Private Limited Company (Sdn Bhd)
Sendirian Berhad (Sdn Bhd)
Company formation in Malaysia
The Sdn Bhd is best suited for: Foreign entrepreneurs establishing a business in Malaysia, SMEs targeting the Malaysian and ASEAN markets, Companies seeking a cost-effective, English-friendly jurisdiction in Southeast Asia, Businesses that want to benefit from Malaysia's competitive tax rates and incentive programs. A Sdn Bhd with paid-up capital not exceeding MYR 2.5 million and annual gross income not exceeding MYR 50 million qualifies as an SME and benefits from a preferential tax rate of 17% on the first MYR 600,000 of chargeable income, with the remainder taxed at the standard rate of 24%. Non-SME companies pay the standard rate of 24% on all chargeable income. Malaysia does not impose capital gains tax on disposal of shares (except for shares in real property companies). Dividends paid by Malaysian companies are tax-exempt in the hands of shareholders under the single-tier tax system. Withholding tax on dividends paid to non-residents is zero. Royalty payments to non-residents are subject to 10% withholding tax, and interest payments to non-residents attract 15% withholding tax (both may be reduced under double tax treaties). Sales Tax (5–10%) applies to manufactured and imported goods, and Service Tax (8%) applies to prescribed services.
- Foreign entrepreneurs establishing a business in Malaysia
- SMEs targeting the Malaysian and ASEAN markets
- Companies seeking a cost-effective, English-friendly jurisdiction in Southeast Asia
- Businesses that want to benefit from Malaysia's competitive tax rates and incentive programs
Key Facts
Step-by-Step Formation Process
Reserve a company name
Submit a name reservation application through the Companies Commission of Malaysia (SSM) MyCoID portal. The name must be unique and not identical or similar to existing registered entities. Names that include controlled words (e.g., "bank," "insurance," "Malaysia") require prior approval from relevant authorities.
Prepare incorporation documents
Draft the company constitution (or adopt the model constitution under the Companies Act 2016). Gather KYC documents for all directors and shareholders, including passport copies, proof of address, and a declaration of compliance. At least one director must be ordinarily resident in Malaysia (citizen or permanent resident).
Incorporate via SSM (Suruhanjaya Syarikat Malaysia)
Submit the incorporation application through the MyCoID portal or a licensed company secretary. Include the constitution, director and shareholder details, registered office address, and the incorporation fee of MYR 1,000 (for companies with share capital). SSM processes applications electronically and issues a notice of registration upon approval.
Obtain a company registration number and open a bank account
SSM assigns a company registration number upon incorporation. Use the notice of registration, constitution, and director identification to open a corporate bank account at a Malaysian bank. Most banks require at least one director to visit in person.
Post-incorporation compliance
Appoint a company secretary within 30 days of incorporation (must be a member of a prescribed professional body or licensed by SSM). Register with the Inland Revenue Board (LHDN) for corporate tax. Register for Sales Tax and Service Tax (SST) if applicable. File annual returns and audited financial statements with SSM. Maintain statutory registers and records at the registered office.
Required Documents
- Name reservation approval from SSM
- Company constitution (or adoption of model constitution)
- Passport copies and proof of address for all directors and shareholders
- Declaration of compliance by a director or company secretary
- Registered office address in Malaysia
- Consent-to-act forms for directors
- Details of shareholding structure
Cost Overview
Tax Treatment
A Sdn Bhd with paid-up capital not exceeding MYR 2.5 million and annual gross income not exceeding MYR 50 million qualifies as an SME and benefits from a preferential tax rate of 17% on the first MYR 600,000 of chargeable income, with the remainder taxed at the standard rate of 24%. Non-SME companies pay the standard rate of 24% on all chargeable income. Malaysia does not impose capital gains tax on disposal of shares (except for shares in real property companies). Dividends paid by Malaysian companies are tax-exempt in the hands of shareholders under the single-tier tax system. Withholding tax on dividends paid to non-residents is zero. Royalty payments to non-residents are subject to 10% withholding tax, and interest payments to non-residents attract 15% withholding tax (both may be reduced under double tax treaties). Sales Tax (5–10%) applies to manufactured and imported goods, and Service Tax (8%) applies to prescribed services.
Pros & Cons
- Low minimum capital requirement (MYR 1) makes it accessible to startups and small businesses
- English is widely used in business and legal documentation — significantly easier for foreign entrepreneurs than Japan, Korea, or Thailand
- Competitive corporate tax rate: 17% on the first MYR 600,000 for SMEs, 24% standard rate
- 100% foreign ownership permitted in most sectors, with no requirement for local partners in many industries
- Well-regarded common law legal system based on English law, providing familiarity for international businesses
- Strategic location in ASEAN with access to major markets (Singapore, Indonesia, Thailand) and excellent infrastructure
- No capital gains tax on disposal of shares or assets (with limited exceptions for real property)
- At least one director must be ordinarily resident in Malaysia — foreign founders without a Malaysian presence need a local director
- A company secretary must be appointed within 30 days and must hold professional qualifications or an SSM license
- Audited financial statements are required annually for all Sdn Bhd companies, regardless of size
- Some sectors (e.g., distribution, retail, services) may have equity conditions or require approval from MIDA for foreign participation
- Malaysian ringgit (MYR) is a partially controlled currency — foreign exchange transactions above certain thresholds require Bank Negara Malaysia approval
- Striking off a dormant Sdn Bhd requires SSM approval and takes several months
Other Structures in Malaysia
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Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.