🇲🇾 年度合规 — Malaysia

Incorporating a Labuan entity without meeting substance requirements

Fix: Since the 2019 reforms, Labuan companies must employ at least one full-time employee in Labuan and incur minimum annual operating expenditure (MYR 20,000 for non-trading, MYR 50,000 for trading) to qualify for the 3% tax rate. Companies that fail to meet these requirements are taxed at the standard Malaysian rate of 24%. Plan for genuine operational substance before incorporating in Labuan.

Not appointing a company secretary within 30 days

Fix: Malaysian law requires a company secretary to be appointed within 30 days of incorporation. The secretary must be a member of a prescribed professional body (e.g., Malaysian Institute of Chartered Secretaries and Administrators) or licensed by SSM. Failing to appoint one on time can result in penalties. Engage a corporate secretarial firm during the incorporation process.

Overlooking SST registration obligations

Fix: Unlike Singapore (GST) or Thailand (VAT), Malaysia uses a Sales Tax and Service Tax (SST) system. Service Tax registration is mandatory for prescribed services when annual revenue exceeds MYR 500,000. Sales Tax applies to manufacturers with sales exceeding MYR 500,000 and importers. Monitor your revenue against these thresholds and register proactively.

Assuming a Labuan company can freely transact with Malaysian residents

Fix: Labuan companies are generally restricted from transacting with Malaysian residents in ringgit. Doing so may cause the Labuan entity to be treated as a Malaysian resident company and taxed at the standard 24% rate. If your primary market is Malaysia, a mainland Sdn Bhd is the appropriate structure. Use a Labuan entity only for genuinely international or offshore activities.