| Types of Foreign Companies Structure | Subsidiary Company / Private Limited Company | Branch Office | Representative Office (RO) |
| Entity Name | Need not be the same as parent company | Must be the same as parent company | Must be the same as parent company |
| Allowed Activities | Can conduct all business activities* | Must be the same as the parent company | Can only conduct market research or coordinating activities |
| Suitable For | For local or Foreign Companies that wish to expand their operations in Malaysia | For Foreign Companies that wish to expand their operations in Malaysia for short term basis | For Foreign Companies that wish to set up temporary vehicle in Malaysia to conduct research and act as liaison office and other activities which will not result directly in actual commercial |
| Ownership | Can be 100% foreign* or locally owned | 100% owned by the head office | No Ownership |
| Separate Legal Entity | Yes | No | No |
| Cap on Number of Members | Yes, max 50 | Not Applicable | Not Applicable |
| Minimum Setting up Requirement | – Min one shareholders or can be solely owned by a corporate body (either 100% local or 100% foreign-owned*) allowed. – One resident director are required, who need not be Malaysians but must have valid work permits and a principal residential address within Malaysia. – Practising company/ qualified secretaries, public accountants or lawyers who are registered with the Companies Commission of Malaysia (CCM) can provide assistance with the incorporation documents and other requirements. | Must have at least one Malaysia Resident Agent to set up the Branch | – The proposed operational expenditure of the RE must be at least RM300,000 per annum. – The RE should be financed by funds emanating from sources outside Malaysia |
| Limited Liability | Yes | No, Liabilities extend to parent company | No, Liabilities extend to parent company |
| Need for Audited Accounts | Yes | Yes | No |
| Filing of Accounts with SSM and LHDN | Yes | Yes | No |
| Annual Filing | Must file audit report of subsidiary | Must file branch office’s as well as parent company’s audit reports | Not Applicable |
| Tax Treatment | – Taxed as Malaysia resident entity, local tax benefits available – Tax at 17% on first RM600,000 and 24% at next RM600,000 of chargeable income Malaysian sourced income (profit, adjusted for tax purposes).– Tax incentives may be available depending on the type of activity undertaken and subject to meeting eligibility conditions. | – Taxed as non-resident entity, local tax benefits not available – Tax at 24% on profits attributable to the branch (subject to tax adjustments). – Withholding tax of 10% + 3% is applicable on payments made to the branch for services performed in Malaysia (as branch is a non-resident for tax purposes) – Generally tax incentives are not available to branch. | Not Applicable |
| Appointment of Officers | Must appoint at least one resident director to set up the Company | Must appoint at least one resident agent to set up the Branch | Not Applicable |
| Staff Hiring | No restrictions on hiring local or foreign staff | No restrictions on hiring local or foreign staff | A Representative office/Regional office will be given expatriate post and the number allowed depends on the functions and activities of the Regional Office/Representative Office. Expatriates will only be considered for managerial and technical posts. The proposed expatriate must be currently employed by the applicant company or its subsidiary or within the group. |
FOREIGN COMPANY SETUP OPTIONS
Registration fee for branch office
Registration fees payable to SSM shall be as per the payment schedule below:
| WITH SHARE CAPITAL (RM) | FEES (RM) |
| Up to 1,000,000 | 5,000 |
| 1,000,001 – 10 Million | 20,000 |
| 10,000,001 – 50 Million | 40,000 |
| 50,000,001 – 100 Million | 60,000 |
| Exceeding 100 Million | 70,000 |
- In determining the registration fees, the nominal share capital either authorised or paid up of the foreign company should first be converted to the Malaysian currency (Ringgit Malaysia) at the prevailing exchange rate.
- In the event a foreign company does not prescribe any share capital, a flat rate of RM70,000.00 shall be paid to SSM.
- A Malaysia Branch Office is considered a non-resident company for tax purposes. Non-resident companies are not eligible for tax incentives for new start up or resident companies. Besides, withholding tax of 10% + 3% is applicable on payments made to the branch for services performed in Malaysia (as branch is a non-resident for tax purposes). In view of this, most foreign companies prefer to set up a Subsidiary Company rather than a Branch Office.
- On the other hand, Representative Office is suitable for foreign company who want to collect relevant information on investment opportunities in Malaysia especially in the manufacturing and services sector, enhance bilateral trade relations, promote the export of Malaysian goods and services and carry out research and development (R & D). Representative Office is prohinited from undertake any commercial activities and only represents its head office/principal to undertake designated functions.