Company Registration in Malaysia for Foreigners – 2025 Complete Guide
3. Private Limited Company (Sdn. Bhd.)
Starting a business venture in Malaysia can be both exciting and challenging. Malaysia is known for its favourable business environment, ranking 12th globally, which makes it an attractive destination for foreign entrepreneurs.
This comprehensive guide walks you through everything you need to know—from company types and registration procedures to capital requirements and tax incentives. Whether you’re an entrepreneur, investor, or expanding your global footprint, this article helps you make confident, informed decisions.
However, foreign business owners need to fulfil certain legal and administrative requirements to establish their presence in this promising market.
Can Foreigners Start a Business in Malaysia?
Yes, they can, but with specific considerations. Malaysia encourages foreign investment and trading by participating in international trade agreements, such as the ASEAN Free Trade Area.
While the government is welcoming to foreign investors, certain restrictions apply, including the types of business entities and sectors open to foreigners.
Why Start a Company in Malaysia?
Malaysia continues to attract foreign investors thanks to its:
Strategic Location in Southeast Asia
Multilingual Workforce with strong English proficiency
Business-Friendly Policies, with company incorporation available 100% online via the Companies Commission of Malaysia (SSM)
Attractive Tax Incentives, including Pioneer Status and Investment Tax Allowances
Affordable Operating Costs and infrastructure
Whether you’re entering e-commerce, manufacturing, technology, or professional services, Malaysia offers a solid platform for business growth.
Types of Foreign Business Entities in Malaysia
Before venturing into the Malaysian business landscape, you must select the most suitable business structure. As a foreign entrepreneur, you have several options:
1. Private Limited Company (Sdn. Bhd.)
The most popular option among foreigners, a Sdn. Bhd. offers:
100% foreign ownership in many sectors
Limited liability protection
Eligibility for local tax benefits
Requires at least one director who is a Malaysian resident (can be fulfilled via nominee services)
Minimum paid-up capital: RM1,000 (industry-dependent; some require RM500,000+)
2. Labuan Company (for offshore or international businesses)
Registered under the Labuan Financial Services Authority (Labuan FSA)
Ideal for trading, finance, holding, or IP licensing
Attractive tax regime (3% on audited net profits or RM20,000 flat rate)
3. Branch Office
Acts as an extension of your foreign company
Subject to the same tax obligations as local companies
Not a separate legal entity—parent company assumes liability
4. Representative Office (RO)
For market research or liaison activities only
Cannot conduct sales or revenue-generating activities
Valid for up to 5 years, subject to renewal
5. Limited Liability Partnership (LLP)
Hybrid structure between a company and a partnership
Allows operational flexibility
At least one compliance officer must be a Malaysian resident
Step-by-Step Company Registration Process
Once you’ve determined the right business structure, you must proceed with registering your company with the Companies Commission of Malaysia (SSM). Registering a business in Malaysia typically takes 5 to 10 working days. Foreigners may also engage the service of an accounting firm in Malaysia to carry out this process on their behalf. This process involves several key steps:
Step 1: Name Search and Reservation
Initiate the process by searching for an available business name that complies with SSM’s guidelines and does not conflict with existing businesses.
Conducted via SSM’s MyCoID system
Name must be unique and not infringe trademarks
Reservation valid for 30 days (RM50 fee)
Step 2: Prepare Incorporation Documents
Submit the necessary documents and information, including the Memorandum and Articles of Association, business plan, passport, and visa to the SSM. The registration fees and timeline depend on your chosen business structure and the method of registration.
Company constitution
Declaration by director(s) and secretary
Share structure and paid-up capital details
Residential address and identification documents
Step 3: Submit to SSM
Depending on your business’s nature, you may need additional licences and permits from government agencies, such as the Ministry of Trade and Industry or the local council. Ensure you obtain the required permits for your specific business activities.
File all documents through the MyCoID 2016 portal
Upon approval, you’ll receive your Certificate of Incorporation (Form 9)
Step 4: Open a Corporate Bank Account
Choose from major banks like Maybank, CIMB, HSBC, or RHB
Physical presence of directors is usually required
Some banks request initial deposits of RM1,000–RM50,000 depending on business type
Step 5: Register for Tax & Employer Obligations
Register your business with the Inland Revenue Board (LHDN) and acquire a tax identification number. Comply with Malaysia’s tax laws, including filing annual tax returns and paying corporate tax and goods and services tax (GST).
Inland Revenue Board (LHDN) for tax registration
EPF and SOCSO for employee contributions
Human Resources Development Fund (if applicable)
Capital Requirements for Foreign-Owned Companies
Malaysia does not mandate a minimum capital for Sdn. Bhd. companies unless your business involves regulated sectors or employs foreign workers.
| Business Type | Minimum Paid-Up Capital |
|---|---|
| General Business (non-regulated) | RM1,000 |
| Wholesale/Retail Trade (WRT License) | RM1,000,000 (100% foreign-owned) |
| Employment of foreign expatriates | RM500,000 – RM1,000,000 |
Malaysia does not mandate a minimum capital for Sdn. Bhd. companies unless your business involves regulated sectors or employs foreign workers.
Taxation & Government Incentives
Corporate Tax Rates (2025)
| Company Type | Tax Rate |
|---|---|
| Resident Company | 17% on first RM600,000 (if revenue < RM50 mil), then 25% |
| Non-resident Company | Flat 25% |
| Labuan Company | 3% (or RM20,000 flat) |
Incentives You May Qualify For:
- Pioneer Status (partial or full income tax exemption)
- Investment Tax Allowance (ITA)
- Reinvestment Allowance
- MSC Malaysia Status (for tech/digital companies)
- Green Technology Incentives
To access these, submit applications to MIDA (Malaysian Investment Development Authority) or Labuan FSA where applicable.
Overcoming Challenges
Starting a business in Malaysia as a foreigner may pose challenges such as language barriers, cultural differences, securing financing, and finding local partners or staff.
To overcome these hurdles and ensure compliance with the legal and regulatory framework, seek professional advice and support from local experts, including lawyers, accountants that offer accounting services in Malaysia, and business consultants.
Industries for Foreign Investments in Malaysia with Incentives
Malaysia offers a range of industries for foreign investors, each with its own set of incentives. The following are just some of the examples.
1. Manufacturing Sector
Pioneer Status
Offers a five-year partial exemption from income tax, with taxation on only 30% of statutory income. You can carry forward unabsorbed capital allowances and losses.
Investment Tax Allowance
Provides a 60% allowance on qualifying capital expenditure within five years, offsettable against 70% of statutory income. Any unutilized allowance can be carried forward.
2. Agricultural Sector
Incentives for Food Production
Offers tax deduction equivalent to investment made in subsidiary companies engaged in food production activities. Subsidiaries can enjoy full tax exemption on statutory income.
Incentives for Production of Halal Products
Encourages investments in halal food production, offering a 100% investment tax allowance on qualifying capital expenditure within five years.
3. Biotechnology Industry
- Exemption of 100% statutory income for new businesses or expansion projects for five years.
- Concessionary tax rate of 20% on statutory income from qualifying activities for ten years.
- Exemption from import duty and sales tax on raw materials, components, machinery, and equipment.
- Double deductions on expenditures incurred for research and development and export promotion.
What to Do After Setting Up a Company in Malaysia as a Foreigner
After successfully establishing your company in Malaysia, you will need to adhere to local regulations. Here are the key steps:
Opening a Corporate Bank Account
Once your company is incorporated, you can open a corporate bank account. Many banks now facilitate online communication with clients, but be aware of specific regulations regarding certain nationalities.
Business Licence
In most cases, businesses need to apply for licences, including business premise and signboard licences. Licensing requirements may vary based on your industry, so ensure compliance to operate smoothly.
Registration of EPF and SOCSO
When hiring local employees, you must register with the Employees Provident Fund (EPF) and the Social Security Organisation (SOCSO) to provide employee benefits and social security protection.
Application of Work Visa – Employment Pass
Depending on your employment needs, apply for the appropriate work visa, such as the Malaysia Employment Pass, to ensure legal employment for foreign staff.
Working Visas and Permits
If you intend to work in or relocate to Malaysia, you’ll need a valid employment pass. Common options include:
Employment Pass (EP) – For professionals in key roles; valid for 1–5 years
Professional Visit Pass – For short-term assignments
Dependent Passes – For family members of EP holders
To qualify, the company must have sufficient paid-up capital, office premises, and a clear business plan.
Timeline & Cost Breakdown
| Stage | Duration | Estimated Cost |
|---|---|---|
| Name Reservation | 1–2 days | RM50 |
| Company Incorporation | 3–5 days | RM1,000–RM3,000 |
| Bank Account Opening | 1–2 weeks | Free (min. balance applies) |
| Licensing (if needed) | 2–8 weeks | RM1,000–RM3,000+ |
| Total Time & Cost | ~2–6 weeks | RM2,000–RM7,000+ |
Need help calculating your capital or tax liabilities? Contact us for a free consultation.
Frequently Asked Questions (FAQs)
Yes, but you must appoint a local director or use nominee director services.
Yes, especially under a Sdn. Bhd. structure, unless restricted by sector-specific laws.
It depends on your activity. Common licenses include WRT (retail/trading), Halal Certification, and sector-specific permits.
Not initially, but a valid Malaysian address is required. Virtual office solutions are available.
Why Work with ShineWing TY Teoh?
With over a decade of experience helping foreigners register companies in Malaysia, we offer:
End-to-end support: from SSM to tax & immigration
Fast turnaround & responsive service
Local experts who speak your language
Transparent pricing with no hidden costs
In Summary
Starting a business in Malaysia as a foreigner can be a rewarding venture, but it demands meticulous planning, regulatory compliance, and comprehensive market research.
Expert services such as accounting services in Malaysia can assist foreigners in overcoming the challenges by offering professional guidance for the successful setup of a business in Malaysia. Some of these professional services also include China Desk and Japan Desk services.
