JALAN ECO SANTUARI 8/1C, PERSIARAN ECO SANTUARI, 42500 TELOK PANGLIMA GARANG, SELANGOR

Options for foreign companies to establish a presence in Malaysia

Establishing a company by non-Malaysian citizens

Subsidiary | Branch Office | Representative Office

Comparison ItemSubsidiaryBranch OfficeRepresentative Office (RO)
Entity NameDoes not need to be the same as the parent companyMust be the same as the parent companyMust be the same as the parent company
Permitted ActivitiesCan engage in all commercial activities*Must be the same as the parent companyCan only conduct market research or coordination activities
Suitable ForLocal or foreign companies wishing to expand in MalaysiaForeign companies wishing to expand temporarily in MalaysiaForeign companies wishing to establish a temporary liaison for investigation and not engage in actual commercial transactions
OwnershipCan be 100% owned by foreign* or local individuals100% owned by the parent companyNo ownership
Separate LegalYesNoNo
Maximum Number of MembersUp to 50Not applicableNot applicable
Minimum Incorporation Requirements
  • At least one shareholder or 100% local or foreign entity
  • One local director who does not need to be Malaysian but must hold a valid work permit and have a primary residence in Malaysia
  • A registered practicing company/qualified secretary, public accountant, or lawyer registered with the Companies Commission of Malaysia (SSM) can assist with registration documents and other requirements
At least one Malaysian resident as an agent
  • Recommended operating expenditure must be at least RM 300,000 annually
  • Funding sources should be from outside Malaysia
Limited LiabilityYesNo, liability falls on the parent companyNo, liability falls on the parent company
Account AuditYesYesYes
Submission of Accounts to SSM and LHDNYesYesYes
Annual ReportingMust submit the subsidiary’s audited reportMust submit the audited report of the branch and parent companyNot applicable
Tax Treatment
  • Taxed as a Malaysian resident entity and may enjoy local tax benefits
  • Profits generated in Malaysia (subject to tax adjustments) are taxed at 25%. The first RM 500,000 of taxable income for small and medium enterprises is taxed at 20%
  • Tax incentives may be available based on the type of activities conducted
  • Taxed as a non-resident entity and cannot enjoy local tax benefits
  • Profits attributed to the branch (subject to tax adjustments) are taxed at 25%
  • Service fees received by the branch in Malaysia are subject to 10% + 3% withholding tax
  • Generally not eligible for tax incentives
Not applicable
Appointment of OfficersMust appoint at least one local resident as a directorMust appoint at least one local resident as an agentNot applicable
Employee HiringNo restrictions on hiring local or foreign employeesNo restrictions on hiring local or foreign employees
  • Foreign employees may be assigned based on the functions and activities of the representative office; they can only hold managerial and technical positions
  • Assigned foreign employees must be employed by the applying company or its subsidiaries/group
ReferenceLocal Company Registration GuideGuide to Registering a Foreign Company in MalaysiaGuidelines for Establishing a Representative Office / Regional Office

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Phone Number: +60 3-8682 1802 | Email:  officer@rising.com.my