Ranked as 24th in the Ease of Doing Business list, the country of Malaysia turns out to be a lucrative business investment option. Located in Southeast Asia, the region covers the part of the Malay Peninsula and the island of Borneo. With a GDP figure of $358,579 million in 2018, there has been a spike of $9,960 as compared to 2017. According to the projections, the economy is expected to grow by4.8% in 2020.
An offshore company is one of the evolving business jurisdictions that has been grabbing the attention of global business investors. Starting an offshore company in Malaysia is a feasible option, and this guide will help you to understand the respective offshore company set up process in a smooth way. Kuala Lumpur, the capital, is a famous tourist destination and one of the fastest developing economies of the world. However, before proceeding towards the process, let’s start by understanding the concept of offshore.
What is an Offshore Company?
The term “Offshore” in simple terms refers to an area which is situated at a distance from the seashore. Similarly, in the corporate world, the term refers to a company which operates its business activities at a range from the area of the establishment. In Malaysia, the secret tax haven for an offshore company in Labuan, which has gained its traction from the financial centres in Asia.
Why Start an Offshore Business in Malaysia?
Some of the core reasons for incorporating an offshore business in Malaysia are highlighted below.
1. No Local Partners Required
When it comes to offshore company incorporation in Malaysia, no local partners are required. The Government of Malaysia has made it completely foreign-owned, with a minimum presence of one director and one shareholder.
2. Low-Cost Company Set up
As compared to the other regions, the offshore company set up cost in Malaysia is relatively less, which attracts multiple business owners to come forward and choose the destination as the ultimate investment ground.
3. Low Corporate Tax
Tax payment is one of the crucial parts that every business owner gets tensed about. In Malaysia, the corporate tax is as low as 3%, which allows the business owners to get relief over the high corporate tax payment. Also, there are several tax advantages associated with starting an offshore business.
4. Multiple DTTA
The ground of Malaysia has got above 60 Double Tax Treaty Agreement which allows the business professionals to get relief of double taxation that takes place during the import-export process.
5. Labuan- A Tax Haven
The presence of Labuan as a tax haven jurisdiction plays a more significant role in grabbing the attention of foreign investors. Some of the advantages that Labuan has on other locations are highlighted below:
- No trade license is required for most of the businesses
- The Labuan Registration law has been stable for a very long time
- Paves out multiple business options
- Director’s fees and dividends are not taxed
How to Start an Offshore Business in Malaysia?
To start an offshore company in Malaysia, one needs to go through the following steps:
1. Draft a Business Plan
Irrespective of the nature and size of your business, planning is one of the crucial steps that every business owner needs to undergo. Market conditions and essential aspects like financial planning, break-even analysis, SWOT analysis are to be considered while building the plan. Upon finalizing the plan, one gets clarity regarding the route and the steps to be followed.
2. Take a Look at Your Finances
Finance is one of the essential aspects that drive an organization to carry out relevant activities. Understand the scenarios were to fetch in more funds for your organization. Also, you need to build the respective marketing budget that will help you to get more footfalls.
3. Decide a Business Structure
A business organization can be formed in multiple ways as there are different business structures that one can choose from. Each structure differs based on the grounds of the number of shareholders, capital invested, location etc. If you are a local entrepreneur, you can proceed ahead as a Sole Proprietorship, or Limited Liability Partnership (LLP), or General Partnership. In case, if you are a foreign entrepreneur, you can proceed ahead with a locally incorporated company or foreign-owned company.
You need to have a clear idea regarding the business entities and then choose one accordingly that suits your business needs.
4. Select a Company Name
Every business needs a name for its recognition. In the next step, you need to choose a unique name for your organization. You need to select a name by analyzing various aspects as tomorrow it’s going to hold the company’s brand identity.
In Malaysia, you need to complete a request for the availability of name form and submit the same to Suruhanjaya Syarikat Malaysia (SMM), and pay the respective fee for each name applied.
After the completion of the name check, you need to register with SMM to get the respective approvals for company formation in Malaysia.
5. Obtain a Specific Location
Setting up a business where your target audience doesn’t exist will end up in losses. You need to make sure that the business entity is set up in a specific location that will help you to grab your target audience. Location plays a significant role in the growth of a business entity, and you need to make sure that you choose the right place accordingly.
6. Get Handy with the Required Documents
Clear and approved documents are the gateway to business incorporation. You need to make sure that you hold the right set of documents while heading towards the registrar office. The set includes:
- Identity of the shareholder(s)
- Passport and visa of the shareholder(s)
- Business plan
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Statutory Declaration by a Director
- Declaration of Compliance
- Company’s name approval letter from SMM
7. Pay the Registration Fees
Once the documents mentioned above gets submitted, you need to proceed ahead with the registration part by paying the relevant fee.
8. Grab the Incorporation Certificate
After the fee payment and completion of the document verification process, you will be issued the company incorporation certificate that will act as a legal permit to carry out the business operations.
9. Avail Professional Services
The business incorporation process involves multiple stages of legal proceedings, and the best way to deal with them is to proceed ahead by availing the professional services. Ranging from business incorporation to set up core services like accounting, auditing, digital marketing, an expert can help you to deal with several grounds.
Benefits of Availing Professional Services
Availing the professional services from business experts is one of the best business decisions that an investor or business owner can make. Some of the core benefits that an investor can grab by investing in professional services are:
- Relevant tasks are carried out in a professional manner
- Investors can utilize the time in business planning and build appropriate strategies
- The market insights can be easily known from the professionals
- Every task assigned holds a deadline
- Practical solutions can be provided at a faster pace
Business Setup Worldwide is one of the top business consulting firms who are dedicated to providing the best business setup services across the globe. We have helped numerous clients to incorporate their business roots in different parts of the world at an affordable price. Our business experts are well-versed with the relevant procedures and are known to provide tailored solutions suiting the business requirements. In case you hold any query, do speak to our experts. Contact us today-we’d be glad to assist.