How to open a Representative Office in Malaysia
A Representative Office provides a foreign company interested in establishing operation in Malaysia an avenue to assess business opportunities in Malaysia market. It is also ideal for a foreign company that is interested in promoting its brand and to work with its local agents and distributors. It is a short-term setup (for up to three years), and it is not permitted to engage in commercial revenue-generating activities such as concluding contracts and opening of Letter of Credit.
Taxation of Malaysia Representative Office
A Malaysia Representative Office cannot engage in commercial revenue-generating activities, and therefore need not file for annual tax returns. However, income earned by the staff of the Representative Office including the Chief Representative is subject to Malaysia personal income tax.
Malaysia Representative Office Registration Requirements
- Sales Turnover of the foreign entity must be > US$250,000
- No. of years of establishment of the foreign entity must be > 3 years
- Proposed No. of staff for RO should be < 5 people
What you need to know before representative office setup
Name: The Representative Office name must be the same as the parent company.
Shareholders: The parent company must own 100% of the Representative Office.
Chief Representative: Malaysia Representative Office must have at least one representative who can be Malaysia resident or foreigner staff member. Intergest Malaysia can assist you in the application of Employment Pass for the chief representative relocating to Malaysia to run the Representative Office operations.
Registered Address: Every business registered in Malaysia is required to have a registered office address. The registered address must be a physical address and cannot be a PO Box. Use of residential address is allowed for certain types of business.
Registration of a Malaysia Representative Office
Intergest Malaysia is specialized in registration of companies in Malaysia. We can set up your Representative Office within 5 working days provided you have all required documents in order.
Upon approval of the application of your Malaysia Representative Office, Intergest Malaysia can also assist you in the application of Employment Pass for the Chief Representative who plans to relocate to Malaysia to run the Representative Office operations. The approval process by Ministry of Manpower of Malaysia is approximately 3-5 weeks.
Approval and Renewal Information
International Enterprise Malaysia takes about 5 business working days to approve each application. Once approved, it will send a Letter of Approval via email. The registration is valid for one year and subject to an annual renewal.
International Enterprise Malaysia sends out a renewal notice two months prior to the expiry of the registration. It is mandatory for the renewal to be completed seven days before the expiration date. A representation office must upgrade to a Branch Office or a Subsidiary Company after a period of three years.
Opening of a Corporate Bank Account
Once the Representative Office has been incorporated, you may open a corporate bank account with any of the local or international banks based in Malaysia, and in some cases, overseas.
If you are unable to come to Malaysia, you may choose a bank that allows opening of a corporate bank account without your presence. Standard Chartered Bank and HSBC are two of the international banks that allow you to open a bank account without you having to be Malaysia.