Doing business in Malaysia

Malaysian commercial law follows the English common law tradition, with key statutes including the Companies Act 2016, the Income Tax Act 1967, the Sales Tax Act 2018 and Service Tax Act 2018, and the Financial Services Act 2013. The Companies Commission of Malaysia (SSM) registers companies and beneficial ownership, the Inland Revenue Board (LHDN) administers income tax, the Royal Malaysian Customs Department runs SST and customs, Bank Negara Malaysia sets foreign exchange policy, and MIDA is the main investment promotion and incentives agency.

Key facts

Corporate income tax

24% (standard rate; to be confirmed with LHDN)

Sales and Service Tax

Scope broadened from 1 July 2025

Main entity form

Private company under the Companies Act 2016

Foreign ownership

No equity conditions in the Companies Act 2016; sector limits apply

Exchange controls

Foreign Exchange Policy Notices of Bank Negara Malaysia apply

Beneficial ownership

Reportable at 20% from 1 April 2024

EPF for foreign employees

2% employer and 2% employee from October 2025

Foreign investors generally incorporate a private company with SSM under the Companies Act 2016 or register a foreign company. The Act itself sets no foreign equity conditions, but sector policies can. Resident director and secretary rules, and beneficial ownership reporting at the 20% level, apply from day one.

Key facts

• Every company doing business in Malaysia must register with SSM.

• The Companies Act 2016 imposes no equity conditions, so foreign ownership limits come from sector policy and licensing.

• At least one director and the company secretary must be resident in Malaysia.

• Beneficial owners holding 20% or more must be recorded and lodged with the Registrar, with changes lodged within 14 days.

Who handles this in MalaysiaSetting up and running a companyContracts and commercial law

Malaysia taxes companies at a standard 24% rate, with reduced rates for qualifying small companies. Indirect tax is the Sales and Service Tax, whose scope was broadened from 1 July 2025. Private companies must be audited unless they meet the new audit exemption thresholds.

Key facts

• The standard corporate income tax rate is 24%.

• The SST framework was broadened from 1 July 2025, with sales tax charged at ad valorem rates including 5% and 10%.

• Small private companies meeting two of three thresholds (RM3 million income, RM3 million assets, 30 employees) can claim audit exemption for periods from 2025.

Who handles this in MalaysiaTax and structuringAccounting and annual filingsAudit

Employers must register with the EPF and contribute for Malaysian staff and, since October 2025, for foreign staff too. Expatriates can be employed, but vacancies must be advertised locally first. Minimum wage and Employment Act coverage still need confirming.

Key facts

• Employers contribute 13% (12% above RM5,000) and employees 11% to the EPF for Malaysian staff under 60.

• Contributions are due by the 15th of the following month.

• Foreign employees with work passes now attract 2% EPF contributions from both sides, from October 2025 wages.

• Expatriates may be employed, but posts must first be advertised on MyFutureJobs for 30 days.

Who handles this in MalaysiaEmployment, payroll and immigration

Most statements here are research drafts, not yet confirmed against an official source.

MIDA approves and promotes manufacturing and many services investments and administers the main tax incentives. Incentives depend on project implementation within 24 months. Sector licensing and land rules need separate checking.

Key facts

• Incentive benefits depend on implementing the approved project within 24 months.

• The main incentives have been Pioneer Status and the Investment Tax Allowance, but the framework is being reformed and current terms must be checked.

• Foreigners cannot own sole proprietorships or partnerships, so a company or LLP is needed.

Who handles this in MalaysiaLicences, permits and regulatorsTax and structuring

Malaysia operates a foreign exchange administration regime under the Financial Services Act 2013 and Islamic Financial Services Act 2013. Bank Negara Malaysia's Foreign Exchange Policy Notices grant general approvals and set conditions, so cross-border flows need to be checked against them.

Key facts

• Bank Negara Malaysia's Foreign Exchange Policy Notices, revised from 1 June 2022, set the approvals and conditions for regulated cross-border transactions.

• Transactions in Schedule 14 need written approval unless a notice gives general approval.

Who handles this in MalaysiaPayments and currencyBanking and capital

This topic was written by AI from general knowledge and is being checked against official sources. Confirm anything you plan to rely on with a qualified local professional.

3 statements on rates, thresholds or deadlines are held back until they are checked against an official source.

Customs duties are administered by the Royal Malaysian Customs Department under the Customs Act 1967, with tariffs based on the ASEAN harmonised nomenclature. Malaysia is a WTO member and trades under ASEAN, RCEP, CPTPP and bilateral agreements, while strategic goods are controlled under the Strategic Trade Act 2010.

Key facts

• The Royal Malaysian Customs Department administers import and export duties under the Customs Act 1967.

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• Malaysia is a WTO member and a party to ATIGA, RCEP and CPTPP, so preferential rates depend on meeting rules of origin.

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Who handles this in MalaysiaCustoms, trade and export controls

This topic was written by AI from general knowledge and is being checked against official sources. Confirm anything you plan to rely on with a qualified local professional.

5 statements on rates, thresholds or deadlines are held back until they are checked against an official source.

Who handles this in MalaysiaData protection and cyber

This topic was written by AI from general knowledge and is being checked against official sources. Confirm anything you plan to rely on with a qualified local professional.

1 statement on rates, thresholds or deadlines is held back until it is checked against an official source.

The Intellectual Property Corporation of Malaysia (MyIPO) registers trade marks, patents, industrial designs and geographical indications. Malaysia is a party to the Paris and Berne Conventions, the PCT and, since the Trademarks Act 2019, the Madrid Protocol. Copyright arises without registration, and infringement can be pursued through the courts or through enforcement action by the domestic trade ministry.

Key facts

• MyIPO is the registry for trade marks, patents, industrial designs and geographical indications.

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• Trade mark registrations last ten years and can be renewed; Madrid Protocol filings designating Malaysia are possible.

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• Industrial designs need registration, while copyright arises automatically.

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• Enforcement is through civil court action and criminal enforcement for trade mark and copyright offences.

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Who handles this in MalaysiaTrade marks, patents and brands

The 2024 amendments to the Companies Act 2016 strengthened Malaysia's corporate rescue tools, including wider access to voluntary arrangements, moratoria for schemes and super-priority rescue financing. Competition law and any merger control or investment screening rules still need confirmation.

Key facts

• Corporate voluntary arrangements now extend to companies with charged assets, and judicial management is available to listed companies.

• Schemes of arrangement carry an automatic moratorium of up to two months, and rescue financing can rank ahead of other debts.

• Essential suppliers generally cannot terminate contracts just because rescue proceedings have begun.

Who handles this in MalaysiaBuying, selling and investingContracts and commercial law

Beneficial ownership information now flows to SSM and is available to competent authorities, which supports AML and anti-corruption enforcement. Anti-bribery, AML and sanctions obligations themselves still need confirmation from official sources.

Key facts

• Beneficial ownership registers are open to law enforcement and competent authorities, and information lodged with SSM is available to gazetted reporting institutions.

Who handles this in MalaysiaAnti-bribery, sanctions and compliance

This topic was written by AI from general knowledge and is being checked against official sources. Confirm anything you plan to rely on with a qualified local professional.

Malaysia has a common law court system under the Federal Constitution, with two High Courts beneath the Court of Appeal and the Federal Court. Arbitration is governed by the Arbitration Act 2005, which is based on the UNCITRAL Model Law, and the Asian International Arbitration Centre in Kuala Lumpur administers cases. Malaysia is a party to the New York Convention, and judgments from listed countries can be registered under the Reciprocal Enforcement of Judgments Act 1958.

Key facts

• Commercial disputes go to the Federal court system: subordinate courts, two High Courts, the Court of Appeal and the Federal Court.

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• The Arbitration Act 2005 is based on the UNCITRAL Model Law.

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• The Asian International Arbitration Centre in Kuala Lumpur administers arbitration and mediation.

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• Foreign arbitral awards from New York Convention states can be enforced through the High Court, and Malaysia is a party to the ICSID Convention.

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• Judgments from listed reciprocating countries can be registered; others need a fresh action.

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Who handles this in MalaysiaDisputes and arbitration