Shardy

I was asked in a Facebook group to share about the experience of setting up a company in Malaysia in order to work under the LTSVP. I thought the information might be useful to some folks on here too so attaching the same post below...




First a bit about why I needed to do this. I had previously worked for an international company under the LTSVP, they have a local office and a local entity (Sdn Bhd company). I was employed by them for about 7 years. When that employment came to an end, I was lucky enough to find a part time contract with an overseas company but they had no local office here in Malaysia.



I enquired about updating my LTSVP to show that I was now working for the new company, but the immigration officer said they couldn’t do it because the employment contract has to be with a local company in Malaysia.



To solve this problem I looked at setting up a local company myself so that the contract could then be carried out by the company and I would pay myself a salary from that contract revenue while also covering company admin costs from the revenues.



I found a good company secretary/accountant who was able to help me. The total setup cost was a few thousand RM, and the ongoing costs for Company Sec etc. are a few hundred a month including subscription to the accountancy software package.



Once the Sdn Bhd company was setup I was able to draft an employment contract and get it stamped. I also had to provide photographs of the companies office (we decided to use the company sec’s office as the main address).



I’m not aware of any minimum salary requirements that had to be met.



There was a checklist of documents that were needed to register the employment status, it included the SSM registration docs (SuperForm) and stamped employment contract.



We dropped the documents at Immigration in the morning and waited quite a while until they closed the office for lunch. So we went off for a while and came back when the office re-opened, we then had to wait a few more hours before getting my passport back with the employment status updated.



Setting up payroll took even longer as we had to visit KWSP and PERKESO offices to get file numbers for the company and then LHDN was all done online.



Setting up bank account(s) was another step that involved some effort as we needed board resolutions done by the company secretary.



All in all I estimate we must have spent a good week or even 10 days of effort getting everything done.



I had my wife also be a company director and shareholder in the company.



We did not need a large amount of ‘paid up’ capital as we are not applying for any Employment Passes.



Let me know if any questions and I’ll try to answer.

OriginalSunshine

Why didn’t you apply for RP-T?

Shardy

Talent Pass is only available to those who are currently on an EP (my friend works at Talent Corp and I checked with her).

As I'd been on the LTSVP for many years I was not eligible for RP-T. I would have to first go back onto an EP for some period of time and then apply.

I don't want to do that through my own company due to the 'paid-up' capital requirements.

OriginalSunshine

Ah I see

Shardy

If I'd known all this a while ago I would have made different decisions I guess :-D

RedApe

Two questions.

Doesn't the establishment of a company require "paid up capital" of a substantial amount?

Doesn't the management have to consist of Malaysians, at least in part. Is your wife Malaysian? Thus you'd have two Malaysian partners (your wife and the accountant)? Don't they own a certain amount of the company?

Shardy

In our case we didn't have the high paid up capital requirement because we don't need to apply for any Employment Passes (EP). Working under LTSVP is different (and cheaper) than doing so under an EP.

My wife is Malaysian (otherwise I wouldn't be able to get the LTSVP at least not in the "Married to Malaysian" category).

So we only needed 2 shares of 1rm each to give us 50% ownership of the company each. The accountant doesn't own a share.

If we did need to apply for an EP (e.g. if we had to employ another foreigner who is not on LTSVP) then we would need paid-up capital of 350K MYR.

If company is completely foreign owned that goes up to 500K.

Full details below:

https://www.3ecpa.com.my/services/im...s-application/

RedApe

Thanks clarifies things. Sounds like this would be useful for contract work for foreign-based company. Or simply for creating a company/business.

Are there any restrictions as to the type of work (sector) that you can undertake. I see a lot of expats with local wives running a Guest House, for example. Maybe this is what Andy Davison does with his business (Expat.com and MM2H)? His Malaysian wife is a partner.

Shardy

I don't think there is any restriction on sector - mine is in IT consulting - apparently this is eligible for SST if the annual revenue for consulting services exceeds a certain figure - but I'm not above it yet.

RedApe

Had to look up what SST was (I initially though it was a Social Security Tax).
It's a good tax on manufactured or imported items. Not sure how they would do this for consultancy work...where's the "item"?

https://mysst.customs.gov.my/AboutBackground

Shardy

I think my consultancy falls under the (b) section on that page - services tax. They don't mention the threshold there but I think it is lower than the 500K for sales tax.

dkW

Hi thanks the information here is really useful.

I am in Sarawak however, where the employment / immigration / business ownership laws are little different. Does anyone know anyone in Sarawak who has LTSVP who has gone through this process successfully? When my wife and I spoke with a lawyer, we were told the only way was to set up an LLP (a business structure barely even recognised in Sarawak), and thus we could not open a bank account for the company. In Sarawak not even West Malaysians can register a Sdn Bhd in Sarawak, unless a majority directors are Sarawakian, and no foreigners allowed it seems. Any advice would be greatly appreciated.

Shardy

This is interesting - I wonder if you could simply set up the Sdn Bhd in West Malaysia but work for the company while based in Sarawak?

You could appoint a company secretary in West Malaysia to look after things and their office could be the official HQ of the Sdn Bhd.

RedApe

Re. Establishing the Company in the Peninsula. Because of Sarawak's separate immigration controls that might not be feasible. Folks who work in Sarawak are expected to get an employment visa or pass (for West Malaysians) if they intend to reside for more than a month in Sarawak. The Business visa might be okay for the Peninsula but Sarawak has its own thicket of rules.

I am aware of many expats who work with their Sarawakian spouses in Guest Houses, Homestays, pubs and other businesses but I'm unsure how the business is structured. It may be entirely under the name of the Sarawakian spouse (or maybe 49%/51%). When foreign investment is involved it seems the government demands a lot more "paid up capital". It does seem to be a means of fast tracking a spousal visa, though.

dkW

Hi Shardy, thanks for your answer.
I looked into this , and I came to the conclusion that a Sarwakian could set up a West Malaysian company this way, but that they would have to bethe majority shareholder and director. As a foreigner resident in Sarawak, my LTSVP only allows me to work for a company based in Sarawak.