insurance, utility bills, rent, and salaries, are also considered to determine the net profit or loss.

2. Balance Sheet

The purpose of a balance sheet is to compare the business assets with the owner’s equity and liabilities. The following equation is the basis of a balance sheet:

 

Assets = Capital + Liabilities

 

Accounting and audit firms in Malaysia provide their professional services to prepare a thorough balance sheet. Generally, creating a balance sheet involves creating three different columns in the sheet and writing the value of every fixed asset in a designated column.

 

Proper calculations are made to calculate the worth of the assets and determine the depreciation value. After calculating various types of liabilities and capital expenditures, the amounts are added to evaluate the quarterly owner’s equity.

3. Cash Flow Statements

A typical cash flow statement is divided into the following three main areas:

  • Operational Activities
  • Investing Activities
  • Financing Activities

This kind of statement includes the revenue generated from different sources like sales, securities, and dividends. Companies that are relying on the services of accounting firms in Malaysia will find it quite easy to maintain and update the cash flow statements on a regular basis.

 

It is important to note that the difference between the cash inflows and outflows represents the overall cash flow from the operating activities.

 

Income from long-term assets like equipment and buildings is included in the investing activities. Moreover, the cash flow from the financing activities includes the revenue generated through long-term debts and owner’s equity.

 

It also includes the cash outflows on different debt repayments. Once all of these activities are determined, the company will have a thorough cash flow statement to be included in the quarterly financial statement.

financial report display on screen

In a Nutshell

The managers and owners of the companies should pay special attention to the importance of the quarterly financial statements.


Some companies make the mistake of not considering such reports to be important. In certain cases, it can result in some serious legal issues.


Therefore, every company should consider quarterly financial statements to be an effective tool for financial planning.


Moreover, comparison of different quarterly reports ensures companies make smart business decisions for profit maximization.


For more information, feel free to get in touch with us.

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How to Register Your Company as Sdn Bhd in Malaysia?

a Muslim female clerk helping a guy to fill in a form

How to Register a Sdn Bhd Company in Malaysia (2025 Update)

Starting a business in Malaysia? Registering a Sendirian Berhad (Sdn Bhd) company is one of the most common choices for entrepreneurs due to its limited liability, credibility, and scalability. With the latest updates in 2025 and digitalisation via the SSM’s MyCoID system, registering a Sdn Bhd is now more straightforward than ever.

 

The majority of company registrations in Malaysia are as Sdn Bhd companies. According to a survey in 2019, there were about 4000 Sdn Bhd companies in Malaysia.

The popularity of such companies has greatly increased since the implementation of the Companies Act 2016 because the process has become extremely straightforward and easy to follow.

In this article, you will find important information about Sdn Bhd companies and how to register your company as Sdn Bhd in Malaysia. Let’s start with some basics:

What is a Sdn Bhd Company?

Sendirian (Sdn) Berhad (Bhd) is a private limited company in Malaysia. According to the Companies Act 2016, a Sdn Bhd company should have at least one director and one shareholder.

It is quite different from other types of company registrations in Malaysia that require at least two directors.

 

Therefore, even if you do not have business partners, you can register a Sdn Bhd company and act as the sole director and shareholder of the company. A Sdn Bhd company can have a maximum number of 50 shareholders.

Eligibility of a Sdn Bhd Company

As discussed, at least one director and shareholder are required to establish a Sdn Bhd company in Malaysia.

The same person can hold both of these positions. You can become a director of a Sdn Bhd company if you fulfil the following requirements:

 

  • At least one director who is at least 18 years old and a resident of Malaysia.

  • At least one shareholder (can be the same person as the director).

  • A registered office address in Malaysia.

  • Minimum paid-up capital of RM1 (recommended: RM1,000 or more).

  • The director must not be bankrupt or convicted of prior offences.

 

Moreover, before registering your company as Sdn Bhd, you should be familiar with the general roles and responsibilities of directors and shareholders in Malaysia to ensure you will be able to fulfil your responsibilities and make your company a success.

 

Foreigners can register a Sdn Bhd too, but may need a local resident director depending on the business sector.

working adults meeting in office

Documents Required for Malaysia Company Registration (Sdn Bhd)

When you are registering your business as a Sdn Bhd company in Malaysia, you will have to go through a thorough company registration process.

You will need some important information and documents related to your company. The following is the essential information that you must show in your company registration documents:

 

  • Copy of NRIC or passport for directors/shareholders

  • Proof of residential address (e.g., utility bill, tenancy agreement)

  • Company name and business nature (MSIC code)

  • Proposed shareholding structure

  • Paid-up capital declaration


The cost of registering a Sdn Bhd company in Malaysia is RM1,010 (including tax).

Step-by-Step Sdn Bhd Registration Process (2025)

Step 1: Name Search and Reservation (RM50)

  • Log in to MyCoID portal

  • Submit your proposed company name

  • Approval within 1–2 working days

Step 2: Register MyCoID Account

  • Create an account

  • Verify identity at an SSM counter if required

Step 3: Submit Incorporation Application (Superform)

  • Enter company details, directors/shareholders info

  • Upload supporting documents

  • Appoint company secretary

Step 4: Pay Incorporation Fees

  • Standard SSM fee: RM1,010

  • Other fees may apply (name reservation, secretary service)

Step 5: Receive Certificate of Incorporation (Section 17)

  • Issued within 3–7 working days upon approval

Timeline to Incorporate a Company

Task Duration
Name reservation
1–2 working days
Document preparation
2–5 days
Application review
3–7 working days
Certificate issuance
1–2 days
Total estimated time
2–4 weeks

Post-Incorporation Requirements

Once incorporated, you must:

  • Appoint a Company Secretary within 30 days

  • Open a corporate bank account

  • Register for income tax, SST (if applicable), and EPF/SOCSO

  • Maintain proper accounting records

  • File annual returns and financial statements

Can Foreigners Register a Sdn Bhd?

Yes, 100% foreign ownership is allowed in most sectors. However:

  • Some industries require local equity participation

  • A local nominee director may be needed

  • Certain licences (e.g., wholesale, retail) must be obtained post-registration

Common Mistakes to Avoid

  • Choosing a company name that’s too similar to existing ones

  • Not appointing a licensed company secretary on time

  • Missing annual compliance deadlines

  • Not separating personal and business finances

Get Expert Help from ShineWing TY Teoh

Setting up a company is the first step—compliance, tax planning, and financial management follow closely. At ShineWing TY Teoh, we provide end-to-end support:

  • Company registration & secretary service

  • Corporate tax & accounting setup

  • Business advisory for foreign investors

signing a contract

In a Nutshell

By following the steps above, you can easily register your company as Sdn Bhd in Malaysia.

 

If you are facing issues in preparing the required documents or need professional help, you can rely on the services provided by accounting firms in Malaysia that also include company registration.

 

Generally, the process is not difficult, and it takes 1-2 business days in which you will receive the Notice of Registration upon the approval from SSM.

 

For more information, feel free to get in touch with us.

Book a Free Consultation

Want to register your Sdn Bhd with peace of mind? Contact us now for a free consultation and let our professionals handle the paperwork while you focus on growing your business.

FAQs

For foreigners, most businesses require at least one resident director.

Legally yes, but banks and investors usually prefer at least RM1,000.

With complete documents, the whole process can take 1–2 weeks.

Yes, via the SSM’s MyCoID system.