Beruflich Dokumente
Kultur Dokumente
com/my
Doing
business in
Malaysia 2013
Disclaimer
This Guide includes information obtained or derived
from a variety of publicly available sources. PwC
has not sought to establish the reliability of these
sources or verified such information. All such
information is provided as is and PwC does not give
any representation or warranty of any kind (whether
expressed or implied) about the suitability, reliability,
timeliness, completeness and accuracy of this
publication. This publication is for general guidance
only and should not be construed as professional
advice. Accordingly, it is not intended to form the
basis of any decision and you are advised to seek
specific professional advice on any transaction or
matter that may be affected by this publication before
making any decision or taking any action.
PwC / 3
Contents
Chapter 1 Chapter 2
Investment environment Business formation and the
Location and climate regulatory environment
History and political background Business formation: types of business entities
Legal system General regulatory environment
People, languages and social patterns Raising capital
Economic structure Securities market
International trade Competition policy
Foreign investment Monopolies and antitrusts
Principal government agencies Mergers and acquisitions
Court system
Intellectual property rights
Chapter 3
Labour relations and
social security
Employment regulations
Unions
Working conditions, wages/salaries and
statutory contributions
Foreign personnel
PwC / 5
Chapter 1
Investment
environment
The early development of Malaysia 11 states of Malaya, Sabah (formerly rulers from among their number
was linked to the strategic position British North Borneo), Sarawak, and to serve for a term of five years.
of Peninsular Malaysia (then called Singapore. In 1965, Singapore left the The Paramount Ruler serves as
Malaya) alongside the Straits of Federation to become an independent constitutional monarch, acting on the
Malacca, one of the worlds major republic. Malaysia now comprises 13 advice of a cabinet of ministers led by
trade routes. Referred to in Greek states and the federal territories of the Prime Minister.
literature as the Golden Chersonese, Kuala Lumpur, Putrajaya and Labuan. The federal legislature comprises
it was the centre of the spice trade Nine of these states are headed by the Dewan Rakyat (House of
that flourished in the 15th century, hereditary rulers, the Sultans, who Representatives), which is a fully
attracting traders from as far as serve as constitutional heads of state. elected body of 222 members, and
Portugal and England in the west The remaining four states are headed the Dewan Negara (Senate), which
and China in the east, many of whom by Yang di Pertua Negeri (governors), comprises 44 members appointed
settled in the peninsula and were the who are appointed for fixed terms of by the Yang di-Pertuan Agong on
forebears of the countrys multiracial office to serve as constitutional heads the advice of the Prime Minister. A
population. Malaya, as it was known of state. member of the Dewan Rakyat who
at that time consisted of a number of Each state has its own written commands the confidence of the
territories, each governed by a Malay constitution and an elected legislative majority of the members may be
ruler. From the 1500s, parts of the assembly. Each state government is appointed Prime Minister and may
peninsula fell at various periods under led by a Mentri Besar (Chief Minister), select cabinet ministers from among
the domination of the Portuguese, who is appointed from among the the members of the Dewan Rakyat
Dutch and British. By 1914 the British members of the legislative assembly. and the Dewan Negara. In practice,
had extended their influence over the The division of powers between the the overwhelming majority of cabinet
whole of Malaya, and the peninsula various state governments on the one ministers are drawn from the Dewan
came under British protection. hand and the federal government on Rakyat.
After World War II an independence the other is defined in the Federal
movement arose, culminating in Constitution, which provides for a
independence for the 11 states parliamentary system of government,
comprising the Federation of Malaya with a central federal government
on August 31, 1957. and a measure of autonomy for the
The Federation of Malaysia was 13 constituent states. The Head of
established in 1963. It consisted of the State is the Yang di Pertuan Agong
(Paramount Ruler or King), who is
elected by the nine Malay hereditary
PwC / 9
Legal system People, languages
and social patterns
The Malaysian legal system is Population All of the worlds major religions have
substantially based on the British substantial representation in Malaysia.
legal system and the principles Malaysia has a total population of The official religion is Islam, and
of common law. Matters brought 28.6 million in 2011. The Malaysian persons of the Islamic faith constitute
before the High Court may be population has a multi-ethnic, multi- more than half the total population.
appealed to the Court of Appeal and cultural composition, the dominant
later to the Federal Court, which racial group being the Malays, who Free education is provided to pupils
is the final court of appeal in the with other Bumiputra1 groups, make between the ages of 7 and 15, and it
country. Offences against Islamic up 65% of the population. The rest of extends to 19 for those who attain the
law are tried by Syariah courts, the population is made up of Chinese required academic standards. After
which are set up by the respective (26%), Indians (8%) and other completion of their primary school
state governments. unlisted ethnic groups (1%). education (which requires 6 years to
complete) the majority of students
Language, religion and education continue their education in secondary
schools. They make up a pool of
Bahasa Malaysia, which is young, educated and highly productive
romanised Malay, is the official workers. Apart from government run
language. It is the language of educational institutions ranging from
administration for the federal and kindergartens to vocational schools
state governments. Correspondence and universities which are under the
from the government is in Bahasa care of the Ministry of Education,
Malaysia, although certain there is an expanding system of private
government departments may accept schools and institutions of higher
correspondence in English. English, learning that cater to the educational
taught as a second language in needs of the population at every level,
schools, is widely used in business. including professional and vocational
training.
Going into 2013 and 2014, inflation will remain moderate around 2% to
3% given the soft commodity prices and weak global economic climate.
PwC / 13
New Economic Model Based on these principles, a holistic
approach is adopted to foster
The New Economic Model (NEM) is the competition in all sectors of the
governments response to the need to shift economy through the implementation
(the economy) to a higher level of value added of market-friendly policies and
and productivity that is based on innovation, regulations with the aim of creating
creativity and high value add activities, in new sources of growth and promoting
order to lift the country into the ranks of a higher value added sectors (e.g.
high income nation by 2020. private education, health tourism,
Islamic finance, ICT, creative
The NEM was unveiled by the Prime industries and biotechnology).
Minister on 30 March 2010. Its formulation
incorporates 3 basic principles, namely, high
income, sustainability, and inclusiveness that
undergirds the following key goals:
Principle Goal
PwC / 15
International trade
PwC / 17
Foreign investment
Malaysia welcomes and actively In line with the governments plan Malaysian equity policy
invites foreign investments. It offers for the implementation of the NEM,
a combination of incentives for the Prime Minister has recently The Foreign Investment Committee
foreign investors, without restrictions announced a slew of measures aimed (FIC) was established in 1974. Until
on the repatriation of capital and at liberalizing major sectors of the 2009, it functioned as the regulator of
profits. There is a well developed economy, namely, the services sector, acquisitions, mergers and takeovers
infrastructure of support services the financial services sector as well involving foreign and Malaysian
and facilities, and a labour force as the capital market. One significant interests other than financial services
that is priced relatively lower than step taken is the deregulation of the companies (e.g. banks and insurance
in developed countries, young and Foreign Investment Committees companies) manufacturing companies
capable of being trained to high levels investment guidelines. It is hoped and those engaged in the wholesale
of productivity. that these measures will encourage and retail trade. Under FIC guidelines
Malaysia has significant natural the entry of foreign players, including on the acquisition of a local company/
resources. Government policy those with intentions to set-up a business, a basic condition that
encourages development and regional base in view of Malaysias must be complied with (except in
processing in the manufacturing strong international linkages specific exempted transactions) is
sector through a number of incentives (including Islamic finance). However, the maintenance of at least 30%
available for resource-based with a challenging global economic Bumiputra equity in the acquired
manufacturing. Special incentives are environment, only strategic investors company. However, the government
also given to promote manufacturing with a long-term view of Malaysia are has in recent years aligned itself
related, regional operations and expected to consider capitalising on to a policy trend of relaxing equity
services-based industries, industries this platform of liberal market-friendly conditions to encourage foreign
that are knowledge based, technology- policies. The new measures would direct investments into Malaysia. For
intensive and involve high technology, better place Malaysia with regional example, since 2003, acquisitions of
and industries in the biotechnology peers in attracting foreign investments interest in manufacturing companies
sector. (see Appendix A(1.1)). and providing a business friendly licensed by MITI are exempted from
environment for high technology, compliance with FIC guidelines.
creative and value add sectors.
PwC / 19
Taxation policy Tax holidays (for companies granted Investment incentives
pioneer status), investment tax
In recent years, the government allowance and a multiplicity of other The underlying strategic thrusts of
has adopted a trend of lowering forms of incentives are available for the macroeconomic management
income tax rates, particularly the qualifying projects. The various tax are premised on a more dynamic
rate of corporate tax, which has been incentives can be complex, and some and vibrant private sector supported
reduced from 28% in YA 2006, (a rate are mutually exclusive. Professional by the enabling and conducive
that had prevailed since YA1998) to advice should be sought in order to environment put in place through
25% from YA 2009 onwards. There maximize the benefits from these various measures over the years.
were expectations that income tax incentives. In cognisance of the importance of
rates (both corporate and personal) the role of private sector investment
would be reduced further when it Labour attitude towards in ensuring sustainable growth in
was announced in the 2006 Budget foreign investment the medium and long term, the
Speech that a goods and services Government has instituted measures
tax (GST) would be implemented The Malaysian labour force welcomes to enhance investment activity in
from 1 January 2007 to replace the foreign investment as a source of Malaysia. One of the measures
existing sales tax and service tax. employment. The industrial relations is through tax incentives. Tax
However, the implementation of GST climate has traditionally been cordial incentives are generally applicable to
was subsequently postponed and and is likely to continue to be so. The investors who establish tax resident
to date, no definite implementation Malaysian Government encourages companies in Malaysia. The policy
date for GST has been announced. the employment structure to reflect is to encourage foreign companies
As such, income tax remains the the multi-racial composition of the wishing to engage in continuing
principal source of tax revenue for the Malaysian population. operations in Malaysia to incorporate
government. Despite the delay in the local subsidiaries.
introduction of GST, it is unlikely that Work permits can be obtained for
there will be any increase in income skilled foreign personnel, but it is
tax rates in the near future, in view of expected that the foreign investor
the need to keep them competitive (as will make a sincere effort to train
compared to Malaysias neighbouring Malaysians to fill these positions over
countries) in attracting foreign direct time.
investments.
PwC / 21
Chapter 2
Business
formation
and the
regulatory
environment
Business formation: types of business entities
General regulatory environment
Raising capital
Securities market
Competition policy
Monopolies and antitrusts
Mergers and acquisitions
Court system
Intellectual property rights
Types of entity the company. Shareholders/ members Two or more individuals or bodies
of a private company shall not be corporate may form a LLP for any
The following are the forms of more than fifty and are also restricted lawful business in accordance with
business organisation available in in their right to transfer their shares the terms of the LLP Agreement.
Malaysia. in the company. A public company A LLP may also be formed for the
is employed where it is intended to purposes of carrying on professional
Company invite the public to subscribe for shares services of which the partners must be
Companies are governed by the or debentures in the company or to natural persons of same professional
Companies Act 1965, which provides deposit money with the company. practice and have in force, professional
for three types of companies: indemnity insurance approved by the
Company limited by shares; Limited Liability Partnership (LLP) Registrar.
Company limited by guarantee; Limited Liability Partnership is a new
Unlimited company. business vehicle introduced by the A LLP has perpetual succession and
Companies Commission of Malaysia any change in the partners will not
In practical terms, almost all (CCM) recently. It provides the public affect the existence, rights or liabilities
companies will be companies limited with more options to choose their of a LLP.
by shares, i.e., companies with limited business vehicle.
liability, the maximum liability of a Partnership or sole proprietorship
member being limited to the value LLP is a hybrid between a company All sole proprietorships and
of share capital. Companies may be and a conventional partnership partnerships (excluding LLPs) are
formed as either private companies or and LLP is governed by the Limited unincorporated and must be registered
public companies. Liability Partnerships Act 2012. with the Registrar of Businesses
also under the auspices of the CCM.
A private company is one which is LLP is a separate legal entity from its As unincorporated entities, sole
prohibited by its articles of association partners. The liabilities of the partners proprietorships and partnerships
to issue any invitation to the public to of a LLP are limited while the LLP has have unlimited liability. In the case of
subscribe for shares or debentures of unlimited capability in conducting partnerships, partners are both jointly
the company or to deposit money with business and holding property. and severally liable for the debts and
obligations of the partnerships.
Joint venture The representative office/ regional affiliates, subsidiaries and agents in
Joint ventures are structured either office does not undertake any Southeast Asia and the Asia Pacific.
as partnerships or as incorporated commercial activities and only The regional office established
companies; the term joint venture represents its head office/principal to is responsible for the designated
does not denote a separate and distinct undertake designated functions. The activities of the company/
business entity. representative offices/regional offices organisation within the region it
operation is completely funded from operates.
Branch of foreign company sources outside Malaysia.
A foreign company is a company Foreign enterprise entities
incorporated outside Malaysia. A The representative office/
foreign company that desires to regional office is not required to be Most foreign investors incorporate
establish a place of business or to incorporated under the Companies one or more companies in Malaysia
carry on business within Malaysia, Act. The set-up of a representative/ through which all operations in
may establish a branch by filing regional office requires the approval of Malaysia are carried out.
the required returns to CCM. The the Malaysian Government.
establishment of a branch is not Foreign companies that come to
encouraged for a foreign company Representative office: An office of Malaysia solely to undertake a
engaged in wholesale or retail trade. a foreign company/ organisation construction project or some similar
approved to collect relevant form of infrastructure development
A foreign company or organization information on investment occasionally form unincorporated joint
does not have the intention to opportunities in the country, ventures with a local company. The
undertake commercial activities especially in the manufacturing choice of such structures is usually
in Malaysia and only represents its and services sector, enhance necessitated by the tax environment
head office / principal to undertake bilateral trade relations, promote in the home country of the foreign
designated functions may apply to the the export of Malaysian goods and company.
appropriate Government Authority for services and carry out research and
Representative / Regional Office. development (R&D). For a comparison of the relative
Regional office: An office of a advantages of a corporation, branch
foreign company/organisation that and sole proprietorship or partnership
serves as the coordination centre structure, see Appendix B(2.1).
for the company/organisations
PwC / 25
General regulatory environment
PwC / 27
Securities market
Bursa Malaysia greater certainty, shorter time-to- All other equity-based corporate
Public trading/exchange of shares in market and lower regulatory costs. proposals such as acquisitions (other
Malaysia is conducted through, Bursa Under the new framework, the SCs than reverse take-overs and back-
Malaysia Securities Berhad (BMSB), review of corporate proposals will door listings), disposals, placements
the stock exchange unit of Bursa focus on the following: of securities, rights offerings and
Malaysia Berhad (Bursa Malaysia). Compliance with minimum issuance of warrants, would no longer
Bursa Malaysia was previously known requirements; require the SCs approval. The SC
as the Kuala Lumpur Stock Exchange Standards of corporate governance; would continue to vet and register
Berhad (KLSE), pursuant to its Resolution of conflicts of interest; prospectuses to ensure adequate and
demutualization in January 2004. Preservation of public interest; and meaningful disclosures to investors.
From 3 August 2009, listing of shares Adequacy of disclosures to enable Bursa Malaysia will take on a more
is done through Bursa Malaysias investors to make informed active role as the frontline regulator
2 Markets the Main Market for investment decisions. for secondary equity fund raisings2.
established corporations, and the ACE
Market which is an alternative market SCs approval (under relevant
Bursa Malaysia
open to companies of all sizes and legislative provision) would only be
Derivatives Berhad
from all economic sectors. required for the following substantive
Exchange of financial and
corporate proposals in the Main
commodities futures in Malaysia is
The exchange also acts as the front Market:
concluded through the Bursa Malaysia
line regulator for the Malaysian stock Initial Public Offerings;
Derivatives Bhd. (formerly known
market and is in turn supervised by Acquisitions resulting in a
as Malaysia Derivatives Exchange
the SC. significant change in business
Berhad), a future and options
direction or policy of a listed
exchange covering financial, equity
Under a new fund-raising framework corporation (reverse take-overs and
and commodity-related instruments.
launched by the SC and Bursa back-door listings);
Malaysia on 8 May 2009, rules and Secondary listings and cross
processes for equity fund-raising have listings; and
been streamlined in order to provide Transfer of listings from the ACE
Market to the Main Market.
PwC / 29
Mergers and acquisitions
The Malaysian Code on Take-Overs Among the notable changes to the The Code makes it clear that a
and Mergers (Code) 1998 is the 2010 Code are: scheme of arrangement, compromise,
legislation governing take-overs Increased coverage of the Code amalgamation and selective capital
and mergers in Malaysia; the legal to include foreign incorporated reductions4 will have the same effects
framework for this Code was put in companies and real estate as takeover offers governed by the
place by the Securities Commission investment trusts (REITs) which are Securities Commission to ensure there
(Amendment) Act 1995, with the SC listed on Malaysian stock exchange. will be no grey areas or loopholes.
being the sole authority for matters Previously, the scope covers public
relating to takeovers and mergers. companies, whether or not it is In light of the above changes, the New
listed on any stock exchange, and Code highlights the SCs continuous
The Code seeks to ensure that such private companies as the SC efforts to raise investors protection
minority shareholders are given may determine from time to time. and transparency as well as to establish
a fair opportunity to consider the To preclude the creation of higher standards of governance in
merits and demerits of an offer and false markets in the securities take-over and merger activities within
to enable them to decide whether of the offeree, the code requires Malaysia.
they should retain or dispose of their a potential offerer to make an
shares. The 1998 Code also requires announcement on possible offers The conduct of acquisitions and mergers
offer documents, board of directors, where there are unusual changes in in Malaysia is governed by specific
circulars and independent advice the price of the potential offerees regulatory agencies and approvals
circulars to include all relevant share. from one or more of these agencies are
information required by shareholders The settlement period for required for acquisitions and mergers
and their professional advisers to make acceptances under a takeover involving foreign or Malaysian interests.
informed assessments of the merits offer has been reduced3 to allow
and risks of accepting or rejecting a normal business to resume as For more information,
take-over offer. quickly as possible, since mergers visit www.sc.com.my
and acquisitions tend to be very
The Securities Commission has disruptive for all the parties
introduced a new Code in 2010 (2010 concerned
Code) to replace the1998 Code, which 3. Cash consideration is reduced from 21 days to 10
days while consideration consisting of securities
came into force on 15 December 2010. reduced from 21 days to 14 days.
4. In this regard, the Code imposes higher
shareholders approval than ordinarily required,
under the Companies Act 1965, in which approval
for the scheme or exercise now requires vote of
at least 50% in number and 75% in value of votes
attached to the disinterested shares and not more
than 10% of votes cast against such resolution.
PwC / 31
Intellectual property rights
Intellectual Property Corporation Malaysia is a member of the World Intellectual Property Organization (WIPO),
of Malaysia a signatory to the Trade Related Aspects of Intellectual Property Rights (TRIPS)
The administration of Intellectual signed under the auspices of the World Trade Organization (WTO), a signatory
Property Rights (IPR) is undertaken to the Paris Convention and Berne Convention which govern these intellectual
by the Intellectual Property property rights. Malaysia has also acceded to the Patents Cooperation Treaty
Corporation of Malaysia (MyIPO) (PCT) in the year 2006 and effective from 16 August 2006, the PCT International
which is a corporate body established Application can be made at the MyIPO.
under the Intellectual Property
Corporation of Malaysia Act Malaysias intellectual property laws are in conformity with international standards
2002. MyIPO is an agency under and provide protection to local and foreign investors. The various legislations are
the Ministry of Domestic Trade, listed below:
Cooperative and Consumerism. Its
functions include the following: Legislation Protection for
Establishment of a strong and
Patents Act 1983 Patents
effective administration of
Patents Regulations 1986
intellectual property;
Strengthening of intellectual Trade Marks Act 1976 Trade marks
property laws; Trade Marks Regulations 1997
Providing comprehensive and Industrial Designs Act 1996 Industrial designs
user-friendly information on Industrial Designs Regulations 1999
intellectual property;
Promoting public awareness Copyright Act 1987 Copyrights
programmes on the importance of Copyright Regulations 1987
intellectual property; and Geographical Indications Act 2000 (Upon registration) protection
Providing advisory on intellectual Geographical Indications to goods following the name of
property. Regulations 2001 the place where the goods are
produced, where a given quality,
reputation or other characteristic of
the goods is essentially attributable
to their geographical origin.
Malaysia has a system of exchange To pay in foreign currency to a non- domestic credit facilities. There
control measures aimed at monitoring resident for any purpose and for is no limit if the resident is
the settlement of foreign currency settlement of import of goods and funded by own foreign currency
payments and receipts as well as services. funds maintained onshore or
encouraging the use of the countrys Investments abroad in foreign offshore.
financial resources for productive currency assets are subject to the
purposes in Malaysia. The Exchange following: Borrowings in foreign currency
Control Act, 1953 is the main -- A resident, individual or A resident company is free to:
legislation governing dealings and company, without domestic Borrow any amount in foreign
transactions in foreign currency whilst Ringgit credit facilities is free to currency from its non-resident
the Exchange Control Notices issued invest any amount abroad. non-bank related companies,
by the Central Bank of Malaysia, -- Ability to invest any amount resident related companies ,
i.e. Bank Negara Malaysia (BNM) abroad from conversion of licensed onshore banks and
embodies the general permissions and Ringgit up to RM50 million licensed International Islamic
directions of the Controller of Foreign per annum (on corporate Banks. However, where the
Exchange (the Controller). Some of group basis) for corporations non-resident non-bank related
the controls put into place include: with domestic credit facilities. company is set up solely to obtain
However for resident foreign currency loans from a
Remittances abroad companies that meet prudential non-resident financial institution,
A resident is freely permitted: requirements, direct investment the amount of borrowing from
To pay in Ringgit (to be converted abroad is permitted without the non-resident non-bank related
when remitting abroad) to a non- limit. Written permission is company continues to be subject
resident for any purpose other than required from BNM to undertake to the prevailing aggregate limit
for international trade of goods and these investments.There is no of RM100 million equivalent from
services or for investments abroad. limit if the resident is funded by non-residents.
Payment in Ringgit is however its own foreign currency funds Procure from non-resident
permitted for international trade maintained onshore or offshore. suppliers, any amount of foreign
in goods and services provided -- Ability to invest any amount currency suppliers credit for capital
payments are made or receipts are abroad from conversion of goods.
received through the non-residents Ringgit up to RM1 million per
external account. annum for individuals with
PwC / 33
Purchase of immoveable Types of accounts
properties by non-residents using Foreign currency accounts
Ringgit credit facilities In general, a resident (individual or
Non-residents are permitted to company) is allowed to open foreign
borrow any number or amount currency accounts with licensed
of Ringgit credit facilities from onshore banks, licensed international
residents (e.g. licensed on-shore Islamic banks and overseas banks for
banks / non-banks) to finance any purpose. For resident exporters,
activities in the real sector of export proceeds must be credited
Malaysia. Real sector is the into foreign currency accounts
sector where there is production maintained with licensed onshore
of goods and services which banks only. There is no restriction on
includes all industries except for the maintenance of a foreign currency
financial services. Non-residents account by a non-resident.
are allowed to finance or purchase Non-resident accounts (external
any residential or commercial accounts)
property in Malaysia (excluding Non-residents may maintain any
financing for purchase of land number of external accounts with any
only). financial institution in Malaysia and
there is no restriction on the amount
of Ringgit funds to be retained in the
external accounts. BNM has provided
a list stating the allowed sources of
ringgit funding and uses of fund for an
external account.
PwC / 39
Working conditions, wages/salaries and statutory contributions
The Malaysian Investment Development required to contribute to EPF although they may elect to do so. The rates
Authority (MIDA) publishes on its website of contributions are as follows:
at www.mida.gov.my a guide on Cost of
Doing Business in Malaysia which provides The statutory rates of contributions are as follows:
information on regulatory requirements
relating to the following: Percent (%) of employees wages
Paid leave (annual leave; maternity Malaysian citizens and Expatriates and foreign
leave; sick leave;) See Appendix C(3.1) permanent residents workers**
(mandatory)
Paid holiday;
Normal working hours; Contribution by Employer Employee Employer Employee
Payment for overtime work; Till age 55 13% 11%* RM5 per 11%*
Salaries (maximum and minimum) for (Income RM5,000****) person
executives and non-executives in the
Till age 55 12% 11%* RM5 per 11%*
manufacturing sector.
(Income > RM5,000) person
Statutory contributions in respect of
employees to the following funds: Age 56 till 75 (from 6%*** 5.5%*** RM5 per 5.5%
1 February 2008) person
Employees Provident Fund (EPF) Age 56 till 75 (from 6.5%*** 5.5%*** RM5 per 5.5%
The Employees Provident Fund Act 1 February 2008) person
1991 requires employers and employees (Income RM5,000****)
to make monthly contributions to the
EPF to secure lump sum payments to * From 1 January 2011, the rate reverted to 11%. From 1 January 2009 to 31 December 2010,
the rate was 8% with option to contribute at 11%.
employees at the age of 55 or earlier ** Not required to contribute to EPF, but can elect to contribute.
in the case of incapacity or upon *** Exceptions:
permanent departure from Malaysia. EPF monthly rate of contributions is maintained at 12% (employers share) and 11%
(employees share) under the following circumstances:
Contributions are mandatory for i. Employees who have attained the age of 55 years before 1 February 2008 and have not
employees who are Malaysian citizens made 55 years withdrawal before 1 February 2008;
or permanent residents. Expatriates and ii. Employees who have made 55 years withdrawal before 1 February 2008 and have elected
to re-contribute to EPF before 1 February 2008.
foreign workers, who are not Malaysian **** If the employer pays bonus to an employee who receives monthly wages of RM5,000.00
citizens or permanent residents are not and below and upon receiving the said bonus renders the wages received for that month to
exceed RM5,000.00, the calculation of the employer contribution rate shall be calculated at
the rate of 13% / 6.5%, and the total contribution which includes cents shall be rounded to
the next ringgit.
PwC / 41
Foreign personnel
Approval for expatriate posts Other approving agencies for The following minimum paid-up share
expatriate posts are: capital requirements must be fulfilled
Approvals for expatriate posts are Multimedia Development before an application for Expatriate
given by different authorized bodies Corporation (MDec) for Position can be processed by the
or agencies depending on the type of expatriate posts and skilled workers Expatriate Committee:
core business of the company. The in IT based companies with MSC
Malaysian Investment Development status. 100% Malaysian owned company:
Authority (MIDA) approves expatriate Public Service Department (PSD) RM250,000
posts in the following fields: doctors and nurses in government
Manufacturing hospitals and clinics; lecturers and Malaysian and foreign owned
Manufacturing related services tutors in government institutions of company:
Regional Office; Operational higher learning; contract posts in RM350,000
Headquarters; Overseas Mission; public services and jobs offered by
International Procurement Centre, the Public Service Commission or 100% foreign owned company:
etc. related government agencies. RM500,000
Hotel and tourism industry Central Bank of Malaysia - posts
Research and Development in banking, finance and insurance Company undertaking distributive
sectors. trade and foreign owned restaurant:
Securities Commission RM1,000,000
employment in security and share
market.
Expatriate Committee Restrictions on employment
employment in sectors other than of foreign personnel
the above.
The government permits a company
investing in Malaysia to bring
in technical expertise or other
executive personnel necessary for the
functioning of the company. However,
it is the governments policy that jobs
should be filled by Malaysians. The
Malaysian government is desirous that
Malaysians are eventually trained and
employed at all levels of employment.
Accounting and other records Accounting and other records are to All amounts shown in the financial
be retained for seven years after the statements shall be presented in
The accounting and other records are completion of the transactions or Malaysian currency.
the responsibility of the companys operations to which they relate.
directors. Every company incorporated Basic statements
under the Companies Act 1965 is Financial statements
required to keep such accounting The basic statements included in the
and other records so as to sufficiently The directors must present a set annual report to the shareholders are
explain the transactions and financial of financial statements to the set out below. A copy of this report is
position of the company and enable shareholders in general meeting filed with the Registrar of Companies
preparation of financial statements not later than 18 months after and is available for public inspection.
showing true and fair view to be incorporation and, subsequently, at
conveniently and properly audited. All least once in every calendar year at 1. Directors report
transactions must be recorded within intervals of not more than 15 months. 2. Financial statements
60 days of completion. Each set of financial statements must 3. Statement by directors on the
These accounting and other records cover the period from the preceding financial statements
must be kept at the companys account (or, in the case of the first set 4. Statutory declaration by the
registered office (which must be of financial statements, from the date director or officer primarily
in Malaysia) or such other place in of incorporation) to a date not more responsible for financial
Malaysia as the directors think fit. than six months before the general management
Accounting and other records relating meeting. Upon application by the 5. Auditors report
to operations outside Malaysia may company, these periods may be ex-
be kept at a place outside Malaysia, tended by the Registrar of Companies. Directors report
provided statements and returns are The financial statements must be
sent to a place in Malaysia and are in prepared in accordance with the MASB A directors report with respect to the
sufficient detail to enable preparation approved accounting standards and state of the companys affairs must
of financial statements showing true the provisions of the Companies Act be attached to every balance sheet.
and fair view. 1965, and duly audited by an approved The audited financial statements and
auditor. the directors report must be sent to
shareholders holders at least 14 days
before their meeting (except for public
company, 21 days before the meeting).
PwC / 47
Statutory requirements for foreign companies
carrying on business within Malaysia
The financial reporting framework private companies incorporated under for annual periods beginning
in Malaysia is based on accounting the Companies Act 1965 that: on or after 1 January 2014. The
standards which are issued or are not required to prepare / lodge entity may in the alternative apply
adopted by the Malaysian Accounting any financial statements under any Financial Reporting Standards
Standards Board (MASB). law administered by the Securities (FRSs) as its financial reporting
Commission (SC) or Bank Negara framework for annual periods
The MASB approved accounting Malaysia (BNM); and beginning before 1 January 2014.
standards comprise: are not a subsidiary / associate of An entity that consolidates or
1. Malaysian Financial Reporting / jointly controlled by, an entity equity accounts or proportionately
Standards (MFRS) which is required to prepare / lodge consolidates another entity that
2. Financial Reporting Standards any financial statements under any has chosen to apply FRSs as its
(FRS) law administered by the SC or BNM. financial reporting framework shall
3. Private Entities Reporting comply with the MFRS Framework
Standards (PERS) Entities other than private entities for annual periods beginning on or
shall apply the MFRS Framework for after 1 January 2014. Such entity
MFRS is an IFRS-compliant framework annual periods beginning on or after may itself choose to apply FRSs as
which became effective for annual 1 January 2012, with the exception its financial reporting framework
period beginning on or after 1 January of entities subject to the application for annual periods beginning before
2012. of MFRS 141: Agriculture and/or IC 1 January 2014.
Interpretation 15: Agreements for the An entity electing to continue
A private entity shall comply with Construction of Real Estate. preparing its financial statements
either PERS in its entirety or the MFRS in accordance with the FRS
framework in its entirety for annual Entities subject to the application of framework for annual periods
period beginning on or after 1 January MFRS 141 and/or IC Interpretation 15: beginning before 1 January 2014
2012. Only private entities can apply An entity subject to the application discloses that fact, and when it will
PERS. Private entities are defined as of MFRS 141 Agriculture and/or IC first present financial statements
Interpretation 15 Agreements for in accordance with the MFRS
the Construction of Real Estate shall framework.
comply with the MFRS Framework
PwC / 49
Auditing requirements
Principle taxes
Proposed goods and services tax
Income tax
Corporate tax system
Tax administration
Transfer pricing rules
Business reorganisations
The principal taxes are shown below: Scope of tax Malaysia has in 2013 introduced a
new business vehicle, i.e. the Limited
Taxes on income Income tax is imposed on income Liability Partnership, which will
Income tax accruing in or derived from Malaysia receive the same tax treatment as
Petroleum income tax with the general exception of companies.
resident companies carrying on
Taxes on transactions a business of air/sea transport, Taxable income and gains
Customs and excise duties banking or insurance, which are
Sales tax subject to income tax on a world The sources of income subject to tax
Service tax income scope. (Specific exemptions include those listed below:
Entertainment tax are available for Malaysian banks, Gains or profits from any trade,
Stamp duty insurance companies and takaful business, profession, or vocation.
Windfall profit levy companies subject to specified Gains or profits from employment,
Contract levy conditions.) including allowances and benefits
in kind.
Taxes on capital gains Classes of taxpayers Dividends, interest and discounts.
There is no capital gains tax except Rents, royalties and premiums.
for real property gains tax (RPGT) The principal classes of domestic Pensions, annuities and other
which is a tax on gains arising from and foreign taxpayers covered by the periodic payments.
the disposal of real property or income tax legislation are companies, Any gains or profits not falling
shares in real property companies individuals, trade associations, within the gains listed above
(RPC). co-operative societies, trusts, and Amounts received by a non-resident
estates. Generally, partnerships are person for provision of technical
not taxable entities. They are treated advice, assistance or services, or
as conduits in which the partners the provision of services relating to
and not the partnership, are taxed the installation or operation of any
on the partnership income. However, apparatus or plant. (Such income
is only taxable if the services are
performed in Malaysia.)
Rent or other payments for the use
of movable property received by a
non-resident.
PwC / 55
Rates of tax
Resident companies are taxed at the rate of 25% from YA 2009 and Withholding tax
subsequent years. However, a resident company with paid-up capital Payments of the above types of
of RM2.5 million or less is taxed at the following rates (provided that income to non-residents (except
specified conditions are met with): for dividends) are subject to
withholding tax which is due
Chargeable income RM Rate (%) from YA 2009 and payable to the Inland
Revenue Board (IRB) within one
On the first 500,000 20
month after paying or crediting
In excess of 500,000 25 such payments. The rates of
withholding tax are as shown
Non-resident companies are taxed at the rate of 25% on their business above, except where the double
income from YA 2009. taxation agreement (DTA)
between the Malaysia and the
Certain income received by a non-resident company that is not country in which the recipient
attributable to a business carried on by that non-resident in Malaysia is resident, provides for a lower
is subject to tax at the following rates (unless the relevant double rate, in which case the DTA rate
taxation agreement provides for some other rate): would be the withholding tax
rate. Appendix D(5.1) shows
Rate (%) from YA 2009 the list of countries that have
concluded DTAs with Malaysia
Royalty 10
and the rates of tax applicable to
Rental of moveable property 10 interest, royalties and technical
Technical or management 10 fees provided in the respective
service fee* agreements.
Interest 15
Dividends single tier Exempt
franked 25
Income other than the above 10
*Only fees for technical or management services rendered in Malaysia are subject to tax.
PwC / 57
The cost of construction of public An initial allowance is granted in the October 2000, where the on-the-
roads and ancillary structures for year the expenditure is incurred. An road price of the vehicle does not
the business of toll collection also annual allowance at the prescribed exceed RM150,000, the maximum
qualifies for industrial building rates of 10, 14 or 20% calculated qualifying expenditure is restricted to
allowances. on qualifying expenditure, is given RM100,000.
for every year wherein the asset is
The Ministry of Finance may also in use at the end of the year for the Plantations and forests
prescribe a building that is used for purposes of the business. Where an Expenditure on new planting
the purpose of a persons business as asset is acquired under hire purchase (as distinct from expenditure on
an industrial building. (installment payments), initial and replanting, which is deductible) and
annual allowances are granted on on the construction of roads in a
Rates of IB allowance the capital repayments made during plantation, qualifies for an agriculture
With effect from YA 2002, the rate of the year. allowance of 50% of cost for two years.
initial allowance for IB is 10%, while Expenditure on the construction of
annual allowance is given at 3% of Accelerated capital allowance may roads in a forest, or of buildings that
qualifying expenditure. be allowed under specific statutory are likely to be of little or no value
provisions for certain plant and when the plantation ceases to be
Plant and machinery machinery whereby the whole cost worked, or when timber ceases to be
Qualifying plant expenditure of the asset may be fully written off extracted, qualifies for an agriculture
includes: within periods of between 1 and allowance of 10% of cost for ten
The cost of assets used in a 3 years, depending on the type of years. The cost of construction of
business (such as plant and asset. Small-value assets costing buildings used for staff welfare or as
machinery, office equipment, less than RM1,000 each are eligible living accommodation, qualifies for an
furniture and fittings and motor for 100% capital allowance, subject agriculture allowance of 20% of cost
vehicles); to a cap of RM10,000 on the total for five years.
Cost of installation and value of such assets. There is also a
construction of plant and limit on the qualifying expenditure
machinery; and on motor vehicles not licensed
Expenditure on fish ponds, animal for commercial transportation of
pens, cages, and other structures goods or passengers (restricted
used for pastoral pursuits. to RM50,000). However, for new
vehicles purchased on or after 28
PwC / 59
Losses Group relief Capital gains and other taxes
From YA 2006 group relief is
Business losses can be set off against available to all locally incorporated, Other than real property gains tax,
income from all sources in the resident companies that fulfilled no tax is imposed on capital gains.
current year. Any unutilized losses certain conditions. Companies that For more details on real property
can be carried forward indefinitely qualify were allowed to surrender gains tax (RPGT) and other taxes,
to be utilized against income from a maximum of 50 % of its adjusted please refer to Chapter 7.
any business source. A restriction loss for a year of assessment to one
was introduced from YA 2006 under or more related companies. From
which companies are not allowed YA 2009, the maximum percentage
to deduct a loss brought forward of loss that can be surrendered has
from a prior year against income of been increased to 70%. Companies
a particular YA if the shareholders opting for group relief must make an
of the company at the beginning irrevocable election to surrender or
of the basis period for that YA are claim the tax loss in the return to be
not substantially the same as the filed with the IRB for that YA.
shareholders of the company at
the end of the basis period for the Companies currently enjoying
(prior) YA in which the loss was certain incentives such as pioneer
initially ascertained. However, status, investment tax allowance,
the Ministry of Finance has issued reinvestment allowance etc. are not
guidelines which state that the above eligible for group relief
rule restricting carry-forward losses
based on the shareholder continuity
test would only apply to dormant
companies.
Submission of returns and revised estimate can be submitted in Public rulings and advance rulings
assessments the 6th and 9th months of the basis
period for a year of assessment. To facilitate compliance with the SAS,
Under the Self Assessment System Companies are then required to the Director General of Inland Revenue
(SAS) companies are required to pay tax by monthly installments (DGIR) is empowered by law to issue
submit a return of income within 7 (based on the estimates submitted) public rulings. Public rulings set out the
months after the closing of accounts. commencing from the second interpretation of the DGIR in respect
Particulars required to be specified month of the companys basis period of a particular tax law, and the policy
in the return include the amount of (financial year). and procedures that are to be applied.
chargeable income and tax payable Public rulings are binding on the DGIR
by the company. Upon submission of From YA 2011, a company but a taxpayer who has applied the
the return, an assessment is deemed commencing operations in a year treatment as set out in a particular
to have been made on the company. of assessment, is not required to ruling may still appeal against an
The return is deemed to be a notice furnish estimates of tax payable assessment which is based on the ruling.
of assessment, which is deemed to be or make instalment payments if All public rulings may be downloaded
served on the company on the date the basis period for the year of from the IRBs website at www.hasil.
that it is submitted. assessment in which the company gov.my.
commences operations is less than
Tax collection 6 months. With effect from 1 January 2007, a
taxpayer may request for an advance
Companies are required to furnish Tax payable by a company under ruling from the DGIR, who may make
estimates of their tax payable for a an assessment upon submission an advance ruling on how any provision
year of assessment not later than 30 of a return is due and payable by of the law applies to an arrangement
days before the beginning of the basis the due date. The due date is described in the application. An
period, but from YA 2008, a newly defined as the last day on expiry of 7 advance ruling is only applicable to
established company with paid-up months from the date on which the the person making the application and
capital of RM 2.5 million and less that accounts are closed. is not subject to review when issued.
meets certain specified conditions, is However, the taxpayer retains his right
exempted from this requirement for 2 of appeal against any assessment issued
years, beginning from the YA in which in accordance with the tax treatment
the company commences operation. A set out in the ruling. A charge will be
imposed for the issuance of an advance
ruling.
PwC / 61
Transfer pricing
PwC / 63
Chapter 6
Personal
taxation
Scope of tax
Taxable income
Basis of assessment
Residence status of individuals
Rates of tax
Employment income
Benefits-in-kind
Deductions
Tax rebates
Filing obligations and tax collection
Capital gains
PwC / 67
Exemptions and concessional tax treatment for foreign nationals
Non-resident employees, who are -- on housing allowance and An approved individual under the
short-term visitors, (other than Labuan Territory allowance Returning Expert Programme who
public entertainers), are exempt received by a citizen from an is a resident is taxed at the rate of
from tax on their income from employment in Labuan with 15% on income in respect of having
employment exercised in Malaysia a Labuan entity (exempt to or exercising employment with a
if their period(s) of employment in the extent of 50% of gross person in Malaysia for 5 consecutive
aggregate do not exceed 60 days in allowance) (YA 2011 to YA 2020) years of assessment.
a calendar year or two overlapping A qualified person (defined Expatriates (non Malaysian
calendar years. If the non-resident by legislation), who may be a citizens) working in approved
short-term visiting employee is Malaysian or foreign citizen, Operational Headquarters,
resident in a country that has a and who is a knowledge worker Regional Offices, International
double tax treaty with Malaysia, residing in Iskandar Malaysia is Procurement Centres, Regional
the qualifying period is generally taxed at the rate of 15% on income Distribution Centres or Treasury
extended to 183 days provided from an employment with a Management Centres, who are
certain other prescribed conditions designated company engaged in a based in Malaysia are taxed on
are satisfied. qualified activity in that specified a time apportionment basis in
Income tax exemption is granted: region. The employment must accordance to the employment
-- to foreign nationals who are have commenced on or after 24 income attributable to the number
exercising an employment in October 2009 but not later than 31 of days the employment is
a managerial capacity with a December 2015. The reduced tax exercised in Malaysia.
Labuan entity in Labuan, co- rate is only applicable in respect
located office or marketing office of employment income from that
(YA 2011 to YA 2020 only). The designated company beginning
exemption is on 50% of gross from 1 January 2010.
income from such employment.
-- on directors fees received by a
director of a Labuan entity, who
is a non-Malaysian citizen, for
the years of assessment 2011 to
2020
Expenses and other payments a period of 3 consecutive years of Individuals who are tax resident in
Employees are allowed a deduction assessment. (See Appendix E(6.3).) Malaysia may qualify for the following
for any expenditure wholly Subscriptions to an association related tax rebates which are deducted from
and exclusively incurred in the to the individuals profession and fees tax chargeable on that individual:
performance of their duties, but incurred for training courses related Individuals with chargeable income
deduction of capital allowance (e.g. to ones profession are deductible. of not more than RM35,000 are
on a vehicle used in the performance Donations to approved institutions are granted a rebate of RM400.
of their duties) is not available. Where also allowed to be deducted. A rebate is also granted for any
an employer provides an allowance zakat, fitrah or any other Islamic
for business purposes, such as for Personal relief religious dues (obligatory
entertaining clients or customers, Personal reliefs are deductible from payments) paid during the year and
the employee may only deduct up to the total income of a tax resident evidenced by receipts issued by an
the amount of the actual expenditure individual to arrive at taxable income. appropriate religious authority.
incurred or the allowance received. See Appendix E(6.3) for the list of
personal reliefs available.
Non-business expenses, such as
medical expenses and taxes, are not
deductible. Expenses of a private
or domestic nature are expressly
excluded from deduction. For
example, the cost of engaging
domestic help for housekeeping while
one is away at work is not deductible.
Mortgage interest incurred to finance
the purchase of a house is deductible
only to the extent of any rental income
derived from the house (which is a
taxable source). However, effective
from YA 2009, a deduction in the
form of a personal relief is given
for interest incurred on housing
loans by qualified house-buyers for
PwC / 69
Filing obligations and tax collection Capital gains
Self assessment Upon submission of the Return Real property gains tax
A Self-assessment system (SAS) for Form, the taxpayer is deemed to be There is no capital gains tax in
individuals has been implemented served with a notice of assessment Malaysia other than Real property
under which the taxpayer is for which tax is due and payable. gains tax (RPGT). See Chapter 7
responsible for computing his own (Other Taxes) for more details.
chargeable income and tax payable, Payment of tax
as well as making payments of any Tax payments by employees are
balance of tax due. collected through compulsory
monthly deductions from salary. All
The tax return form for a year of deductions are made on a Pay-as-
assessment (year ended 31 December) you-earn ( PAYE) basis. Under the
is issued to individual taxpayers in SAS, tax for a year of assessment is
January of the following year or earlier due and payable on the following
and will be due for submission not dates (the due dates) in the year
later than 30 April of the following following that year of assessment:
year for individuals without business 30 April for individuals deriving
income, and 30 June of the following non-business income,
year for individuals with business 30 June for those having business
income. For example, the 2012 tax income as well as other income
return will be issued in December sources.
2012/January 2013 and is due for If the amount of tax deemed
submission by 30 April 2013 for assessed on an individual upon the
individuals receiving employment and submission of his return for that
other non-business income. Taxpayers year of assessment exceeds the
now have the option of submitting total amount deducted from the
their returns manually or by e-filing individuals salary, the difference
via the Internet. Those who have must be paid on or before the due
chosen to file their returns for a year of date.
assessment by way of e-filing will not
be issued with a return form by the IRB
for subsequent years.
Sales tax
Service tax
Import duties
Excise duties
Export duties
Stamp duty
Other taxes
Sales tax is a single stage tax imposed Licensing and Class of goods and rates of tax
on all goods (unless specifically exemption from licensing
exempt) manufactured in or imported Sales tax is computed and paid by Rate (%)
into Malaysia. It is a consumption tax, every person who carries on business
and under the system the onus is on in Malaysia as a manufacturer Fruits, certain 5
the manufacturer to calculate the tax, of taxable goods or who imports foodstuff, timber
levy it and collect it from its customers. taxable goods into Malaysia. No and building
In the case of imported goods, sales person is permitted to manufacture materials
tax is collected from the importer at taxable goods unless duly licensed Cigarettes and 5
the time the goods are cleared from as a manufacturer. However, an tobacco
customs control. application for a certificate of
Liquor and 5
exemption from licensing may be alcoholic drinks
Sales tax will be replaced with a single made if total sales in the preceding
broad based Goods and Services Tax year did not exceed RM100,000 and All other goods, 10
(GST) on a date yet to be announced. is not expected to exceed that amount except petroleum
during the next 12 months. subject to specific
Taxable goods rates and goods
All goods manufactured in Malaysia or Certain manufacturing operations are not specifically
imported are taxable unless they are exempt from licensing requirements. exempted
specifically exempted by order of the They include the developing
Minister of Finance. and printing of photographs and
production of film slides, the
preparation of ready mixed concrete,
the repacking of bulk goods, and the
repair of second-hand goods and
the installation of air conditioners in
motor vehicles.
Value of goods
The valuation of goods for sales tax
purposes is based on the World Trade
Organsation (WTO) principles of
customs valuation.
PwC / 75
Service tax
Service tax is a consumption tax Taxable persons and With effect from 1 January 2003,
levied and charged on any taxable taxable services certain professional services provided
service provided by any taxable A complete list of taxable persons to companies within the same group
person. and taxable services can be found in would not be taxable subject to certain
the Second Schedule to the Service qualifying criteria.
Service tax will be replaced with Tax Regulations 1975. A summary of
a single broad based Goods and taxable persons and taxable services Payment of service tax/
Services Tax (GST), on a date yet to is found in Appendix F(7.1) taxable period
be announced. Service tax is due when payment is
Taxable services include: received for taxable services rendered.
Taxable person/licensing The provision of rooms for If payment is not received within 12
Any taxable person who carries lodging/sleeping accommodation; calendar months from the date of
on business of providing taxable Health services; issuance of invoice, the tax is due on
service must apply for a licence, Certain professional services; the day immediately after the expiry of
and the term person includes Certain telecommunication the 12-month period. Any service tax
an individual, a firm, a society, an services including bandwidth that falls due during a taxable period,
association, a company and every services; which is 2 calendar months, is payable
other juridical person. Certain value-added services; to the customs authorities within
Management services; 28 days after the end of the taxable
Rate of tax Security services; period.
The rate of service tax is 5% ad Provision of parking space;
valorem. This tax is levied on both Provision of golf course, golf
taxable goods and services except driving range or services related
for the provision and issuance of to golf or golf driving range;
charge or credit card, for which the Courier delivery services (other
service tax is as follows: than to destinations outside
RM50 per year on the principal Malaysia);
card; and Provision and issuance of charge
RM25 per year on the card or credit card; and
supplementary card. Sale or provision of food, drinks
and tobacco products.*
PwC / 77
Excise duties Export duties
Excise duties are imposed Rates of duties Export duties are generally imposed
on a selected range of goods The rates of excise duties vary on Malaysias main commodities such
manufactured in Malaysia or from a composite rate of 10 sen per as crude petroleum and palm oil for
imported into Malaysia. Goods litre and 15% for certain types of revenue purpose.
which are subject to excise duty spirituous beverages, to as much as
include beer/stout, cider and perry, 105% for motorcars (depending on
rice wine, mead, undenatured engine capacity). Proposed Goods
ethyl alcohol, brandy, whisky, and Services Tax
rum and tafia, gin, cigarettes Payment of duty
containing tobacco, motor vehicles, As a general rule, duty is payable at It was announced in the 2005 Budget
motorcycles, playing cards and the time the goods leave the place that a single, broad based Goods and
mahjong tiles. No excise duty is of manufacture. However, for motor Service Tax (GST) will be introduced
payable on dutiable goods that are vehicles, duty is payable at the time to replace the existing sales tax and
exported. the vehicles are registered with the service tax. The Goods and Services
Road Transport Department. Tax Bill 2009 was tabled in Parliament
Licensing for a first reading on 16 December
Unless exempted from licensing, 2009. However, the second reading
a manufacturer of tobacco, of the bill, which was scheduled for
intoxicating liquor or goods subject March 2010 has been postponed
to excise duties must have a licence indefinitely. In a statement issued by
to manufacture such goods. the Ministry of Finance on 13 October
2009, it was reiterated that despite the
A warehouse licence is required postponement, the importance of GST
for storage of goods subject to as a key component of fiscal reforms to
excise duty. However, a licence to ensure a strong and sustainable fiscal
manufacture tobacco, intoxicating position that is capable of supporting
liquor or goods subject to excise long term economic growth is
duty also permits the holder to store recognized by the government.
such goods.
The proposed rate of GST is 4%.
Companies with revenue below
a certain threshold (to be gazette
separately, and expected to be
RM500,000) will be exempted from
imposing GST.
78 / DOING BUSINESS GUIDE
Stamp duty
PwC / 79
Real property gains tax (RPGT)
Relief from stamp duty RPGT is a tax that is imposed on capital gains arising from the sale of real property
Relief from stamp duty may or shares in a real property company (chargeable assets). A real property
be available where assets are company (RPC) is a controlled company that owns or acquires real property or RPC
transferred under a scheme of shares with a defined value of not less than 75 percent of its total tangible assets.
reconstruction or amalgamation of RPGT is imposed at the following rates:
companies and certain prescribed
conditions are satisfied. Relief
is also available under certain Disposal from the date RPGT rates for companies and individual
circumstances on the transfer acquisition From 1 Jan 2012 From 1 Jan 2013
of assets between associated to 31 Dec 2012 onwards
companies where either company
owns 90% or more of the other Up to 2 years 10% 15%
company or where a third company Exceeding 2 until 5 years 5% 10%
owns 90% or more of both
Exceeding 5 years 0% 0%
Relief from stamp duty (either by
way of exemption or remission)
are also available for transactions
involving specified instruments and
subject to prescribed conditions.
PwC / 81
About PwC
PwC / 85
Appendices
A (1.1)Investment incentives
(1.2) Investment guarantee agreements
(1.3) Government departments and agencies
B (2.1) Structuring an investment
(2.2) Important Regulatory Agencies
C (3.1) Minimum conditions of employment
D (5.1) Double Tax Treaties and withholding tax rates
E (6.1)Rates of personal tax
(6.2) Value of perquisites from employment and
benefits-in-kind
(6.3) Personal reliefs
F (7.1) Service tax list of taxable persons
Investment
incentives
PwC / 89
Enhanced PS and ITA incentives
The PA and ITA incentives are enhanced for the following type of projects:
Infrastructure for public use Proprietary rights years to be deducted against 70% of
statutory income (100% for projects
A company which has incurred A manufacturing company at least which have achieved prescribed level
capital expenditure on provision 70% owned by Malaysians which of productivity). The remaining 30% is
of infrastructure in relation to its has incurred expenditure on the taxed at the normal corporate income
business which is available for public acquisition of proprietary rights for tax rate. Unutilized reinvestment
use is eligible for 100% deduction of use for purposes of the business is allowances may be carried forward
that expenditure. allowed a tax deduction on the cost of indefinitely for setoff against future
acquisition at the rate of 20% per year. profits of the business. Dividends paid
Green Building Index out of exempt profits are not taxable in
(GBI) certification Reinvestment allowance the hands of shareholders.
A person (resident in Malaysia) A Malaysian resident company that Accelerated capital allowance (ACA)
awarded GBI certificate by the Board embarks on a program to expand,
of Architects Malaysia from 24 October modernize, automate, or diversify After the 15 year period of eligibility
2009 until 31 December 2014 is its existing business in respect of a for RA, companies that reinvest in the
granted 100% allowance on qualifying manufacturing project or agriculture manufacture of promoted products are
expenditure incurred for the purpose project is eligible for reinvestment eligible to apply for accelerated capital
of obtaining the GBI certificate, to allowance (RA). The amount of RA is allowance, whereby qualifying capital
be set off against 100% of statutory 60% of qualifying capital expenditure expenditure may be written off in 3
income. incurred within a period of fifteen years (40% initial allowance and 20%
annual allowance).
PwC / 91
In addition, companies that incur Approved services project (ASP) A venture capital company investing
certain qualifying capital expenditure funds in the form of start up, early
(QCE) may also qualify for ACA at A Malaysian resident company in stage or capital seed financing
various rates. The QCE includes: the communication, utilities and or its combination in approved
Plant and machinery used by transportation services subsectors venture companies (which should
manufacturing companies for which has incurred capital expenditure not be companies within the same
recycling of wastes on an ASP (approved by the Minister group) is eligible for tax exemption
Power quality equipment of Finance) is eligible for: for 10 or 5 years on income from
ICT equipment Investment allowance of 60% of all sources, other than interest
Security control and Monitor qualifying capital expenditure, income from savings or fixed
equipment available within 5 years from the deposits, where at least 50% or
date the expenditure was first 30% (respectively) of its funds are
Special incentive scheme incurred, to be deducted against invested in Venture Companies
70% of statutory income; or
A Malaysian resident company Income tax exemption of up to 70% Establishments for doing
deriving income from an approved of statutory income for 5 years. business in Malaysia
business (approved by the Minister of Buildings used solely for the purposes
Finance) under the special incentive of ASP qualify for an industrial The following are aimed at
scheme is eligible for the following: building allowance. Enhanced relief facilitating the setting up of business
A. Income tax exemption on 70% of is available for projects in a promoted establishments in Malaysia by foreign
statutory income (or at any other area and other qualifying projects. enterprises. In all cases, the Malaysian
rate prescribed by the Minister) Dividends paid out of exempt entity must take the form of a company
from the approved business; profits are exempt in the hands of incorporated in Malaysia. Except for
B. Income tax exemption by way of an shareholders. the international trading company,
allowance, which is computed by they must all have a minimum paid up
applying a rate (to be determined capital of RM500,000 and approval for
Venture capital industry
by the Minister) to the amount all are subject to specific conditions:
of qualifying capital expenditure Approved operational
Any resident company or individual
incurred by the claimant for the headquarters (OHQ)
investing in approved venture
relevant year. company is one that provides
companies (which should not be
qualifying services to its offices and
companies within the same group)
related companies within or outside
in the form of start-up, early stage
Malaysia. An OHQ company is
or seed capital financing is given a
granted tax exemption for 10 years
deduction equivalent to the value of
except for income from related
the investment; or
companies in Malaysia exceeding
PwC / 93
MSC Malaysia status companies The following incentives are also Resident carrying on an inbound
available: tour operating business approved
MSC (Multimedia Super Corridor) A company or individual investing and registered with the Ministry of
status is awarded to both local and in a bionexus company is given Tourism qualify for tax exemption
foreign companies that develop or use a tax deduction of an amount on statutory income from such
multimedia technologies to produce equal to the value of investment in tours where the total number of
or enhance their products and services seed capital stage and early stage inbound tourists from outside
and for process development. Besides financing; Malaysia is 750 or more for the
pioneer status and Investment tax Stamp duty and real property period (effective for YA 2013 to YA
allowance incentives, companies gains tax exemption is granted to 2015); and
awarded MSC status are also eligible a bionexus company undertaking Companies organising domestic
for the following: a merger and acquisition with a tour packages are eligible for tax
Eligibility for R&D grants (for biotechnology company within a exemption on statutory income
majority Malaysian-own, MSC- period of 5 years till 31 December from domestic tour packages where
status companies); 2011; the total number of local tourists is
Exemption from indirect taxes on Accelerated industrial building 1,500 or more per year. (available
multimedia equipment; allowance is given (over 10 years) for YA 2013 to 2015).
Unrestricted employment of local on qualifying building expenditure
and foreign knowledge workers; for buildings used by a Bionexus Healthcare service providers
Freedom to source funds globally status company for the sole purpose
for investments; of its new business or expansion Healthcare service providers who
Protection of intellectual property project; and derive income from healthcare
and cyberlaws; and Concessionary tax rate of 20% of services provided in Malaysia to
No censorship of the Internet. statutory income from qualifying foreign clients will enjoy an increased
activities to be applied for 10 years rate of exemption of 100% of the
Biotechnology industry upon expiry of the tax exempt value of increased services (defined
period. by legislation), limited to 70% of
Companies undertaking biotechnology statutory income (YA 2010 to 2014
activity with approved bionexus Tourism industry only). Foreign clients include entities
status from Malaysian Biotechnology such as a corporation or partnership
Corporation Sdn Bhd are eligible Besides pioneer status and investment registered outside Malaysia, or a non-
for 100% income tax exemption on tax allowance incentives for eligible Malaysian citizen (excluding those
statutory income for 10 years from the companies in the tourism industry, the holding a Malaysian student pass or
first year in which the company derives following are additional incentives: work permit and their dependents).
profit or ITA of 100% on qualifying Hotel and tour operators may
capital expenditure incurred for qualify for double deduction on A resident company which undertakes
a period of 5 years. Dividends specified expenses incurred on qualifying projects will be given
distributed from exempt income is promotional activities overseas; exemption of its statutory income
tax exempt for the recipient. Double Companies may qualify for double from the qualifying projects based
deduction is available for expenditure deduction on expenses incurred on the amount of qualifying capital
incurred on research and development on participating in an approved expenditure incurred for the purpose
and on promotion of exports international trade fair; of the qualifying projects within a
.
PwC / 95
Single deduction for:
Expenses on training of potential employees before
commencement of business;
Cash contributions to technical or vocational training
institutions that are not operated primarily for profit and
those established by a statutory body
Shipping
* Value added means ex-factory price less total cost of raw materials
PwC / 97
Real estate investment trusts (REIT) Islamic banking and other Islamic
financing activities
With effect from YA 2007, REITs or property trust funds (PTF) approved by
Securities Commission are exempted from tax on all income provided that at To further the governments objective
least 90 per cent of their total income is distributed to unit holders in the basis of developing Malaysia into a leading
period for that YA. If the 90 per cent distribution condition is not complied with, international Islamic Financial Centre,
the REIT will be subject to income tax and tax credit will be claimed by the unit the following incentives are available:
holders. With effect from 1 January 2009, unit holders are taxed as follows: Tax deduction is allowed for
expenses incurred in the issuance
of Islamic securities under certain
Unit holders Income tax
principles approved by the
Individuals (whether resident or Withholding tax of 10% from 1 Securities Commission or by the
non-resident), body of persons, January 2009 to 31 December Labuan Financial Services Authority
other unincorporated persons 2016. (until YA 2015 only).
Non-resident company Withholding tax at 25% (from YA Full income tax exemption is
2009 onwards). granted to Islamic banks licensed
under the Islamic Banking Act
Resident company No withholding tax (income to be
1983 on income from Islamic
included in annual tax return and
banking business conducted in
taxed at prevailing corporate tax
international currencies, and to
rate).
Takaful (insurance) companies
Institutional investor (pension Withholding tax at 10% from 1 on income from the Takaful
fund, collective investment January 2009 to 31 December business conducted in international
scheme or other person approved 2016. currencies (until YA 2016 only).
by MOF) Full income tax exemption on
management fees received by
Other incentives available are: local and foreign companies for
Real property gains tax exemption on disposal of real property to a REIT/PTF; managing funds of foreign and
Stamp duty exemption on transfer of real property to REIT/PTF; local investors in accordance with
Tax deduction given for consultancy, legal and valuation service fees incurred Syariah principle certified by the
on the establishment of a REIT. Securities Commission (until YA
2016 only).
A special purpose vehicle (SPV)
established solely for the issuance
of Islamic securities under certain
principles approved by the
Securities Commission or Labuan
Financial Services Authority, is
not subject to income tax and
is not required to comply with
administrative procedures under
the tax law. Deduction for the cost
PwC / 99
Basic to the strategy for promotion 2020. Technical fees, royalties and
of investments in these development interest received by non-residents
regions is the provision of all from approved developers are
necessary infrastructure (financial exempt from tax and withholding
and non-financial) for the creation tax requirements are also waived in
of a business-friendly environment, respect of such payments.
including tax and other financial Exemption is also granted to an
incentives. Apart from existing approved development manager
incentives which are available for on income from the provision
promoted activities and products of management, supervisory
provided under the Promotion of and marketing services to such
Investments Act 1986 (pioneer status, developers until YA 2020. Income
investment tax allowance, etc.) and from technical fees received by
the Income Tax Act 1967 (outlined non-residents from approved
above), special incentives which are development managers are exempt
customized for the purpose of each from tax and withholding tax
development region have been (or will requirements are also waived in
be) developed. So far, however, special respect of such payments.
legislation has been enacted only in A qualified person (defined) who
respect of Iskandar Malaysia to grant is a knowledge worker residing
the following incentives: in Iskandar Malaysia, is taxed at
Income tax exemption for an the rate of 15% on chargeable
approved IDR status company income from an employment with
in respect of income from the a designated company (defined by
provision of qualifying services to a legislation) engaged in a qualified
person situated within designated activity (green technology;
node in the IDR or outside biotechnology; educational
Malaysia, for 10 years, provided services; healthcare services;
that these operations commence creative industries; financial
on or before 31 December 2015. advisory and consulting services;
Income from technical fees and logistics services; tourism) in that
royalties received by non-residents specified region. The employment
from IDR status companies are must have commenced on or after
exempt from tax and withholding 24 October 2009 but not later than
tax requirements are also waived in 31 December 2015.
respect of such payments.
Income tax exemption for an Information pertaining to each
approved developer in designated development corridor including
node on income from the disposal incentives available may be obtained
of rights over land or buildings from the corridors website, the
in designated node in the IDR address of which is shown above.
until year of assessment 2015 or
rental from such buildings until YA
Investment
guarantee
agreements
Groupings
Association of South-East Asian Nations (ASEAN)
Organisation of Islamic Countries (OIC)
Countries
Albania Egypt Laos Sri Lanka
Algeria Ethiopia, Republic of Lebanon Sudan, Republic of
Argentina Finland Macedonia Sweden
Austria France Malawi Switzerland
Bahrain Germany Mongolia Syrian Arab Republic
Bangladesh Ghana Morocco Taiwan
Belgo-Luxembourg Guinea Namibia Turkey
Bosnia Herzegovina Hungary Netherlands Turkmenistan
Botswana India Norway United Arab Emirates
Burkina Faso Indonesia Pakistan United States of
Cambodia Iran Papua New Guinea America
Canada Italy Peru United Kingdom
Chile, Republic of Jordan Poland Uruguay
China, Peoples Republic of Kazakhstan Romania Uzbekistan
Croatia Korea, North Saudi Arabia Vietnam
Cuba Korea, South Senegal Yemen
Czech Republic Kuwait Slovak, Republic of Zimbabwe
Denmark Kyrgyz, Republic of Spain
Djibouti, Republic of
PwC / 103
APPENDIX A (1.3)
Government
departments
and agencies
PwC / 105
Ministry of Science, Technology Ministry of Natural Resources Malaysia Productivity
and Innovation and Environment Corporation (MPC)
(Kementerian Sains, (Kementerian Sumber Asli Lorong Produktiviti,
Teknologi dan Inovasi) dan Alam Sekitar) Off Jalan Sultan,
Level 1-7, Block C4 & C5, Level 14, No.25, Persiaran Perdana, 46200 Petaling Jaya,
Complex C, Federal Government Wisma Sumber Asli, Selangor
Administrative Centre, Precint 4,
62662 Putrajaya 62574 Putrajaya T: +60 (3) 7955 7266
F: +60 (3) 7957 8068
T: +60 (3) 8885 8000 T: +60 (3) 8886 1111 E: marketing@mpc.gov.my
F: +60 (3) 8888 9070 F: +60 (3) 8889 2672 W: www.mpc.gov.my
W: www.mosti.gov.my/ W: www.nre.gov.my/
MPCs mission hinges on its efforts to
Malaysian Science Technology and The ministry is responsible for enhance productivity and quality in
Information Centre: the nations nature resources line with the national industrialization
http://mastic.gov.my/ management; conservation and plan by providing training, promotion,
management of environment and consultancy and research services.
This ministry has responsibility for shelters; and management of land
promoting awareness, research survey and mapping administration. Malaysian Technology Development
and development in science and Corporation Sdn. Bhd. (MTDC)
technology. Malaysia External Trade Development Level 8 - 9,
Corporation (MATRADE) Menara Yayasan Tun Razak,
Ministry of Agriculture and Menara MATRADE Jalan Bukit Bintang,
Agro-Based Industry Jalan Khidmat Usaha, 55100 Kuala Lumpur, Malaysia
(Kementerian Pertanian dan Off Jalan Duta,
Industri Asas Tani) 50480 Kuala Lumpur T: +60 (3) 2172 6000
Level 1, Wisma Tani, F: +60 (3) 2163 7541
No. 28, Persiaran Perdana, T: +60 (3) 6207 7077 E: comms@mtdc.com.my
Precint 4, Federal Government F: +60 (3) 6203 7037/7033 W: www.mtdc.com.my
Administrative Centre, E: info@matrade.gov.my
62624 Putrajaya W: www.matrade.gov.my/ MTDC is a joint venture company
between the government and the
T: +60 (3) 8870 1000 MATRADE is an export development private sector. The objectives of MTDC
F: +60 (3) 8888 6906 organization that assists Malaysian are to promote the commercialization
W: www.moa.gov.my entrepreneurs to develop foreign of research and innovation for
markets for products and services application and to be a catalyst for
The Ministry of Agriculture and from Malaysia. It also organizes trade venture capital in technology based
Agro-based Industry is responsible missions, facilitates participation in areas.
for improving the incomes of farmers, trade fairs, and puts buyers and sellers
livestock breeders and fisherman by together and assist foreign importers
efficient utilization of the nations to source for trade related information
resources and manages food by providing market and relevant
production for domestic consumption advise. MATRADE is supported by 34
and export. overseas offices around the world.
PwC / 107
Inland Revenue Board Ministry of Human Resources Multimedia Development
(Lembaga Hasil Dalam Negeri) (Kementerian Sumber Manusia) Corporation Sdn Bhd (MDeC)
Level 18, Hasil Tower Level 6-9, Block D3, Complex D, MSC Malaysia Headquarters,
Persiaran Rimba Permai Federal Government 2360, Persiaran APEC,
Cyber 8, 63000 Cyberjaya Administrative Centre, 63000 Cyberjaya,
Selangor 62530 Putrajaya Selangor Darul Ehsan, Malaysia
T: +60 (3) 8313 8888 T: +60 (3) 8886 5000/5200 T: +60 (3) 8315 3000
F: +60 (3) 8313 7801/7806 F: +60 (3) 8889 2381 F: +60 (3) 8315 3115
W: www.hasil.gov.my E: ksm1@mohr.gov.my W:www.mdec.com.my/
W: www.mohr.gov.my/
The Board is responsible for the The MDeC is the agency responsible
overall administration, assessment The Labour Department of this for implementing the MSC
and collection of income tax and other ministry is responsible for the (Multimedia Super Corridor)
direct taxes. enforcement of the Employment Act. Malaysia. It is also serves as promoter
and facilitator to companies setting up
Royal Malaysian Customs Labuan Financial Services operations in MSC Malaysia.
(Kastam Di Raja Malaysia) Authority (Labuan FSA)
Head Office, Level 17, Main Office Tower,
Ministry of Finance Complex, Financial Park Complex,
No. 3, Persiaran Perdana, Jalan Merdeka,
Precint 2, Federal Government 87000 Federal Territory of Labuan
Administrative Centre,
62596 Putrajaya T: +60 (87) 591 200
F: +60 (87) 453 442
T: +60 (3) 8882 2100/2300/2500 W: www.labuanfsa.gov.my
F: +60 (3) 8889 5899/8882 5901
W: www.customs.gov.my/ This authority was established as a
single regulatory body to spearhead
This department is principally a and coordinate efforts to promote and
revenue-collecting department that is develop Labuan as an International
also responsible for the administration Business & Financial Centre (IBFC)
and enforcement of regulations and to streamline and rationalize
relating to customs and excise duties, the administrative machinery in
sales tax, and service tax. supervising the Labuan IBFC.
PwC / 109
Perak Pulau Pinang (Penang) Selangor
Perak State Development Corporation Penang Development Corporation Selangor State Development
(Perbadanan Kemajuan Negeri Perak) (Perbadanan Pembangunan Pulau Corporation (SSIC)
Wisma Wan Mohamed, Pinang) (Perbadanan Kemajuan
Jalan Panglima Bukit Bangunan Tun Dr Lim Chong Eu Negeri Selangor)
Gantang Wahab, No. 1, Persiaran Mahsuri, Level 2-9, Menara HPAIC
(P.O. Box 217) Bandar Bayan Baru, Laman Seri Business Park
30904 Ipoh, 11909 Bayan Lepas, No. 7, Persiaran Sukan, Seksyen 13
Perak Darul Ridzuan Pulau Pinang 40100 Shah Alam
Selangor Darul Ehsan
T: +60 (5) 529 6600 T: +60 (4) 634 0111
F: +60 (5) 253 6604 F: +60 (4) 643 2405 T: +60 (3) 5520 1234
E: info@pknp-perak.gov.my E: enquiry@pdc.gov.my F: +60 (3) 5510 2186
W: www.pknp-perak.gov.my/ W: www.pdc.gov.my/ E: general@pkns.gov.my
W: www.pkns.gov.my
Perlis Sabah
Perlis State Economic Sabah Economic Development Terengganu
Development Corporation Corporation (SEDCO) Terengganu State Economic
(Perbadanan Kemajuan Ekonomi (Perbadanan Pembangunan Ekonomi Development Corporation
Negeri Perlis) Sabah) (Perbadanan Memajukan Iktisad
No. 173-191, Taman Kemajuan, Level 8,9,10, Wisma SEDCO, Negeri Terengganu)
Jalan Raja Syed Alwi, Lorong Plaza Wawasan, 14th Floor, Menara PERMINT,
01000 Kangar, Off Coastal Highway, Jalan Sultan Ismail,
Perlis Indera Kayangan PO Box 12159, 20200 Kuala Terengganu,
88823 Kota Kinabalu, Sabah Terengganu Darul Iman
T: +60 (4)-9761 088/037/616
F: +60 (4) 976 2181 T: +60 (88) 266 777 T: +60 (9) 627 8000
E: webmaster@pkenps.gov.my F: +60 (88) 219 179/249 545/219 263 F: +60 (9) 623 3880
W: www.pkenps.gov.my/ W: www.sedco.com.my E: admin@pmint.gov.my
W: www.pmint.gov.my/utama.php
Sarawak
Sarawak Economic
Development Corporation
(Perbadanan Pembangunan Ekonomi
Sarawak)
6th-11th Floor, Menara SEDC,
Jalan Tunku Abdul Rahman,
Peti Surat 400,
93100 Kuching, Sarawak
National Chamber of Commerce The Associated Chinese Chamber of Sarawak Chamber of Commerce &
and Industry of Malaysia (NCCIM) Commerce and Industry of Malaysia Industry
Level 3, West Wing, (ACCCIM) L3-12, 3rd Floor,
Menara MATRADE, 6th Floor, Wisma Chinese Chamber DUBS Commercial Centre,
Jalan Khidmat Usaha off Jalan Duta, 258, Jalan Ampang Lot 376, Section 54 KTLD,
50480 Kuala Lumpur 50450 Kuala Lumpur Jalan Petanak,
93100 Kuching,
T: +60 (3) 6204 9811 T: +60 (3) 4260 3090/3091/3092/ Sarawak
F: +60 (3) 6204 9711 3093/3094/3095
E: enquiry@nccim.org.my F: +60 (3) 4260 3080 T: +60 (82) 237 148
W: www.nccim.org.my/ E: acccim@acccim.org.my F: +60 (82) 237 186
W: www.acccim.org.my/ W: www.scci.org.my
Malaysian International Chamber
of Commerce and Industry (MICCI) Malaysian Associated Indian Chamber
C-8-8, Block C, Plaza Mont Kiara, of Commerce (MAICCI)
No. 2, Jalan Kiara, Mont Kiara, Megan Avenue 11, Block B,
50480 Kuala Lumpur 9th floor, Unit 1,
No. 12, Jalan Yap Kwan Seng,
T: +60 (3) 6201 7708 50450 Kuala Lumpur
F: +60 (3) 6201 7705
E: micci@micci.com T: +60 (3) 2171 2616
W: www.micci.com/ F: +60 (3) 2171 1195
E: info@maicci.org.my
Malay Chamber of Commerce W: www.maicci.org.my/
Malaysia (MCCM)
33 & 35, Jalan Medan Setia 1, Sabah United Chinese Chamber
Bukit Damansara, of Commerce
50490 Kuala Lumpur P.O. Box 12176,
88824 Kota Kinabalu,
T: +60 (3)2096 2233 Sabah
F: +60 (3)2096 2533
W: www.malaychamber.com T: +60 (88) 225 460/255 471
F: +60 (88) 218 185
E: succc01@tm.net.my
W: www.succc.org
PwC / 111
APPENDIX B (2.1)
Structuring
an investment
PwC / 113
Branch Sole proprietorship or partnership Limited liability partnership (LLP)
(excluding limited liability
Limitations on foreign participation partnership) Founder partners
In general, CCM do allow the Minimum of two partners with no
registration of foreign branches Limitation on foreign participation limit to maximum number of partners.
except for establishments involved Foreign nationals require valid work The partners can be individuals
with the wholesale and retail trade. permits to work in Malaysia. (natural persons) or bodies corporate
Foreign nationals are generally or a combination of both.
Advantages not permitted to set up sole- The partners need not be resident
Cessation of business is more proprietorships or partnership in Malaysia, however there is
straightforward than liquidation of businesses, except for carrying out requirement for the compliance
a company. government or other approved officer* to be resident in Malaysia.
Capital and profits can be freely projects.
repatriated. However for amounts Advantages of a LLP
exceeding RM200,000 or its Advantages Limited liability status for partnership
equivalent in foreign currency, Minimal regulatory requirements to type of business.
Form P has to be completed by comply. Provides flexibility of organization
remitting banks, on behalf of their arrangement through a partnership
clients. Disadvantages agreement whereas a company is
Sole proprietors and partners are subject to more stringent compliance
Formation and registration personally liable for the liabilities of requirements.
requirements the business. More affordable business vehicle.
Resident agent is required.
Registration fee is payable at Formation requirements Formation requirements
the same rate as for locally Registration as a business with the Practising company / qualified
incorporated companies, depending CCM secretaries, public accountants or
on the amount of authorized share Partnership agreement. lawyers can provide assistance with
capital of the foreign corporation. the partnership agreement and other
Documentation similar to those Taxation requirements.
for a locally incorporated company Sole proprietors are taxed as The partnership agreement and
must be filed annually. individuals. other relevant documents must be
Partnerships are treated as submitted to the CCM along with
Taxation conduits, with partners taxed on payment of the required fees.
Foreign (non-resident) corporations their shares of the income.
have the same obligations and Taxation
rights as resident companies. A LLP is taxed as a company.
Tax rate is at a flat rate of 25 % for Tax rate is at flat rate of 25% .
YA 2009 and subsequent years. Professional advice should be obtained
Professional advice should on tax-planning opportunities.
be obtained on tax planning
opportunities.
* The LLP requires the appointment of a least one
compliance officer whos main responsibilities include
registering changes in registered particulars of the LLP
and keeping and maintaining the records of the LLP.
Some
regulatory
agencies
The following are some of the Malaysian Industrial Ministry of Domestic Trade,
important regulatory agencies: Development Finance Berhad Co-operatives and Consumerism
(MIDF): (MDTCC)
Ministry of International Trade and Established to speed up industrial
Industry (MITI) development in Malaysia and acts This ministry is responsible for
as a conduit for the government to supervising domestic trade and
This ministry has overall responsibility manage funds under the various formulates policies and implements
for all aspects of international trade government schemes. measures aimed at encouraging fair
and industrial development, acting Malaysian Technology ethical domestic trade practices and
through the following agencies: Development Corporation. protecting the interests and rights of
(MTDC): consumers. Its functions also include
Malaysian Investment Set up with the objective of the following:
Development Authority (MIDA): promoting the commercialization Licensing and controlling the
Main government agency that of research and innovation for manufacturing and sale of items of
provides assistance for investors application and to be a catalyst for necessity
intending to set up manufacturing venture capital in technology based Licensing and monitoring direct
and its related support services areas. selling activities;
projects in Malaysia. Small and Medium Enterprise Licensing and monitoring
Malaysia External Trade Corporation Malaysia (SME Corp marketing of petroleum products
Development Corporation Malaysia): as well as formulating guidelines
(MATRADE): Set up to promote further the relating to petroleum safety in
An external trade arm of MITI, development of small and medium- petroleum, petrochemical and gas
functions as a central source for size industries (SMIs) through industry;
trade related information for the provision of advisory services, Drafting and conducting research
Malaysian exporters and foreign fiscal and financial assistance, on policies and strategies related
importers. infrastructural facilities, market to domestic trade development,
Malaysia Productivity access, and other support programs. consumerism and intellectual
Corporation (MPC): property.
MPCs mission hinges on its efforts
to enhance productivity and
quality in line with the national
industrialization plan by providing
training, promotion, consultancy
and research services.
PwC / 117
Companies Commission Local government authorities
of Malaysia (CCM)
These authorities are responsible
All companies, partnerships and sole for local regulations that affect
proprietors intending to do business business operations. Such laws relate
in Malaysia are required to register mainly to buildings and structures
with the CCM, which is responsible for (business premises), health, public
the administration of the Registration safety and security, sale of liquor, and
of Businesses Act 1956 and the displays (signboards, advertisements,
Companies Act 1965. billboards, etc.).
Ministry of Science,
Technology and Innovation
Minimum
conditions of
employment
PwC / 121
APPENDIX D (5.1)
Double taxation
treaties and
withholding tax
rates
Albania 10 or Nil 10 10
Australia 15 or Nil 10 or Nil Nil
Austria 15 or Nil 10 10
Bahrain 5 or Nil 8 10
Bangladesh 15 or Nil 10 or Nil 10
Belgium 10 or Nil 10 10
Bosnia & Herzegovina * 10 or Nil 8 10
Brunei 10 or Nil 10 10
Canada 15 or Nil 10 or Nil 10
China, Peoples Republic 10 or Nil 10 10
Chile 15 10 5
Croatia 10 or Nil 10 10
Czech Republic 12 or Nil 10 10
Denmark 15 or Nil 10 or Nil 10
Egypt 15 or Nil 10 10
Fiji 15 or Nil 10 10
Finland 15 or Nil 10 or Nil 10
France 15 or Nil 10 or Nil 10
Germany 10 or Nil 7 7
Hong Kong * 10 or Nil 8 5
Hungary 15 or Nil 10 10
India 10 or Nil 10 10
Indonesia 10 or Nil 10 10
Iran 15 or Nil 10 10
Ireland 10 or Nil 8 10
PwC / 123
Rate of withholding tax %
Treaty countries Interest Royalties Technical Fees
Spain 10 or Nil 7 5
Sudan 10 or Nil 10 10
Sweden 10 or Nil 8 8
Switzerland 10 or Nil 10 or Nil 10
Syria 10 or Nil 10 10
Thailand 15 or Nil 10 or Nil 10
Turkey 15 or Nil 10 10
Turkmenistan 10 or Nil 10 Nil
United Arab Emirates 5 or Nil 10 10
United Kingdom 10 or Nil 8 8
Uzbekistan 10 or Nil 10 10
Venezuela 15 or Nil 10 10
Vietnam 10 or Nil 10 10
Zimbabwe * 10 or Nil 10 10
* Pending ratification
With effect from 21 September 2002, only fees for technical and management
services rendered in Malaysia are liable to Malaysian income tax.
There is a restricted double tax treaty with Argentina and with the United States
of America which deals with the taxation of air and sea transport operations in
international traffic.
PwC / 125
APPENDIX E (6.1)
Rates of
personal tax
PwC / 127
Non-resident individuals Knowledge workers
Types of income YA 2013 Rate % in a specified region
A qualified person (defined by
Interest 15
legislation) who is a knowledge
Royalty 10 worker residing in Iskandar
Special classes of income: Malaysia is taxed at the rate of 15%
rental of moveable property 10 on income from an employment
technical or management services fees* 10 with a designated company engaged
payment for services rendered in connection with use of 10 in a qualified activity in that
property or installation or operation of any plant, machinery specified region. The employment
or other apparatus purchased from a non-resident person must have commenced on or after
24 October 2009 but not later than
Dividends (single tier) Exempt
31 December 2015.
Dividends (franked) 26
Business and employment income 26 Approved individuals under the
Income other than the above 10
Returning Expert Programme
An approved individual under the
Returning Expert Programme who
is a resident is taxed at the rate of
* Only fees for technical or management services rendered in Malaysia are liable to tax.
15% on income in respect of having
or exercising employment with a
person in Malaysia for 5 consecutive
years of assessment. This applies to
Malaysian citizens only.
Value of
perquisites from
employment and
benefits-in-kind
* The above exemptions are not extended to directors of controlled companies, sole proprietors and
employees who are partners of the employer.
PwC / 131
Valuation of benefits-in-kind
Under Public Ruling 3/2013 issued by the IRB, two methods may be used to
determine the value of benefits-in-kind (BIK) provided to the employee by the
employer:
The formula method; and
The prescribed value method
Whichever method is used in determining the value of the benefit provided, the
basis of computing the benefit (whether the formula method or the prescribed
value method) must be consistently applied throughout the period of the
provision of the benefit.
Formula method
The value of BIK is calculated based on the following prescribed formula.
Asset Years
Motorcar 8
Curtains, carpets 5
Furniture, sewing machine 15
Air conditioner 8
Refrigerator 10
Kitchen equipment/utensils 6
Piano 20
Organ 10
Stereo set, TV, video recorder, CD/DVD player 7
Swimming pool (detachable), sauna 15
Miscellaneous 5
*Exemption is not extended to directors of controlled companies, sole proprietors and partnerships.
PwC / 133
APPENDIX E (6.3)
Personal
reliefs
* Maximum relief
PwC / 135
APPENDIX F (7.1)
Service tax
list of taxable
persons
* No threshold
** No threshold effective 1 January 2008
PwC / 137
2013 PricewaterhouseCoopers . All rights reserved. PricewaterhouseCoopers and/or PwC refers to the individual
members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity.
Please see www.pwc.com/structure for further details. CS05655