When starting a business in Malaysia, choosing the right company structure is one of the most important decisions an entrepreneur can make. The three most popular options for foreigners — Sdn. Bhd., Labuan Company, and Representative Office — serve different purposes and come with different tax, compliance, and operational implications.
A Sdn. Bhd. is suitable for entrepreneurs planning to operate within Malaysia. It allows 100% foreign ownership in most sectors, enables hiring, supports Employment Pass applications, and is eligible for all necessary business licenses. It is the most flexible and operationally strong structure.
A Labuan Company is an offshore structure designed for international business. It offers a low tax regime (3% or RM20,000 flat tax), easier work permit options, and global operation flexibility. However, it cannot operate within Malaysia without additional licenses.
A Representative Office is ideal for companies that want to explore the Malaysian market before committing. It cannot generate income but is perfect for research, networking, and managing early-stage activities without commercial risk.
Choosing the wrong structure can result in licensing issues, tax burdens, visa problems, and costly restructuring later. Choosing the right one ensures smooth operations, tax efficiency, and long-term success.
Horizon Hub Consulting can help you select the right structure quickly and effectively.
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