A Quick Guide To Foreign Owned Companies In Malaysia vs Singapore

Let us start by potentially saving you time: If you’re set on Malaysia as the location for your foreign-owned company, nothing in this or any other guide will change your mind.

And the same goes if you’ve decided on Singapore.

However, if you’re truly undecided between them, we hope our no-fluff comparison table based on metrics that matter can help you choose.

Metric	Malaysia	Singapore
100% foreign ownership	Allowed	Allowed
Resident director requirement	Yes	Yes
Can operate remotely	Yes, with nominee director	Yes, with nominee director
Personal income tax rate for foreign directors	0–30% based on progressive tax brackets	0–24% based on progressive tax brackets
Corporate tax rate	24%	17%
Corporate tax rate for JV with local partner	If foreign ownership <20%, then: 15% on first RM150,000 17% on RM150,001 to RM600,000 24% on anything above RM600,000	No difference
Dividend withholding tax (for foreign shareholders)	Likely 0% since many countries sign a DTA with Malaysia . Otherwise 15%	0%
SST / GST rate	5%–10% for sales tax, 6%–8% for service tax	9%
Minimum paid up capital	1 MYR (but can be higher based on bank conditions and visa requirements)	1 SGD (but can be higher based on bank conditions and type of business)
Visa	Category 1 Employment Pass : Needs minimum RM500,000 PUC Valid for 1–5 years per renewal	Employment Pass : Must meet salary requirements and earn points to justify application Valid for 2–3 years per renewal EntrePass : Must have track record or currently run an established business Valid for 1–2 years per renewal
Employer contribution to employee provident fund	13% if ≤ RM5,000 12% if > RM5,000	7.5%–17% depending on age

Here’s our take, for what it’s worth.

If any of these metrics were deciding factors, all foreigners would either incorporate in Malaysia or Singapore, and yet both countries continue to be popular locations for FDI!

This strongly suggests that there is a more important metric–and no, it’s not fluff like cultural differences or English proficiency!

The true deciding factor (in our opinion)

We believe it’s about how your business activity aligns with each country’s landmass and market size:

• Malaysia spans 330,803 km² with 35 million people
• Singapore covers just 735.7 km² with six million

If your business relies on physical operations or a broad consumer base like retail, manufacturing, or hospitality, Malaysia offers more room to grow. 

But if you’re running a digital service-based business-like software, consulting, or fintech, not only is Singapore’s lower tax rate beneficial, the higher CPF contributions affect you less since your business is less reliant on hiring to grow.

Then again, we have some pretty sweet tech startup visas too–so you know what, forget Singapore and incorporate your company in Malaysia 😀

Incorporate a foreign-owned company with MISHU

MISHU’s team regularly assists foreigners from all parts of the world open new businesses in Malaysia. Get in touch – we’d love to help with yours!