Registering a Company in Malaysia as a Foreign Investor (2025-2026 Guide and FAQ by Zitadelle AG)

Full overview of Malaysian structures: Sdn Bhd, Labuan companies, foreign branches and representative offices

Malaysia is one of the most business-friendly jurisdictions in Southeast Asia, offering foreign investors a stable legal system, competitive tax environment, and strategic access to the ASEAN region. Whether you are expanding operations, entering Asian markets, or establishing a holding or fintech structure, Malaysia offers several company types suitable for international founders.

Zitadelle AG - with its local office and team in Malaysia (Labuan) - assists foreign investors with every step of incorporation, from structure selection and licensing to bank account opening and ongoing compliance.

Why Foreign Investors Choose Malaysia

• 100% foreign ownership permitted in most sectors

• Stable political and regulatory environment

• Attractive tax rates (17%-24% for onshore, 0%-3% for Labuan)

• Access to ASEAN’s 670+ million consumers

• Broad double-taxation treaty network

• Fully developed financial and banking infrastructure

Main Company Structures for Foreigners in Malaysia

Below is a full breakdown of all business structures available to international investors and when each should be used.

1. Private Limited Company (Sdn Bhd)

Best for: operational companies, commercial activities, trading, services, local market presence.

A Sdn Bhd is the most common corporate form in Malaysia and is fully accessible to foreign investors, except for a few restricted or regulated sectors.

Key Features

• Separate legal entity, limited liability

• 100% foreign ownership allowed in most sectors

• Minimum 1 shareholder and 1 director

• At least 1 director must be resident in Malaysia

• Corporate tax: 17% or 24% depending on revenue and profit thresholds

• Required to maintain local registered office and accounting records

Advantages

• Ideal for businesses that need a physical operational presence

• Access to local tenders and Malaysian clients

• Straightforward incorporation (5-10 days)

• Permanent structure for long-term activity

Disadvantages

• Requires a resident director (Zitadelle AG can arrange this)

• Higher tax rate compared to Labuan

• Mandatory bookkeeping, audit, and annual filing

2. Labuan Company (Trading or Non-Trading)

Best for: international trading, holding structures, fintech, brokerage, fund management, IP holding, asset protection, cross-border operations.

A Labuan company is incorporated under the Labuan Companies Act and is widely used by international groups due to its favorable tax regime.

Trading Company (Operational)

• 3% tax on audited net profits

• Used for FX brokerage, consulting, international trading, SaaS, fintech, and more

• Can apply for regulated licenses (money broking, fund management, securities, etc.)

Non-Trading (Investment Holding) Company

• 0% tax in many cases

• Used for group holding, SPVs, asset ownership, IP holding, investment vehicles

Advantages

• Very low tax structure

• No restrictions on ownership

• Confidentiality (non-public shareholder register)

• Foreign bank accounts allowed

• Easy to integrate into global structures

• Ideal for EU, UAE, Singapore, and offshore holdings

Disadvantages

• Cannot conduct business with Malaysian residents (except in limited cases)

• Must meet economic substance requirements

• Licensed activities require regulatory approval

Zitadelle AG added value

Zitadelle AG has a local office in Labuan with staff capable of handling:

• incorporation

• substance setup

• licensing applications

• business plan drafting

• accounting and audit

• local office rental

• staffing and HR sourcing

3. Foreign Company (Branch Office)

Best for: established foreign companies expanding into Malaysia without creating a separate legal entity.

A branch office is an extension of a foreign parent company.

Key Features

• Not a separate Malaysian legal entity

• Parent company is fully liable

• Suitable for sectors requiring foreign presence without equity structure

• Taxed at standard Malaysian corporate rates

Advantages

• No share capital requirements

• Direct control from parent company

• Recognized by banks and regulators

Disadvantages

• Unlimited liability on parent company

• Not suitable for long-term expansion

• More regulatory restrictions than Sdn Bhd

4. Representative Office (RO)

Best for: market research, feasibility studies, early-stage market entry, non-revenue operations.

A Representative Office cannot earn revenue in Malaysia. It is a temporary presence used by global companies testing the market.

Key Features

• No commercial activity allowed

• Cannot sign contracts, invoices, or make sales

• Ideal for marketing, sourcing, research, or after-sales support

• Approval valid for 2 years (renewable)

Advantages

• Simple registration

• No tax

• No corporate compliance burden

Disadvantages

• No income allowed

• Staff visas limited

• Must eventually convert to Sdn Bhd or shut down

5. Limited Liability Partnership (LLP)

Best for: professional services, consulting, small international partnerships.

Key Features

• Hybrid between partnership and company

• Separate legal entity

• Flexible management structure

• Taxed as a partnership (flow-through taxation)

Advantages

• More flexible than Sdn Bhd

• Lower compliance cost

• No paid-up capital minimum

Disadvantages

• Less recognized by banks

• Not suitable for high-value or regulated businesses

Which Structure Should Foreign Investors Choose?

FAQ: Company Registration in Malaysia for Foreign Investors

1. Can a foreigner own 100% of a company in Malaysia?

Yes. Foreigners can own 100% of a Malaysian company in most sectors. Restrictions apply only in a few regulated industries such as telecoms, aviation, and certain professional services.

2. What is the best type of company for foreign investors in Malaysia?

For local operations, the best option is usually a Sdn Bhd. For cross-border trading, fintech, or holding structures, a Labuan company is often more advantageous due to its low tax regime.

3. How long does it take to register a company in Malaysia?

On average, a Sdn Bhd or Labuan company can be incorporated within 5-10 working days, assuming all documents are prepared.

4. Do I need a local director to open a company in Malaysia?

Yes. A Sdn Bhd requires at least one resident director. Zitadelle AG can provide resident director services through its Malaysian office.

5. What are the tax rates for Malaysian companies?

Onshore Sdn Bhd companies are taxed at 17%-24%. Labuan trading companies pay 3%, while Labuan non-trading entities may pay 0%.

6. Can a Labuan company do business inside Malaysia?

Generally no. A Labuan entity is restricted from conducting business with Malaysian residents, except for approved transactions such as leasing property or working with approved service providers.

7. Is a physical office required to register a company in Malaysia?

Yes. Both Sdn Bhd and Labuan companies require a registered office address. Zitadelle AG provides office rental and substance solutions in Malaysia.

8. Can a foreign company open a branch in Malaysia instead of a Sdn Bhd?

Yes. A foreign branch is possible, but it is not a separate legal entity and the parent company carries full liability. It is used mostly by large international groups.

9. What is the difference between a Labuan company and a Malaysian Sdn Bhd?

A Sdn Bhd is an onshore entity used for business inside Malaysia. A Labuan company is an offshore entity used for international operations with minimal tax and flexible regulation.

10. Can Zitadelle AG help open a bank account in Malaysia?

Yes. Zitadelle AG assists clients with both Malaysian onshore bank accounts and international banking options suitable for Labuan entities.

11. What documents are required to register a Malaysian company?

Typically: passport copies of shareholders and directors, proof of address, company name proposal, and a basic business plan. Labuan companies may require additional compliance documents.

12. Does Malaysia require economic substance for Labuan companies?

Yes. Labuan entities must demonstrate substance depending on their activity. Zitadelle AG helps with office rental, staffing, HR support, and compliance.

How Zitadelle AG Helps Foreign Investors in Malaysia

Zitadelle AG provides end-to-end incorporation and licensing services, including:

1. Malaysia Onshore (Sdn Bhd)

• Company registration with SSM

• Resident director provision

• Local office setup

• Accounting, audit, tax compliance

2. Labuan Company Formation

• Trading or non-trading company setup

• Substance planning and office rental

• Local HR and staffing

• Full licensing support:

  • money broking

  • fund management

  • securities dealer

  • fintech or digital financial services

3. Banking Support

• Malaysian and international bank account opening

• EMI or fintech account alternatives

4. Compliance and Governance

• AML or CFT frameworks

• Policies and manuals

• Economic substance reporting

• Annual regulatory filings

Zitadelle AG has a physical office with local staff in Malaysia (Labuan) - allowing clients to meet substance requirements and handle ongoing obligations.

📩Contact us now for more information,