A company incorporated abroad can be present in Malaysia in two legal ways: register a local subsidiary (a Sdn Bhd), or register itself with SSM as a foreign company, which most people call a branch. A third option, the representative office, is a MIDA approval that lets you keep staff here but not trade. For foreign company registration in Malaysia, most owners end up with the Sdn Bhd. A branch suits a time-limited project or a regulated parent whose own name has to be on the contract, and the representative office is for scouting only.
I haven’t registered a company here, and I’d rather say that plainly than fake the experience. Every fee, rate and rule below links to its official source, checked on 1 November 2026.
TL;DR
- A branch is registered under section 562 of the Companies Act 2016. The SSM fee runs from RM5,000 to RM70,000 depending on the parent’s share capital, and the notice of registration follows within one working day of a complete filing.
- The branch must have a resident agent in Malaysia at all times, and that person is personally liable for the branch’s penalties (section 563).
- A branch pays 24% on Malaysian-source profit, with no access to the 15% and 17% small-company rates.
- A representative office cannot trade, runs for a minimum of two years, and needs at least RM300,000 a year of operating spend funded from abroad for a new office.
- A Sdn Bhd limits liability, but from YA 2024 a company with more than 20% foreign ownership also pays 24%.
- Labuan is a separate regime taxed at 3% on audited trading profit, with substance rules. It is not a shortcut for selling to Malaysian customers.
What Are the Three Ways a Foreign Company Can Be Present in Malaysia?
The three structures differ most on liability, fees and whether you may invoice a customer. One assumption that keeps coming up in forum threads is that every foreign company operating here must set up a Sdn Bhd. That is not so: section 561 of the Companies Act only bars a foreign company from carrying on business unless it is registered, and a branch is that registration.
| Feature | Sdn Bhd subsidiary | Branch (registered foreign company) | Representative office |
|---|---|---|---|
| Legal personality | Separate company | None, it is the parent | None, it is the parent |
| Who is liable | The company | The parent | The parent |
| SSM or MIDA fee | RM1,000 + RM10 at SSM | RM5,000 to RM70,000 at SSM | None, MIDA approval |
| Can trade and invoice | Yes | Yes | No |
| Corporate tax | 24%, or 15%/17% only if 20% or less foreign-owned | 24% flat | Not taxable on trading, because it may not trade; expatriates are taxed personally |
| Local officer | One resident director plus a company secretary | Resident agent plus a registered office | None, but expatriate posts follow a Malaysian hire ratio |
| Annual filings | Annual return RM150, audited financial statements RM50 | Annual return RM500, parent’s financial statements RM200 | Progress report to MIDA every 12 months |
| Duration | Indefinite | Indefinite | Minimum 2 years, extendable |
The parent page on registering a business in Malaysia covers the Sdn Bhd and why the sole proprietorship is closed to foreigners.
What Does Registering a Foreign Company (Branch) Involve?
Registering a branch means settling four things: the name, the section 562 filing with its resident agent, the fee set by the parent’s share capital, and the duties that follow registration. The name comes first and must match the parent’s name in its country of origin. The name search and reservation cost RM50 and hold the name for 30 days, under SSM’s guidelines for registering a foreign company. Within 30 days of setting up a place of business, the company lodges its section 562(1) particulars: its directors and members, its share capital, and the name and address of the Malaysian resident appointed as agent under a memorandum of appointment or power of attorney, with the agent’s signed consent. The filing also needs certified copies of the parent’s certificate of incorporation and constitution, with certified translations if they are not in Bahasa Malaysia or English.
The notice of registration arrives within one working day of a complete filing. The slow part is upstream: the notarising and legalising chain for documents issued abroad. Practitioners put the whole job at 5 to 10 working days, and add two to six weeks where consular legalisation is needed.
SSM’s fee follows the parent’s share capital, converted to ringgit at the prevailing rate:
- Share capital up to RM1 million: RM5,000
- Above RM1 million up to RM10 million: RM20,000
- Above RM10 million up to RM50 million: RM40,000
- Above RM50 million up to RM100 million: RM60,000
- Above RM100 million: RM70,000
- No share capital: RM70,000 flat
The agent is the part people underestimate. Section 563 says a foreign company “shall at all times appoint an agent in Malaysia”. That agent is answerable for everything the Act requires and personally liable for the branch’s penalties unless a court is satisfied otherwise. Any change of agent goes to SSM within 14 days. Naming two individuals in the appointment is the usual practice among corporate secretarial firms, so one resignation does not leave the branch without an agent.
After registration the branch needs a registered office (section 566), lodges the parent’s financial statements and a statement of its Malaysian operations (section 575), and files an annual return (section 576). The Companies Act 2016.pdf) sets all of this out in Part V, Division 1. For a bank account, banks ask for the SSM notice and a board resolution from the parent, and how Malaysian banks treat foreign customers applies to a company’s signatories too.
Filing is online through SSM’s MyCoID system. The Kuching office at City Square, Jalan Pending (082-266 111, Monday to Friday 8am to 5pm) handles counter queries, and the pattern in reviews of it is slow service, with one counter open of three and email enquiries left unanswered.
How Is a Branch Taxed Compared With a Sdn Bhd?
A branch pays 24% on Malaysian-source profit. It counts as a non-resident company because its management and control sit abroad. The 15% on the first RM150,000 and 17% on the next RM450,000 are reserved for resident companies with paid-up capital of RM2.5 million or less, in LHDN’s company tax rates.
The Sdn Bhd used to have a clear tax edge, and for a foreign owner that edge is gone. LHDN’s Public Ruling 8/2025 removes the small-company bands from YA 2024 for any company with more than 20% of its paid-up ordinary share capital held, directly or indirectly, by a foreign company or a non-citizen. A wholly foreign-owned Sdn Bhd therefore pays 24% from the first ringgit, exactly like a branch. A Sdn Bhd in which foreign companies and non-citizens together hold no more than 20%, directly or indirectly, keeps the bands, but a branch never can.
What remains is smaller. A branch moves profit to the parent without declaring dividends. Malaysian single-tier dividends are tax-exempt, though, so the saving is paperwork rather than tax. The treaty position and some incentives reserved for Malaysian-incorporated companies also differ. Whether your home country’s treaty has a permanent-establishment clause that matters is a question for a Malaysian tax adviser. For how residency works for individuals, see tax for expats in Malaysia.
When Does a Branch Make Sense?
A branch makes sense in four cases. First, a fixed-term contract where the parent must be the contracting party and winds up afterwards: a Sarawak construction package, oil and gas service work, or commissioning a plant. Second, a regulated parent, such as a bank or insurer, whose home regulator or Malaysian licence requires the entity itself. Third, a parent that wants early Malaysian losses to offset home profits, which depends on the home jurisdiction. Fourth, a parent whose procurement or warranty terms cannot be novated to a new subsidiary.
A branch fits badly in two cases. Anything retail-facing sits better in a local company, because the wholesale and retail trade rules and most landlords favour one. And a branch cannot take investors or be sold as a company, so anything the owner may later sell is better in a Sdn Bhd. A premises licence still applies to a branch, so read the guide to getting a business licence in Malaysia before leasing space.
What Is a Representative Office, and Who Should Use One?
A representative office is a MIDA-approved office of a foreign company that gathers information, runs feasibility studies, coordinates and sources materials. MIDA’s guidelines, as at 24 March 2023, bar it from trading, importing or exporting, signing contracts, charging for services, leasing warehousing or managing a Malaysian subsidiary.
The approval runs for a minimum of two years, and an extension must be applied for three months before expiry. The approval also requires operating expenditure of RM300,000 a year for a new office, funded from outside Malaysia. The first extension raises that to RM600,000, and a further extension to RM1 million for conglomerates only. Quotes of RM600,000 from some chamber pages are the extension tier, not the entry figure.
Staff register with EPF and SOCSO, so the EPF and SOCSO guides apply to local hires. Expatriate posts are considered at two expatriates to one Malaysian, on a minimum salary of RM5,000, with a one-year pass renewed annually. Applications go through the InvestMalaysia portal, and MIDA has an office on Jalan Satok in Kuching. Practitioners report approval in roughly 4 to 8 weeks for a clean file, and the usual cause of delay is an activity description that sounds commercial.
It fits a company deciding whether to enter, with a manager on the ground for a year or two.
What About a Labuan Company?
Labuan is a Malaysian jurisdiction with its own legislation, and its tax treatment is different in kind from the three structures above. Under the Labuan IBFC tax structure, trading income is taxed at 3% of audited net profit and non-trading holding income at 0%, conditional on economic substance prescribed by gazetted regulation. A Labuan company can elect irrevocably to be taxed at the domestic rate under the Income Tax Act instead, generally 24%. On substance, formation agents commonly quote a floor of two full-time staff in Labuan and RM50,000 of annual local spend for an ordinary services company, with higher numbers for licensed activity.
Labuan is built for regional holding, trading with non-residents and licensed financial activity. Running a shop in Kuching is not on that list, and dealings with Malaysian residents in ringgit face restrictions.
So Which One, for a Company Coming to Kuching?
A Sdn Bhd by default, a branch for the time-limited or regulated case, and a representative office to scout. The Sdn Bhd route is covered in setting up a Sdn Bhd as a foreigner, which will go live alongside this guide. Whichever structure you pick, the Sarawak licence and work-pass layer still applies, and starting a business in Kuching walks through it.
A parent above RM100 million in capital pays RM70,000 to SSM before anything else. Even a small foreign parent cannot reach the small-company rate through a branch or, since YA 2024, through a majority foreign-owned Sdn Bhd. The branch’s agent carries personal liability for its compliance, and the parent carries every other liability.
FAQ
Does a Branch Need a Resident Director?
No. A branch has no directors of its own in Malaysia, because it is the parent. The Malaysian roles are a resident agent and a registered office.
Can a Branch Sponsor an Employment Pass?
The Expatriate Services Division (ESD) registers foreign company branches as employers, so a branch can apply. For a Sdn Bhd, ESD reads paid-up capital against a table that runs from RM250,000 to RM1 million depending on the category. A branch has no paid-up capital of its own. The number to confirm with ESD before you commit to headcount is which figure it reads for a branch: the parent’s capital or a capital-equivalent. Sarawak adds its own state immigration step, and the capital figure expected there should be confirmed directly.
Is a Singapore Company’s Malaysian Branch Taxed in Both Countries?
Malaysian-source profit is taxed here at 24%. How Singapore treats that income depends on Singapore’s foreign-sourced income rules and the Malaysia-Singapore treaty, so take it to an adviser who works in both.
Next Step
If the work is permanent, start with the guide to setting up a Sdn Bhd as a foreigner. More on the working side of Sarawak life sits in the working in Kuching section.