Companies Sending Staff to Malaysia

At the bottom of this page we have detailed information about our solution for Malaysia, including management fees, work permit fees & processing times, payroll, taxation, and social security levels.

If you’re looking to send staff to Malaysia for an overseas project, it can be difficult to find clear information on an unfamiliar jurisdiction, much less efficient solutions. You’re facing complicated issues, in addition to a host of problems you may not have even considered yet. To compound these difficulties, you’re likely under sizable time and budget constraints.

Contractor Taxation offers a comprehensive solution to these concerns, helping companies extend into new markets and rapidly deploy expatriate resources. Read more about the kinds of goals your company could be achieving, instead of using time and resources to research Malaysia’s intricate tax and immigration information.

Taxation in Malaysia

One of a company’s biggest concerns will be guaranteeing total compliance with any and all tax requirements. In order to safeguard both itself and the end client, a company needs to consider:

  • Personal income tax for their employees in Malaysia
  • Social security costs
  • Payroll tax in Malaysia
  • VAT/Sales tax in Malaysia
  • Withholding tax in Malaysia (if you’re in the U.S., learn more about withholding tax here)
  • Permanent establishment

Work Permits for employees in Malaysia

Another major concern will be your ability to secure the appropriate Work Permit for your employee.

Employees need to be sponsored for a permit. To sponsor an employee yourself, you will need to be incorporated locally and be licensed to sponsor foreign workers. If you’re not already at that stage, organising a permit is an impossibility until you complete the (often lengthy) process of local incorporation and licensing. Depending on your project’s time frame, you might need employees on site quickly, making a Work Permit even more problematic.  

The end client may or may not be willing to sponsor a temporary worker, but this raises complicated payroll and employment issues. Sponsors often need to pay the sponsored employee, adding another layer of complication to the already-complex process of taking on a project in Malaysia.

You might be able to explore alternate visas for your employee, or even use one visa and transfer to a Work Permit in order to expedite secondment. However, missteps can cost even more time (and money). If an employee is working on the wrong visa, you could be opening the end client to serious legal and financial risks.  

What is a management company and how can it help send your staff to Malaysia?

Essentially, a management company operates like an outsourced employer. They sponsor your staff on local Work Permits (where required), employ your staff and payroll them locally. They deduct all local taxes and social security from the assignees’ pay at source, and then pay these to the local tax authorities. In short, they reduce your administrative burden, while mitigating the business risks of employee secondment.

Taxation: As specialists in local tax law, they ensure that an employee 1) is compliant with all regulations, and 2) keeps the largest possible portion of his or her earnings. This reduces your administrative work, along with any risk of tax violation in Malaysia.

Immigration: Management companies can sponsor Work Permits for staff, eliminating one of the largest barriers of project work in Malaysia.

If you urgently need staff on site, a management company can also help organise a Business Visa for the employee. They can then help the employee transition to a Work Permit, assuring that your employees start work faster while maintaining compliance with Malaysia’s immigration regulations. 

Your company’s role: Although a management company involves a fee, you typically save money and time by reducing your administration, as well as potential liability. Why not get a quote and compare the total cost of employment?

Malaysia payroll services

Firstly, do you have a local company in Malaysia? If so, is it appropriately registered to run a payroll, or to deduct and file taxes? Does it have the right administrative staff and is it capable of staying up-to-date with local tax requirements? Is it able to sponsor international hires for Work Permits?

Without a suitable local company already in Malaysia, you need to consider a few different options.

Setting up payroll in Malaysia

You can incorporate locally, get registered, and hire staff to handle payroll in Malaysia. This option depends on your circumstances; will your project justify the cost of incorporating locally? Will you be able to incorporate within the time limits of the project? Is it even possible to set up a company yourselves with local ownership requirements? Will this company be able to sponsor international hires on local Work Permits?

If you believe this is the correct route for your company, you likely need to consult a local accounting advisory firm. Time and budget permitting, you can also consult an international tax specialist like PWC or KPMG. Some of our partners offer assistance to foreign companies incorporating locally; check with us if you are interested.

Even if you decide that establishing a local payroll in Malaysia is the right option for you, you should still consider using a local payroll provider.

Using a local payroll provider

The time frame of your project may not justify local incorporation. In that case, a payroll provider is a more efficient solution. Even if you plan on incorporating in Malaysia, you can reduce security risks by using a payroll provider while you get set up. This solution is simple and only requires a monthly, commitment-free operational cost.

Payroll providers versus management companies

Outsourcing payroll can mitigate the risks and liabilities of sending employees to Malaysia, but it’s prudent to consider using a management company rather than just a payroll provider. A management company specialises in all of the same payroll tasks, plus a multitude of other services.

Most notably, they are able to sponsor Work Permits for your staff. This means a management company can reduce immigration-related liability, in addition to their specialist tax and payroll solutions.

Getting started with a management company in Malaysia

Co-employment eliminates your legal responsibility and dramatically lessens your administrative load. This frees your company to devote its resources to higher value business objectives, and helps maintain consistency across borders. However, different management companies offer different expertise, making it important to find the right company for your project.

Let us know your goals and we can give you easy, concise information on sending your staff to Malaysia.  Our advice is free and doesn’t obligate you in any way.

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Work Permits in Malaysia: Frequently Asked Questions




Can a management company sponsor Work Permits for foreigners in Malaysia? 


How long does it take to get a Work Permit in Malaysia?

Nationality dependent. From 3 weeks to 2 months.

What is the work permit process in Malaysia?

To work legally in Malaysia an Employment Pass (EP) must be applied for. The local company needs to submit the application to the immigration authorities once all documents have been received.  The EP will be sponsored by the local Malaysian employer. Validity is normally 2 years however the immigration authorities have the final decision on the duration. While the application for EP can be done in Malaysia, there may be the requirement for the contractor to return to his country of residence to finalise the EP. This requirement depends on each situation. 
The employment pass (EP) process takes approximately 14 working days plus 2 days to endorse the visa in the passport once all the information/ documents have been collated and the application has been filed with the immigration authorities. 

What documentation is required for a Malaysia work permit?

CV, passport, passport photos, employment contract, copies of degree/diploma/professional certifications (notarised).

What is the cost of a Work Permit in Malaysia?

$2400 USD with $284 USD cancellation at the end of the assignment.

Can you transfer from a Business Visa to a Work Permit in Malaysia?

Yes in some instances.

$3500 USD.


Business Visas in Malaysia: Frequently Asked Questions



Can we organise business visas for Malaysia?


How long does it take to process a business visa in Malaysia?

5 to 12 days.

What is the cost of a Business Visa in Malaysia?

$450 USD.

Can nationals of certain countries enter Malaysia without a Business Visa (for example, on an entry visa or visa waiver)?

Not to work.


Management Companies in Malaysia: Frequently Asked Questions



What is the monthly cost of using a management company in Malaysia?

5% with a minimum of $500 USD.

What is the estimated net retention for an assignee in Malaysia earning USD 200,000 per year?

Depends how it is structured. From 70-85%.

What is the estimated net retention for an assignee in Malaysia earning USD 100,000 per year?

Depends how it is structured. From 70-85%.


Payroll in Malaysia: Frequently Asked Questions



How does payroll work for employers of foreign nationals in Malaysia?

Tax and social security are deducted at source, payroll paid monthly.

What is the monthly cost to outsource payroll in Malaysia?

$350 USD.

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