A representative office of a foreign company in Malaysia is an office established to operate permissible activities for its parent company from abroad. The liaison office of an international company also collects relevant information on investment opportunities in Malaysia in different domains, such as manufacturing and services, trade relations development, promotion of the export of Malaysian goods and services, and many others. Our specialists in company formation in Malaysia can offer specific information and legal assistance when setting up a representative office in this country.
| Quick Facts | |
|---|---|
| The purpose of a liaison office in Malaysia | Representing the business interests of a foreign company in Malaysia |
|
What activities can you undertake with a liaison office in Malaysia? |
– research and development activities, – marketing and promotion, – connecting the parent company with potential business clients in Malaysia |
|
How can a representative office be registered in Malaysia? |
– preparing a copy of the parent company’s certificate of incorporation, – completing standard forms with the purpose of establishment and activities, – preparing the latest annual reports of the foreign company, – presenting tenancy contract |
| Can a liaison office in Malaysia have commercial activities? (YES/NO) | NO |
| Contacting potential clients and partners (YES/NO) |
YES |
| Local agent required (YES/NO) |
YES |
| Attributes of a liaison officer |
– promoting the business activities of the foreign company, – contacting potential customers, – negotiating contracts, – communicating with the parent company |
| Bank account for a liaison office in Malaysia |
For varied payments in Malaysia, financed by the parent company |
| Operational costs to set up a liaison office in Malaysia |
Around USD 71,000 per year |
| The institution that authorizes the liaison office in Malaysia | Malaysian Investment Development Authority (MIDA) |
| Who financially sustains a representative office in Malaysia? |
The parent company |
| Corporate tax for a liaison office in Malaysia |
No corporate tax is imposed, as a liaison office in Malaysia does not have commercial activities. |
| Licensing requirement |
Not solicited |
| Time frame for opening a liaison office in Malaysia |
Around 30 days |
| Why choose our company formation agents in Malaysia? |
– experience in business formation, – professionalism, – efficiency, – affordable prices for complete services |
| A liaison office is also known as | Representative office (RO) |
|
Rental contract required (YES/NO) |
YES |
|
Duration of a liaison office in Malaysia |
At least 2 years, but no more than 5 years in the case of government institutions. In certain cases, the period can be extended. |
| Feasibility studies permitted (YES/NO) | YES |
| Formal management body |
Not required |
| Research and product development |
Allowed with a liaison office in Malaysia |
| Sectors of interest for a liaison office |
Social, education, business, economy, etc. |
| Shipment storage of products in Malaysia |
Not possible through a liaison office |
| Founding a liaison office in Malaysia from local sources |
Forbidden |
| Knowing the business direction | Required for a liaison officer in charge of business promotion |
| Mediating conflicts |
The responsibility of the liaison officer in Malaysia |
| Justifying the expenses of the liaison office in Malaysia |
With invoices |
| Borrowing or lending money through a liaison office in Malaysia |
Not permitted |
| Reporting requirements |
Only to the parent company that established a liaison office in Malaysia |
| Advantages of a liaison office in Malaysia | Great for business advertising, fast incorporation, simple formalities, no taxation |
Table of Contents
Requested documents for opening a representative office in Malaysia
Several documents must be prepared for opening a liaison office in Malaysia. In this case, we specify that they must be translated into English and certified by a notary. Here are the documents in question:
- company profile of the parent enterprise,
- a copy of the certificate of incorporation of the foreign entity,
- a standard application form comprising information about the activities, purpose of establishment, cash flow, employees, and other requirements imposed for such a structure,
- the latest annual reports and audited accounts (no older than two years),
- a passport copy and resume of the liaison officer in charge of the representative office in Malaysia,
- a rental contract for the future business address in Malaysia.
What is the duration of a representative office in Malaysia?
A liaison office in Malaysia can be active for at least 2 years and can represent an extension of a foreign company that wants to operate in the market in this country. In the case of government entities or trade associations, a liaison office in Malaysia should operate locally for no more than 5 years. Depending on the case and business plans, the period can be extended. We invite you to discover our services if you want to open a liaison office in Malaysia under optimal conditions and without complexity.
Operational expenditure for a liaison office in Malaysia
Operational expenses of a representative office in Malaysia should be at least RMB 300,000 or approximately USD 71,000 per year. Moreover, the expenses of a liaison office in Malaysia are borne by the parent company. Most of the expenses are directed towards the marketing and promotion plans of the activities of the foreign company.
Activities allowed for a representative office in Malaysia
The representative office established in Malaysia will act as a coordination center for the parent company’s subsidiaries, affiliates, and agents in the area. Foreign investors must know that they are not allowed to carry out any business transactions. They are not permitted to derive profit from its operations. Consequently, a representative office in Malaysia is allowed to develop the following activities:
• Gather and analyze important information on investment and business opportunities in Malaysia and the region;
• Undertake feasibility studies on investment ideas;
• Plan/coordinate business activities;
• Identify sources of industrial products, such as different components and raw materials relevant in the operational domain;
• Undertake research and product development;
• Other activities which will not result in commercial transactions.
Our experts in company incorporation in Malaysia will help you with the legal matters that define the specific activities you are allowed to develop in this country.
If you are looking for a team of accountants in Malaysia, you can collaborate with our company and discover the necessary services for the company you own. We are at your disposal with payroll services, preparation of annual financial statements, audits, debt monitoring, tax advice and compliance, and support for tax registration. We also focus on human resources management, and prices are set according to the size of the company, the number of employees, and other important aspects.
Investors are invited to watch the video below, which presents how to set up a liaison office in Malaysia:
Forbidden business activities for a representative office in Malaysia
Every international entrepreneur interested in opening a representative office in Malaysia should be aware of the fact that a liaison office is not permitted to carry out activities such as:
• engagement in any trading (for example, import and export) or any other form of commercial activity;
• leasing warehousing facilities;
• any shipment or storage of goods will be handled by a local agent;
• signing business contracts on behalf of the foreign company;
• providing services for a fee;
• participating in the daily management of its affiliates, subsidiaries or branches in Malaysia.
In order to pay careful attention to the business activities a foreign investor will conduct when opening a representative office in this country, our company formation agents in Malaysia will provide specific legal assistance on the matter. It might also provide help regarding the application procedure (excluding banking, financial, and tourism services) that should be submitted in three copies to the Malaysian Industrial Development Authority (Manufacturing Services Division) and the following documents should accompany the expatriate’s application: a certified copy of passport, curriculum vitae, certified academic qualification.
Below is an infographic with details about a liaison office in Malaysia:
Characteristics of a liaison office in Malaysia
Those who want to set up a liaison office in Malaysia should know that this type of business establishment does not require incorporating the company following the provisions of the Companies Act 1965, as the office will not carry out commercial activities in Malaysia.
A representative office is funded from non-local sources. For the registration of the representative office in Malaysia, you will need the approval of the Malaysian government. The main purpose of a liaison office in Malaysia is to collect information useful for the main company, establish business relations with local and foreign partners, and conduct research and development services; our team of company formation specialists in Malaysia can offer further details. We can help foreigners start a business in Malaysia.
The main attributes and responsibilities of a representative officer in Malaysia
Having a liaison office in Malaysia requires a representative officer who can be local or from another country. He/she must know the business direction of the company he/she represents in order to be able to implement the operations imposed by the head office. Here are other important aspects of a representative officer in Malaysia:
- Communication is important in order to establish business relationships. A good representative office should know how to promote the activities of the company in question.
- International business relations knowledge is important for a liaison officer in Malaysia. In addition, the experience accumulated over time can only be to his advantage when developing business relationships.
- A liaison officer must report everything related to his activities and efforts in Malaysia to the parent company. If other business tools are recommended for business expansion, they can be used immediately.
- A good liaison officer must also have the skills to mediate conflicts if these intervene during the promotion of the respective business.
- The conclusion of collaboration contracts and the development of business relations with clients in Malaysia are other responsibilities of a liaison officer.
Those interested in company incorporation in Malaysia, including a liaison office can confidently call on our specialists. They can manage everything related to formalities and registration procedures, in compliance with the legislation applicable in this country, both for local and foreign entrepreneurs.
Financial support for the liaison office in Malaysia
In Malaysia, a representative office cannot undertake commercial activities to generate income and profit. The purpose of the liaison office in Malaysia is to contact potential clients on the market and promote the business of the represented company. In this sense, the expenses are borne by the parent company. This can budget marketing and promotion projects, as well as other business plans for Malaysia. In this sense, all expenses must be justified with the help of invoices to be sent to the head office for accounting. If you want to open a liaison office or set up a business in Malaysia, you can trust our local experts.
What taxes does a representative office in Malaysia pay?
As specified in this article, a liaison office in Malaysia cannot have economic operations, cannot issue invoices, or generate income and profits. As a result, this business structure is not subject to the taxation regime in Malaysia. On the other hand, if the representative office in Malaysia makes purchases in this country, they may contain standard sales and services tax or SST, the equivalent of VAT, which must be paid. Such purchases are accompanied by invoices that must be kept for accounting purposes. We recommend here the services of our accountants in Malaysia.
Why is it advantageous to open a liaison office in Malaysia?
The fact that you can advertise your business in the Malaysian market through a liaison office is one of the advantages of this structure. Moreover, the formalities are quite simple and there are no complexities regarding the registration of a representative office in Malaysia.
The costs for opening a representative office in Malaysia are relatively low and are borne by the parent company. You can opt for local staff when you appoint a liaison officer in Malaysia. We invite you to speak with our local specialists and benefit from the services offered for the quick registration of a liaison office in Malaysia. We can help you open a business in Malaysia.
Investing in Malaysia, a great option for foreigners
Malaysia is one of the appreciated destinations for business and various company extensions, in varied sectors of interest. Considered one of the fastest-growing countries from an economic point of view, Malaysia offers a stable business climate to those who want to be active in the local market. If you want to set up a company in Malaysia, you might be interested in the following statistical data about the country’s economy:
- An economic growth in Malaysia of approximately 7% was recorded in Q4 of 2022.
- The services sector grew by approximately 8.9% in the same Q4 of 2022.
- The manufacturing sector also grew in Q4 of 2022, by approximately 3.9%.
- Malaysia’s exports increased by about 25% in 2022.
- China is the largest export market for Malaysia, with total exports of over 15%.
Please contact our company formation agents in Malaysia for further information on the matter. On the other hand, you can solicit the services of our CPA in Malaysia when Setting up a company.