Key Areas to consider when Maintaining a Malaysian Company (Sdn Bhd)

Foreigners are highly recommended to know the key’s areas to consider when maintaining a Malaysian Company in Malaysia. Foreigners can comply to the following guidelines to maintain their company SDN BHD  where they are either seeking expertise to assist them or doing the tasks by themselves.

The recommended guidelines are as follows:

• Ensure all company’s documents are submitted to the Company Commission of Malaysia
• Audit your company accounts on a yearly basis
• Submit your Company Tax Return on a yearly basis, click here to for complete info on Tax compliance
• Submit Income Tax Return for all employees in the company on a monthly basis
• Submit Employee Provident Fund (EPF) for the Malaysian workers in the company on a monthly basis
• Submit the Government Insurance (SOCSO) and EIS for the Malaysian workers in the company on a monthly basis
• Renew the Town Council Licence and any other trade licenses of your company every year
• Once every two months, submit Sales and Service Tax if your company is eligible to contribute
• Comply with all Labour Law Acts pertaining to the employment of workers
• Renew your expatriate staffs’ work visa on time
• Payment timely to Company Secretarial, Auditor and Tax Agent for their services

The Malaysian Government encourages foreign companies to employ Malaysians to work in their companies. When employing local Malaysian staff, there are two main contributions that must comply. They are:

• Employees Provident Fund (EPF) contribution table:

Aged 55 and below – Employee pays 8% and the employer pays 12% of the total monthly gross salary
Aged 55 to 77 years – Employee pays 5.5% and the employer pays 6% of the total monthly gross salary

It is optional for foreigners to contribute for EPF. More on EPF, please visit www.kwsp.gov.my.

• Social Security Organisation (SOCSO) and EIS Scheme

Wholly paid by the employer – 1.25% of the employee’s wages of a maximum salary of RM3,000.
Foreigners are not entitled to SOCSO contribution. More on SOCSO, please visit www.perkeso.gov.my.

Guidelines for Recruitment and Labor based on the Malaysian Labor Law:

Working hours – maximum 48 hours in one week
Paid Holiday     – at least 10 gazetted public holidays
Maternity Leave for women – 60 days paid leave

Annual Paid Leave
0 to 2 years service: 8 days
2 to 5 years service: 12 days
> 5 years: 16 days

Paid Sick Leave
0 to 2 years: 14 days
2 to 5 years: 18 days
> 5 years: 22 days

Overtime Payment
Normal days: 1 ½ time of hourly rate of pay
Rest Days: 2 times of hourly rate of pay
Public Holidays : 3 times of hourly rate of pay

Payment of Income Tax for Employees (Local and Foreigners)

All income earned by locals or foreigners in Malaysia is subject to tax. The company has a duty to deduct the income tax portion of an employee’s (local or foreigner) salary on a monthly basis and make payment to the Income Tax Department.

The company needs to open Income Tax Account in order to start making payments for the employees’ (local or foreigner) income tax account on monthly basis. The Income Tax department will refund for any surplus of tax paid on chargeable income of the employees after assessing the year-end income tax return. Should there be any shortfall, employees must pay to the Income Tax Department.

The dateline for income tax assessment is the 30th of April every year for salaried staffs. More on Income Tax complete info, please visit Malaysia Inland Revenue website: www.hasil.gov.my. 

[Read: How to start Malaysian Sdn Bhd Company in Malaysia]

An average yearly maintenance fee range from RM4,000 to RM6,000 will be required to maintain an active Malaysian Sdn Bhd Company. To ensure if the setting up the Malaysia Company Sdn Bhd is right for your intended business nature to achieve your objectives in Malaysia, feel free to contact us at +603-2181 2882 or email at contact@malaysiabizadvisory.com. [What are Business Entities Foreigners Can Have in Malaysia]