Facts in this handbook are compiled from official sources such as local authorities. Rules change — confirm the current position through the source links or with the authority before making major decisions.
01Overview
- Region
- Southeast Asia
- Capital
- Kuala Lumpur
- Currency
- MYR
- Languages
- Malay (official); English and Chinese widely used
- ISO code
- MY / MYS
Jurisdictions
- Malaysia (federal) — Federal level; Sabah and Sarawak have separate rules on some matters
China's direct investment
- China's 2025 FDI flow
- 25.1 USD 100m
- End-2025 FDI stock
- 142.4 USD 100m
- Flow rank
- #8 by flow
Source：2025 Statistical Bulletin of China's Outward Foreign Direct Investment ↗ · Flow is for calendar 2025; stock is at end-2025. Flow rank is from Table 8 (top 20); other countries from Annex Tables 1–2 (originally USD 10k, converted to USD 100m; one decimal, two below 1). A negative flow means divestment exceeded new investment that year.
Macro indicators such as GDP and population will be added from the World Bank in the data release (P1).
02Market Entry
Industries to study: Manufacturing & plant relocationTrade, logistics & warehousingMedical devices & pharma
Foreign ownership
Whether 100% foreign ownership is generally allowed, and key exceptions. Allowed / conditional / not allowed / unverified.
100% foreign ownership allowed in most manufacturing
- Applies to
- Distribution, retail, services and regulated sectors may have equity or capital conditions; investment banks, Islamic banks and insurers generally capped at 70% foreign
- Jurisdiction
- Malaysia (federal)
- Source
- Malaysian Investment Development Authority (MIDA)
- Cross-check
-
Outward Investment and Cooperation Guide: Malaysia (2025 ed.) consistent
Tax Guide for Chinese Residents Investing in Malaysia consistent
03Business Formation
Common legal entity
The company form most commonly used by foreign investors for a local operating entity.
Private limited company (Sdn. Bhd.)
- Applies to
- Ordinary companies
- Jurisdiction
- Malaysia (federal)
- Source
- Companies Commission of Malaysia (SSM)
Foreign ownership
Whether 100% foreign ownership is generally allowed, and key exceptions. Allowed / conditional / not allowed / unverified.
100% foreign ownership allowed in most manufacturing
- Applies to
- Distribution, retail, services and regulated sectors may have equity or capital conditions; investment banks, Islamic banks and insurers generally capped at 70% foreign
- Jurisdiction
- Malaysia (federal)
- Source
- Malaysian Investment Development Authority (MIDA)
- Cross-check
-
Outward Investment and Cooperation Guide: Malaysia (2025 ed.) consistent
Tax Guide for Chinese Residents Investing in Malaysia consistent
Local director / representative
Whether a locally resident director, manager or representative is required.
At least one director whose principal residence is in Malaysia
- Applies to
- Under the Companies Act 2016
- Jurisdiction
- Malaysia (federal)
- Source
- Companies Commission of Malaysia (SSM)
Registration authority
Primary authority for company or commercial registration.
Companies Commission of Malaysia (SSM)
- Applies to
- Ordinary companies
- Jurisdiction
- Malaysia (federal)
- Source
- Companies Commission of Malaysia (SSM)
Foreign-entity setup flow
Main approval stages for a foreign investor setting up an entity (no time estimates).
Incorporate with SSM → MIDA manufacturing licence or other sector licences as needed → local business licence
- Applies to
- No time estimates given
- Jurisdiction
- Malaysia (federal)
- Source
- Companies Commission of Malaysia (SSM) Malaysian Investment Development Authority (MIDA)
- Cross-check
-
Outward Investment and Cooperation Guide: Malaysia (2025 ed.) consistent
Local registered address
Whether a local registered address or premises is required at incorporation.
A registered office in Malaysia is required
- Applies to
- Ordinary companies
- Jurisdiction
- Malaysia (federal)
- Source
- Companies Commission of Malaysia (SSM)
Beneficial ownership register
Whether companies must keep or file ultimate beneficial owner information.
Beneficial ownership information must be reported to SSM
- Applies to
- Ordinary companies
- Jurisdiction
- Malaysia (federal)
- Source
- Companies Commission of Malaysia (SSM)
04Taxation
Headline corporate income tax
Statutory headline rate for ordinary companies, before incentives, exemptions, thresholds or special regimes. Always read with the conditions.
24%
- Applies to
- Qualifying SMEs pay reduced rates on part of chargeable income
- Jurisdiction
- Malaysia (federal)
- Source
- Inland Revenue Board of Malaysia (LHDN)
- Cross-check
-
Tax Guide for Chinese Residents Investing in Malaysia consistent
Corporate income tax consistent
Indirect tax (VAT / GST / SST)
Standard rate and type of VAT, GST or sales & service tax.
Sales & Service Tax (SST): sales tax 5% / 10%, service tax mostly 8%
- Applies to
- Scope widened from July 2025; most taxable services 8%, some sectors 6%; check the latest RMCD notices
- Jurisdiction
- Malaysia (federal)
- Source
- Royal Malaysian Customs Department (RMCD)
- Cross-check
-
Outward Investment and Cooperation Guide: Malaysia (2025 ed.) differs MOFCOM guide (2025 ed.) states 6% service tax; most taxable services moved to 8% from March 2024 (some remain at 6%) — verify with RMCD
Customs and Sales & Service Tax (SST) consistent
Tax authority
Authority responsible for corporate tax registration and filing.
LHDN; SST administered by RMCD
- Applies to
- Ordinary companies
- Jurisdiction
- Malaysia (federal)
- Source
- Inland Revenue Board of Malaysia (LHDN) Royal Malaysian Customs Department (RMCD)
Dividend withholding tax (non-residents)
General withholding on dividends paid to foreign shareholders, before treaty relief.
Generally no withholding tax on dividends
- Applies to
- Single-tier dividends; from 2025 individuals pay 2% on annual dividend income above RM100,000 (not withheld by the company)
- Jurisdiction
- Malaysia (federal)
- Source
- Inland Revenue Board of Malaysia (LHDN)
- Cross-check
-
Tax Guide for Chinese Residents Investing in Malaysia consistent
Corporate income tax consistent
Tax treaty with China
Whether a double taxation agreement with China is in force. Rates and conditions per the treaty text.
In force
- Applies to
- Rates, holding thresholds and conditions per the treaty text and STA publications
- Jurisdiction
- Malaysia (federal)
- Source
- State Taxation Administration (China)
05Banking & Payments
Banking & financial regulator
Primary regulator for banking and foreign exchange.
Bank Negara Malaysia (BNM)
- Applies to
- Foreign exchange policy applies; check BNM rules for cross-border flows
- Jurisdiction
- Malaysia (federal)
- Source
- Bank Negara Malaysia (BNM)
Exchange controls
Whether general exchange controls or cross-border fund rules apply.
Foreign exchange policy applies
- Applies to
- BNM rules apply to cross-border borrowing, investment and conversion
- Jurisdiction
- Malaysia (federal)
- Source
- Bank Negara Malaysia (BNM)
- Cross-check
-
Outward Investment and Cooperation Guide: Malaysia (2025 ed.) consistent
Tax Guide for Chinese Residents Investing in Malaysia consistent
Banking and foreign exchange policy consistent
06Employment
Labour & work permit authority
Authority for labour rules and foreign employee work permits.
Ministry of Human Resources
- Applies to
- Sabah and Sarawak have their own labour ordinances
- Jurisdiction
- Malaysia (federal)
- Source
- Ministry of Human Resources Malaysia
Foreign employee work permit
Main permit types needed for foreign employees to work legally.
Employment Pass and other passes
- Applies to
- From 1 Jun 2026 minimum basic salaries rose for each EP category (RM20,000 for Category I); some posts need local recruitment first; check ESD for exact thresholds
- Jurisdiction
- Malaysia (federal)
- Source
- Immigration Department of Malaysia
- Cross-check
-
Outward Investment and Cooperation Guide: Malaysia (2025 ed.) consistent
Expatriate employment passes consistent
Social security contributions
Main employer social security schemes for local and foreign employees.
EPF and SOCSO
- Applies to
- From October 2025 foreign employees must join the EPF (2% employer + 2% employee); they are also covered by SOCSO's employment injury scheme
- Jurisdiction
- Malaysia (federal)
- Source
- Employees Provident Fund (KWSP/EPF)
- Cross-check
-
Outward Investment and Cooperation Guide: Malaysia (2025 ed.) differs MOFCOM guide says foreign workers are covered by the Workmen's Compensation Act and SOCSO covers locals; foreign workers joined SOCSO's employment injury scheme in 2019 — verify current rules
Employer contributions consistent
07Trade & Customs
Customs authority
Authority for import/export clearance and tariffs.
Royal Malaysian Customs Department (RMCD)
- Applies to
- Ordinary companies
- Jurisdiction
- Malaysia (federal)
- Source
- Royal Malaysian Customs Department (RMCD)
Main free trade agreements
Main regional and bilateral trade agreements relevant to Chinese exporters (not exhaustive).
ASEAN, RCEP, CPTPP, ASEAN–China FTA and others
- Applies to
- Preferential tariffs require meeting rules of origin
- Jurisdiction
- Malaysia (federal)
- Source
- Ministry of Investment, Trade and Industry (MITI)
08Investment & Manufacturing
Investment authority / agency
Body responsible for approving, registering or promoting foreign investment.
MIDA
- Applies to
- Ordinary companies
- Jurisdiction
- Malaysia (federal)
- Source
- Malaysian Investment Development Authority (MIDA)
Free zone / SEZ regime
Whether free zones or special economic zones operate under rules different from the mainland.
Free industrial zones, free commercial zones and others
- Applies to
- Different customs and tax treatment within zones; from 2025 the Johor–Singapore SEZ offers 5% or 10% rates and other incentives to qualifying companies
- Jurisdiction
- Malaysia (federal)
- Source
- Royal Malaysian Customs Department (RMCD) Malaysian Investment Development Authority (MIDA)
- Cross-check
-
Tax Guide for Chinese Residents Investing in Malaysia partly consistent
09Digital & IP
Personal data protection law
Main law and regulator governing collection, use and cross-border transfer of personal data.
Personal Data Protection Act (PDPA)
- Applies to
- Applies to personal data in commercial transactions; recent amendments added breach notification and other duties
- Jurisdiction
- Malaysia (federal)
- Source
- Personal Data Protection Department (JPDP)
IP office
Authority for trademark and patent filing and registration.
MyIPO
- Applies to
- Trademark rights are territorial; register locally or designate via the Madrid System (check WIPO membership)
- Jurisdiction
- Malaysia (federal)
- Source
- Intellectual Property Corporation of Malaysia (MyIPO)
10Compliance & Risk
New York Convention party
Whether the country is party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which affects enforcing foreign arbitral awards locally.
Yes
- Applies to
- Foreign arbitral awards can be enforced under the Convention, subject to its limited refusal grounds
- Jurisdiction
- Malaysia (federal)
- Source
- UNCITRAL
Live risk monitoring
Geopolitical, conflict and trade-route risk events for Asia-Pacific, monitored by our sister site Global Risk Monitor.
View Asia-Pacific risk monitor
Global Risk Monitor · Geopolitical and trade-route risk monitoring
11Step-by-Step
Main setup steps in Malaysia
- 1Incorporate with SSM
- 2MIDA manufacturing licence or other sector licences as needed
- 3local business licence
No time estimates given
General checklist (setting up a subsidiary)
- Decide model and jurisdiction
- Confirm licences
- Prepare documents
- Incorporate
- Register for tax
- Open bank account
- Obtain operating licences
- Start operations
Steps follow the setup-procedure fact on this page, without times or fees; rely on the official sources.
12Official Resources
Chinese official resources
Country materials from MOFCOM, the State Taxation Administration and China's overseas commercial offices
- MOFCOM country investment guideMOFCOM · PDF (Chinese)
- Country tax guide (STA)State Taxation Administration · PDF
- Commercial office中华人民共和国驻马来西亚大使馆经济商务处
- MOFCOM going-global platformMOFCOM
- Compliance & security alertsMOFCOM platform
Official guides are long Chinese-language PDFs updated on the publishers' schedules. Our structured facts cite local authorities as primary sources; use these guides to cross-check.
Local authorities
- Company registration Companies Commission of Malaysia (SSM) Company registration · Accessed 2026-11-12
- Tax Inland Revenue Board of Malaysia (LHDN) Corporate income tax · Accessed 2026-11-12
- Customs Royal Malaysian Customs Department (RMCD) Customs and Sales & Service Tax (SST) · Accessed 2026-11-12
- Investment Malaysian Investment Development Authority (MIDA) Investment and manufacturing licences · Accessed 2026-11-12
- Financial regulation Bank Negara Malaysia (BNM) Banking and foreign exchange policy · Accessed 2026-11-12
- Labour Ministry of Human Resources Malaysia Employment rules · Accessed 2026-11-12
- Labour Employees Provident Fund (KWSP/EPF) Employer contributions · Accessed 2026-11-12
- Investment Ministry of Investment, Trade and Industry (MITI) Free trade agreements · Accessed 2026-11-12
- Labour Immigration Department of Malaysia Expatriate employment passes · Accessed 2026-11-12
- Legislation Personal Data Protection Department (JPDP) Personal Data Protection Act (PDPA) · Accessed 2026-11-12
- Company registration Intellectual Property Corporation of Malaysia (MyIPO) Trademarks and patents · Accessed 2026-11-12