ASME – S P Setia Bhd Group

Seminar and Networking Session

3 March
a c 2010,
0 0, Wednesday
ed esday
 ASQ

Seminar
S i on IInvestment
t t in
i
Malaysia
ASQ CONSULTANTS SDN BHD

Date : 3rd March 2010

FORMATION OF COMPANIES
INCORPORATION OF PRIVATE LIMITED
(SDN. BHD.) COMPANY IN MALAYSIA
- A two
Any t or more persons may form
f a Company
C (S 14)
(S.14).
- Minimum two residence directors (S.122).
- Any person who stays in Malaysia more than 182
days a year can be considered as residence Director.
- Minimum paid-up capital is RM2-00.
- Minimum authorised capital is RM100,000-00.
- Foreigner may hold 100% of shares.
FORMATION OF COMPANIES
PROCEDURES
1) Choosing a name requesting for the availability of
the name for the intended Company.

2) Filing the M & A

A, Form 6 and 48A
48A.

3)) Filing
g Forms 24,, 44 and 49.
 MINIMUM LICENSES
REQUIREMENT FOR SETTING
UP BUSINESS IN MALAYSIA
MINIMUM LICENSES REQUIREMENT FOR SETTING UP
FACTORIES IN MALAYSIA

1) MANUFACTURING LICENSE
Only manufacturing companies with shareholders’
shareholders funds of RM2
RM2.5 5 million
and above or engaging 75 or more full time employees need to apply for a
license under the ICA.

2) APPROVAL FROM DEPARTMENT OF ENVIRONMENT

(DOE)
All manufacturing projects need to comply with the requirements
stipulated in the Environmental Quality Act, 1974.
3) APPROVAL FROM DEPARTMENT OF
OCCUPATIONAL HEALTH & SAFETY
Under the Factories and Machinery Act 1967, manufacturing
projects are required to :-

- Obtain design approval of ‘certificate machinery’ i.e. steam boilers,

unfired pressure vessels and hoisting machines such as cranes and
lifts.

- Obtain a ‘Certificate of Fitness’ prescribed for ‘certificated

machinery’.

- Serve written notice to the nearest Inspector of Factories and

Machineries of the intention to take occupancy of the Factory and
operate the machine.
4) LOCAL TRADE/BUSINESS LICENSE

An investor must obtained a local trade / business license. This is

issued by the Local Authorities.

5) SALES TAX LICENCE

A sales tax is levied on imported and locally manufactured goods
(except those exempted by the Ministry of Finance)
Finance), either at the
time of import or at the point of sale. Manufacturing companies
should apply for a license under the Sales Tax Act, 1972.
Companies manufacturing taxable goods
goods, but where the sales are
below RM100,000 per year, may apply for a certificate of exemption.
6) NOTIFICATION TO THE LABOUR DEPARTMENT
Under
U d Section
S ti 63A off the
th Employment
E l t Act,
A t 1955 allll Companies
C i
must submit a notice within 90 days of establishment to the nearest
Labor Department.

7) EPF / SOCSO
Registration of workers with the Employee Provident Fund (EPF)
under
d the
th Employees’
E l ’ Provident
P id t Fund
F d Act,
A t 1951 andd Social
S i l Security
S it
Organization (SOCSO) under the Employees’ Social Security Act,
1969.

8) FIRE SERVICES DEPARTMENT

9) LAND OFFICE APPROVAL
10) IMPORTER & EXPORTER CODE
CODE.
11) OTHER APPROVALS :
a) Chemical Project / Industry

- Pharmaceutical projects are required to obtain :-

a)) “Good Manufacturing

g Practice” ((GMP)) approval
pp for the
manufacturing process.

b) A license to manufacture drugs under the control of Drugs and

Cosmetics Regulation 984 and to register the products with the
Drug Control Authority.

j
- Projects which p
propose
p to use p
poisonous materials are required
q to
obtain a Poisons License from the Ministry of Health.

- Companies proposing to manufacture pesticides are required

to register their products with the Pesticide Board Department of
Agriculture.
2) Electrical and Electronic Industry

A Company is required to apply for certificate of approval to manufacture

and sell electrical apparatus or accessories.

3) Wood-based Industry

Wood-based
W db d projects
j t such h as sawmilling,
illi plywood
l d mills,
ill ffurniture
it mills,
ill
etc. are required to obtain a license from the respective State Forestry
Department.

Wood-based projects (with the exception of furniture projects) are

required to register with the Malaysian Timber Industry Board.
4)) Rubber-based Industry
y

Latex-based projects are required to obtain a license to Purchase and

store latex from the Malaysian Rubber Exchange and Licensing
Board.

5)) Palm Oil-based Industry

y

Palm oil-based projects are required to obtain a license to sell, purchase,

store and export palm oil products from Palm Oil Registration &
Licensing Authority (PORLA).
6) Food Industry
Projects which propose to manufacture foodstuff must observe and
comply with the Food Act, 1983 and Food Regulations, 1985.
Food processing projects which intend to produce ‘halal’ food
products are required to obtain a certificate from the Islamic Affairs
Division, Prime Minister’s department.
Projects which propose to can pineapples are required to obtain a
Certificate of Registration from the Malaysian Pineapple Industry
Board.
7) Textile Industry
Textile projects which propose to export products with quota
restrictions to USA, EEC, Canada, Norway and Sweden are
required to obtain a Quota Allocation and Export License from the
Ministryy of International Trade and Industry.
y

8) Printing Industry

Printing companies are required to obtain a printing press license

from the Ministry of Home Affairs.

9) Film / Video Production Industry

Film /Video production projects are required to obtain a license from

th N
the National
ti l Fil
Film D
Development
l tBBoardd (FINAS)
(FINAS).
10).
) Aquaculture
q Project
j

Aquaculture projects which propose to import or export live fish /

prawns are required to obtain the approval of the Department of
Fi h i
Fisheries.

11) Storage of Control Items

Projects which propose to store, manufacture and trade ‘controlled

items’ under the Control of Supplies Act, 1961, are required to
y of Domestic Trade and Consumer
obtain a license from the Ministry
Affairs.
GUIDELINES ON EMPLOYMENT OF
EXPATRIATE PERSONNEL

TYPES OF EXPATRIATE POST

1) Key Post
- Permanent
2) Executive Post
- Maximum 10 years
3) Non-executive Post
- Maximum 5 years
y
 GUIDELINES

- Manufacturing companies with foreign paid-up capital

of US$2 million and above will automatically be allowed 10
expatriate
p p
posts including
g 5 key
ypposts.

- Manufacturing companies with foreign paid-up capital

of more than US$200,00 but less than US$2 million will
automatically be allowed 5 expatriate posts including 1 key
post.

- Key post can be considered when the foreign paid up

capital is at least RM500,000-00.
CUSTOMS
DUTIES
EXEMPTION
 TYPES OF CUSTOMS DUTIES EXEMPTION
I) CUSTOMS ACT, 1967

(a) Licensed Manufacturing Warehouse (LMW) under Section

65/65A.

(b) Drawback of Import Duty and Surtax Under Section 99.

(c) Drawback of Import Duty and Surtax Under Section 93.

TYPES OF CUSTOMS DUTIES EXEMPTION

II) SALES TAX ACT, 1972

(a) Exemption from Sales Tax
(b) Drawback of Sales Tax

III) SPECIAL INCENTIVE SCHEMES

(a) Treasury Exemption
- PC 2 (97)
 LMW

CJ 5 PC 2
SALES IMPORT
TAX DUTIES
EXEMPTION EXEMPTION
 LICENSED
MANUFACTURING
WAREHOUSE
(LMW)
LICENSED MANUFACTURING WAREHOUSE (LMW) ESTABLISHED UNDER
SECTION 65A CUSTOMS ACT, 1967
1. Objective
j
S.65 - To establish Warehouse for storage of
dutiable goods.
S.65A - To enable manufacturing gpprocess to be
carried out in Licensed Warehouse.

2. Period of License
- 2 years
- To be renewed at least one month before expiry

3. Type of Premises
- Approved factory
 ASQ

TAX INCENTIVES
TAX INCENTIVE

TAX AVOIDANCE TAX EVASION

VS

reduce tax by means which are

within the law

reduce tax by illegal means

TAX INCENTIVE

Tax Incentives
• Important to choose the right incentives!!!!!!

- Some incentives are mutually exclusive

TAX INCENTIVE

SME – LOWER CORPORATE TAX RATE

• Aim
Ai ffor th
the use off 20% reduced
d d ttax rate
t if you can

• - tax saving of RM25,000 (YA 2009) if the

chargeable income > RM500,000
TAX INCENTIVE 税务优惠

Pioneer status
Vs
Investment tax allowance

choose the right

g one…..
TAX INCENTIVE
PIONEER STATUS

tax exemption of 70% / 100% of statutory income

TAX INCENTIVE

INVESTMENT TAX ALLOWANCE

allowance = 60% 0r 100% of capital expenditure

maximum exemption on 70% / 100% of statutory

income
TAX INCENTIVE
REINVESTMENT ALLOWANCE

make the most of the RA…….

it is available for 15 years
TAX INCENTIVE

REINVESTMENT ALLOWANCE
* manufacturing / agriculture
* allowance = 60% of capital expenditure
* must have been in operation > 36 months
* qualifying project – expansion, modernisation, automation,
diversification

eg :
cost off machine = RM1,000,000
1 000 000 ((cash))

RA = RM1,000,000 x 60% = RM600,000

TAX INCENTIVE

EXEMPTION FOR VALUE OF

INCREASED EXPORT

If you are exporting goods to overseas,

make use of the incentive on
exemption for value of increased
exportt
TAX INCENTIVE

• Exemption for value of increased export

1. significant increase in export = 30% of value of increased export

2
2. P
Penetrating
t ti new exportt market
k t = 50% off value
l off increased
i d exportt

3
3. Export excellence award = 100% of value of increased export
TAX INCENTIVE
What
at iss significant
s g ca t increased
c eased in e
export
po t ?
i.e : value of increased in export > 50%

Eg:
Value of increased export (VIE)
Export value (FOB)

YA 2007 RM1,000,000
YA 2008 RM1,800,000
VIE = RM 800,000
% of VIE = 80% > 50%
TAX INCENTIVE

DOUBLE DEDUCTION–
DEDUCTION promotion of export

pay attention to promoting export, it can

earn you double deduction
deduction….
TAX INCENTIVE
DOUBLE DEDUCTION

– ADVERTISING EXPENDITURE ON MALAYSIAN BRAND NAME

GOODS

- 70% Malaysian shareholder

- At least 20% export
- Company (or holding co) is registered proprietor
TAX INCENTIVE
SME -ACCELERATED
ACCELERATED CAPITAL ALLOWANCE

- YA 2009 TILL YA 2010

- Capital allowance on plant and

machinery = 100%
TAX INCENTIVE
SMALL VALUE ASSETS

- value < RM1,000 per item

- 100% capital allowance
- No threshold
ISKANDAR MALAYSIA
• Special economic zone in South Johor
• Covers 2,217 square kilometres of land area
• 3 times the size of Singapore
ISKANDAR MALAYSIA
• Five flagship zones
¾Johor Bahru City Centre
¾Nusajaya
¾Port Tanjung Pelepas
¾S
¾SenaiiA
Area
¾Tanjung Langsat
ISKANDAR MALAYSIA
• Focus on the following industry clusters
™Electrical and electronics
™Petrochemicals and oleo chemicals
™Food and agro processing
™Logistics and related services
™Tourism
™Health services
™Ed
™Education
ti services
i
™Financial services
™Creative industries
ISKANDAR MALAYSIA
ISKANDAR REGIONAL DEVELOPMENT
AUTHORITY (IRDA)
Roles include :
• Act as a coordinator between government agencies,
to promote trade, investment and development
within IM and to handle all matters relating to the
general administration of IM.
• Act as the agent in relation to applications for
approvals
• Recommend incentives for tax, customs, duties and
other fiscal incentives
ISKANDAR MALAYSIA
INCENTIVES IN IM :
Targeted service sectors:
9 creative industries
9 Education
9 Financial advisory and consulting
9 Healthcare
9 Logistics;
L i ti and
d
9 Tourism
ISKANDAR MALAYSIA
• CRITERIA
• Approved by IRDA
• Carry out activities in the above targeted service
sectors
• Situated in the designated zones
ISKANDAR MALAYSIA
Incentives:
• Exemption from foreign investment committee rules
which require a minimum 30% Bumiputra equity
shareholding;
• Freedom to source capital globally
• Abilityy to employ
p y foreign
g employees
p y freelyy within the
approved zones, depending on the amount of space
occupied in these zones;
• Exemption from corporate income tax for a period of
10 years from commencement of qualifying activities
within the zone and outside Malaysia. (provided
operations commence before end of 2015)
ISKANDAR MALAYSIA
Incentives:
• Ability to carry forward losses to post tax
exempt period with certain conditions
• Foreign knowledge workers living in IM and
working in IRDA status companies will be
entitled to import or purchase one car per
person free
f off import duties or excise duties
and sales taxes subject to conditions;
ISKANDAR MALAYSIA
Incentives:
• Chargeable income of resident knowledge
workers in respect of qualifying activities (QA)
who apply and commence employment in IM
between 24 October 2009 to 31 December
2015 be taxed at 15% indefinitely. (QA= green
technology, biotechnology, educational
services, healthcare services, creative
industries, financial advisory and consultancy
services logistic services and tourism
services, tourism.))
 TAX INCENTIVES
AVAILABLE
IN MALAYSIA
FOR NON MANUFACTURING
OPERATIONS
TYPES OF INCENTIVES AVAILABLE FOR
SERVICE- BASED OPERATIONS

a) Operational Headquarters
b) International Procurement Centres /
Regional Distribution Centres
c) Regional Office / Representative Office
d) Foreign Fund Management Company
e) Malaysian International Trading Company
a) Operational Headquarters
• Local incorporation under the Companies Act 1965
but 100% foreign equity is allowed
• A minimum paid-up capital of RM0.5 million
• A minimum total business spending (Operating
Expenditure) of RM1.5 million per year
• Serve at least 3 related companies outside Malaysia

• A sizeable network of companies outside Malaysia

which includes the parent company or its head
office and related companies
Exempted
E t d from
f Income
I Tax
T for
f 10 years for
f the
th following
f ll i sources
of income

• Business
B siness Income • IIncome arising
i i ffrom services
i rendered
d d
to its offices or related companies
outside Malaysia

• Interest • Income derived from interest on foreign

currency loans extended to its offices
or related companies outside Malaysia
• Royalties • Royalties received from research &
development work carried out in
Malaysia on behalf of its offices or
related companies outside Malaysia
b) International Procurement Centre (IPC)
IPC refers to a company
p y undertakes procurement
p & sales of raw
materials, components and finished products to its group of related
& unrelated companies in Malaysia and abroad

• Local incorporation under the Companies Act 1965

• A minimum paid-up capital of RM0.5 million
• A minimum total business spending (Operating Expenditure) of
RM1.5 million per year
• Incremental usage of Malaysian ports & airports
• A minimum annual sales turnover of RM50 million by the third year
of operation
• Drop shipment permitted up to 30% of annual sales turnover
Facilities Accorded to IPC

• Expatriate posts based on the requirement of

IPC

• Bring in raw materials, components or finished

products with custom duty exemption into free
industrial zones, licensed manufacturing
warehouses, free commercial zones & bonded
warehouse for repackaging, cargo consolidation
and integration before distribution to its final
consumers
Incentives

• Tax exemption on the statutory income for 10 years:

• Dividends paid out from the exempt income will be

exempted
t d from
f ttax in
i the
th hands
h d off its
it shareholders
h h ld

• Expatriates working in an IPC are taxed only on that portion

of their chargeable income attributable to the number of
days that they are in the country
Eligibility Criteria For Incentives

• It must have an annual sales turnover of at least

RM100 million with export sales of at least RM80
million (out of which direct export must be at
least RM50million)
• Sales to the domestic market are limited to 20%
of its sales turnover
• Sales
S l to Free Zones and d Licencedd Manufacturing
f
Warehouse (LMW) are considered as domestic
sales
Regional Distribution Centre (RDC)

Same conditions & tax incentives as

International Procurement Centre (IPC)
except that the RDC is allowed to deal with
its own brand of goods only and must be
located in free zones or licenced
warehouse or licenced manufacturing
warehouse.
c) Representative Office / Regional
Office

• An office which is established in Malaysiay to

perform permissible activities for its head
office/principal.
• Not
N t required
i d tot be
b incorporated
i t d or registered
i t d
under the Companies Act 1965
• Not allowed to carry out any business
transaction or derive income from its operations
p
• Expatriate posts based on requirements
p q
Representative Office

• An office of a foreign company approved to

collect relevant information on investment
opportunities in the country especially in the
manufacturing sector, develop bilateral trade
relations, promote the export of Malaysian
goods/products and carry out research and
development (R & D).
Regional Office

• An office of a foreign corporation that serves as

the coordination centre for the corporation’s
affiliates subsidiaries and agents in South
affiliates, South-East
East
Asia and the Asia Pacific. The Regional Office
established is responsible for designated
activities of the corporation within the region it
operates.
d) Foreign Fund Management Company

• A company incorporated in Malaysia and

licensed under the Securities Industry Act 1983
• Issued share capital can be wholly foreign
owned
• Paid upp capital
p must be at least RM 2 million
• Provision of fund management services to
foreign investor in their home countries which
includes investment portfolio,
portfolio advisory services
and other activities incidental to fund
management
Incentives

• Concessionary tax rate of 10%

• Net of tax income is allowed to distribute as
Tax Exempt Dividend
e) Malaysian International Trading
Company (MITC)
• Local incorporated under the Companies
Act 1965 & at least 60% of the issued
share capital is Malaysian owned
• Annual sales of more than RM 10 million
have been achieved
• 20% of the value of increased export
(incentive amount) can be set off against
70% of statutoryy income to be credited
into an exempt income account.
 SELF
ASSESSMENT SYSTEM
SELF ASSESSMENT SYSTEM :
Group Year of Implementation
a) Companies 2001

b) Individual Businesses,
Partnerships, Cooperatives
and Salaried Group 2004
1)What are the responsibilities of a company under Self Assessment
System and penalties on non-compliances?

• Notification of Estimated Tax Payable & Submission of Form CP 204.

(a) Due Date : Not later than 30 days before the beginning of
the Basis Period/Financial Period.
E.g.
g ASQSQ Tax
a Se
Services
ces Sd
Sdn. Bhd.
d
With financial year end 31/12/2010.
(Financial Period 1/1/2010 - 31/12/2010).
Due Date : 1/12/2009.

A company is still required to submit the Form CP204 within the stipulated
deadline even if it expects its estimate of tax payable to be NIL.

(Exception :
a) SME exempted from filing the estimation for first 2 years of assessment.
assessment
b) Companies with Basis period for first year of assessment < 6 months are
exempted from filing.
 ASQ

Thank you 谢谢
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