Types of Business in Malaysia
4.Types of Business in Malaysia
4.1 Malaysia Representative Office set up
Set up Requirements :
1. The headquarter or parent company must be a private limited company or public company. Sole proprietors or unlimited companies are not allowed to set up representative offices.
2. The applicant company should preferably be in operation for 2 years or more as audited accounts of 2 years are required.
3. The activities of the representative office must only be limited to research &
development or marketing and promotion.
4. An official business address must be set up upon approval.
5. Work permit applicants must have university degrees & 5 years of experience.
PERIOD OF APPROVAL
Representative office approval is for 3 years , extendable for another 2 years after which you can apply for an extension of 2 years.
Work permits are for 2 or 3 years depending on the discretion of the Immigration Officer in charge. Immediate dependents will get the same length of visa as the principal applicant unless they are from China or other blacklisted countries. Parents of principal applicants will get a 6 months social visa , extendable every 6 months. Extensions of visa are charged separately.
Approvals are normally given based on sufficient supporting documentation for substantiating the existence of a representative office. The process normally takes just over a month provided that all relevant documentation has been submitted. The work permit process will take another month after the approval of the representative office set up.
AFTER THE REPRESENTATIVE OFFICE SET UP
The company is required to submit half yearly budgetary & activity reports every 6 months of operation. If you do update these reports, you will encounter renewal problems later on.
COMPARISON BETWEEN PTE LTD CO. & REPRESENTATIVE OFFICE
|Representative office set up||Vs||Private Limited Company set up|
|• Cheaper & easier to set up||Cost more than representative officeto initially set up|
|• Cheaper to maintain yearly – yearly submission of financial statements to Government authority||Annual statutory accounting recordsand secretarial records , audit and tax returns must be submitted to the Registrar of Companies – average annual costs > US$1,000 (equivalent to RM3,500)|
|• Cannot formally do trading or conduct business transactions. Can only market your services and products||Can transact business.|
|• There are no tax issues for the Rep. Office as it is not allowed to transact in sales. Only the personal taxes of the expat staff will have to dealt with. If an invoice is payable to the parent company, the client company will withhold a 5%-20% withholding tax to pay the government depending on what products and services is involved.||Annual tax compliance according tothe existing self assessment system which requires the company to estimate their assessable tax one year in advance|
|• UP to 5 Work permits can be obtained without any limitations for share capital||Work permit can only be obtainedwith a initial paid up share capital of US$150,000 (equivalent to RM500,000) if not married to a local|
|• Set-up valid for maximum of 5 years after which you will have to set up a local Pte. Ltd. company|
4.2 Letter of Origin Application
Certificate of Origin
|Certification of the country of origin where the product concerned is made.A certificate which identifies the country of origin is typically required for international shipments. Certain countries may entirely bar shipments from certain other countries. In select countries, a notarized certificate of the country of origin may significantly lower the taxes levied.
Certain nations require a signed statement as to the origin of the export item. Such certificates are usually obtained through a semiofficial organization such as a local Chamber or Commerce. A certificate may be required even though the commercial invoice contains the information.
Q1. What is a Certificate of Origin
The Certificate of Origin (CO) certifies the country of origin of a particular product.
Q2. What is the Purpose of the CO?
a) To enable the importer of other countries to take advantage of the preferential tariff rate of duty from the country of origin eg. Malaysia.
b) To satisfy trade requirements such as supporting letters of credit.
c) To be used as supporting documents for the issue of certificates by another authorised Chamber.
Q3. Who issues the Certificate of Origin
FMM is one of the authorised body that issues and endorses the certificate of origin. Endorsement of the Certificate of Origin is available at all FMM Head Offices, branches and representative office
Q4. What are the types of CO Endorsement provided by FMM
a) Malaysian Manufactured and Processed Products
Example: A Malaysian company exports direct to Indonesia.
b) Goods for Re-export
Example: A Malaysian company buys from China and ships goods back to Malaysia. Goods are then re-exported to another country eg. Australia.
c) Direct Shipment from a Second Country to a Third Country
Example: A Malaysian company buys from China but requests for goods to be shipped direct from China to Australia.
d) Third Party Endorsements
Example: A China company buys from a Malaysian company and sells to Australia. The Malaysian company applies for CO on behalf of China company for their client in Australia.
e) Certification of Commercial Invoice and other Shipping Documents
Documents to be certified may be submitted with the endorsement for any category of Certificates of Origin.
f) Certification of other Documents
Documents such as Exclusive Agent Agreement or Certificate of Manufacture may also be endorsed by FMM for FMM members only.
Q5. How to Apply for Certificate of Origin?
i) Submit Letter of Indemnity(LI) to FMM. The LI renewable on January 1 of every two years for members and every year for non-members. FMM also provide stamping of the LI facilities for a fee of RM15.00 for members and RM17.00 for non-members.
ii) For Non ¨C FMM Members, a Letter of Indemnity (LI) and Registration Form must be submitted before any CO can be endorsed by FMM.
iii) Submit necessary supporting shipping documents
Q6. How long does it take to endorse the CO ?
Each CO application form with completed supporting documents is processed and handed over to the customer within 15-20 days upon completion of documents.