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 are not included yet; see official statistics such as the World Bank.
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 Malaysiaconsistent
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 Malaysiaconsistent
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 Malaysiaconsistent
Corporate income taxconsistent
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.)differsMOFCOM 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 Malaysiaconsistent
Corporate income taxconsistent
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 Malaysiaconsistent
Banking and foreign exchange policyconsistent
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 passesconsistent
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.)differsMOFCOM 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 contributionsconsistent
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 Malaysiapartly 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 registrationCompanies Commission of Malaysia (SSM)Company registration · Accessed 2026-11-12
- TaxInland Revenue Board of Malaysia (LHDN)Corporate income tax · Accessed 2026-11-12
- CustomsRoyal Malaysian Customs Department (RMCD)Customs and Sales & Service Tax (SST) · Accessed 2026-11-12
- InvestmentMalaysian Investment Development Authority (MIDA)Investment and manufacturing licences · Accessed 2026-11-12
- Financial regulationBank Negara Malaysia (BNM)Banking and foreign exchange policy · Accessed 2026-11-12
- LabourMinistry of Human Resources MalaysiaEmployment rules · Accessed 2026-11-12
- LabourEmployees Provident Fund (KWSP/EPF)Employer contributions · Accessed 2026-11-12
- InvestmentMinistry of Investment, Trade and Industry (MITI)Free trade agreements · Accessed 2026-11-12
- LabourImmigration Department of MalaysiaExpatriate employment passes · Accessed 2026-11-12
- LegislationPersonal Data Protection Department (JPDP)Personal Data Protection Act (PDPA) · Accessed 2026-11-12
- Company registrationIntellectual Property Corporation of Malaysia (MyIPO)Trademarks and patents · Accessed 2026-11-12