The Asian country Malaysia is one among the few countries that have been witnessing a rise in the number of foreign investments over the past few years. Many foreign, as well as multinational companies, have set up companies in the country because of the opportunities it offers and the ease of doing business. Foreign investors have set up businesses in sectors such as oil, gas, automotive manufacturing, food, luxury products, mineral exploration, and aerospace, among many others. Most of the foreign-owned businesses are set up in Kuala Lumpur, the capital of Malaysia. Specifically, they are located in the Klang Valley.
Branch Office
Another option that foreign corporations can make use of is branch office registration in Malaysia. A foreign company that wants to establish a place for conducting commercial and trading activity in the country has to register a subsidiary or a branch office.
To register a branch office it is not necessary to incorporate a new company. Further, it is not considered to be a separate legal entity in the country. A branch office is a type of business operation for foreign companies. Branch offices operate on a short-term basis when compared with local company incorporation.
However, it is to be borne in mind that a foreign company cannot register a branch office for carrying out businesses in the retail and wholesale trade sectors. All businesses having foreign interests involved in wholesale and retail trades must operate by incorporating a local company.
Branch Office Registration in Malaysia
A branch office should have a person residing in Malaysia as its authorised agent. He/she is responsible for the acts, things, and matters that are required to be executed by a foreign company as per the provisions of the Companies Act. He/she will also be personally liable to pay all penalties imposed as per the Act.
Registration fee To Be Paid the Companies Commission (SSM) is as follows:
- Share capital up to RM 1 million – RM 5,000
- Up to RM 10 million – RM 20,000
- Up to RM 50 Million – RM 40,000
- Up to RM 100 Million – RM 60,000
- Above RM 100 Million – RM 70,000
In order to determine the registration fee, the foreign company’s nominal share capital (paid up or authorised) is converted into the Malaysian Ringgit at the current exchange rate. If the foreign business does not specify the share capital, the flat rate fee payable to SSM is RM 70,000.00.
For tax purposes, a branch office in Malaysia is considered as a non-resident company. Such a company does not qualify for tax incentives. Further, a withholding tax of 10 percent plus 3 percent is levied on payments received by the branch for services provided in Malaysia. It is because of this reason foreign companies prefer setting up subsidiary companies rather than branch offices.
For more information on branch office registration in Malaysia, please visit our website https://www.offshore-labuan.com At QX Trust Limited, we specialize in providing tailor-made services for setting up businesses in Malaysia or the country’s offshore jurisdiction of Labuan.