Corporate Compliance in Malaysia: Key Requirements & Ongoing Responsibilities

In this guide, we break down the full scope of corporate compliance in Malaysia from company setup to ongoing monthly, quarterly, and annual responsibilities as a business owner.

Key Requirements for Setting Up a Company in Malaysia

Most foreign investors in Malaysia register their business as a Sendirian Berhad (Sdn Bhd)– a private limited company governed under the Companies Act 2016.

However, the core setup requirements below apply to nearly all company types regulated by the Companies Commission of Malaysia (SSM), including Berhad (Bhd), Limited Liability Partnerships (LLPs), and foreign branches, unless expressly exempt. 

Requirement	Key Considerations
Company Name & (MSIC) Code	Must align with the Malaysia Standard Industrial Classification (MSIC) code that defines your business activity. A mismatch can delay approval or trigger a name rejection by SSM.
Registered Office Address	All companies must have a local Malaysian address to receive statutory correspondence.• Virtual offices are allowed for non-regulated sectors (e.g. IT, marketing, consultancy, or e-commerce)• Regulated sectors (e.g. finance, education, healthcare, logistics, oil & gas) typically require a physical commercial address.
Resident Director and Shareholders	At least one director must be a Malaysian citizen, PR holder, or foreigner with a valid work permit (e.g. Employment Pass, Dependent Pass with endorsement).
Foreign Shareholding Limits	100% foreign ownership is mostly allowed in liberal sectors like tech, consulting, and manufacturing. Regulated sectors (e.g. education, oil & gas, retail trade) require local equity or Ministry-level approvals.
Paid-Up Capital	The minimum capital depends on your business sector. • General threshold: RM500,000–RM1,000,000 for foreign-owned Sdn Bhds. • Higher thresholds: Sectors like employment agencies, fintech, and logistics often require ≥RM1,000,000 to obtain operating licenses.
Company Secretary	A licensed company secretary (registered with SSM) must be appointed within 30 days of incorporation. They’re legally responsible for maintaining your company’s statutory records, board resolutions, and filings to SSM.

• Important Note: These apply even if your entity is dormant, pre-operational, or used solely for licensing or holding purposes.

Emerhub ensures your setup is compliant from the start. We’ll match your MSIC codes to your actual business model, secure a sector-appropriate office address, and connect you with vetted, licensed company secretaries and resident directors who meet Malaysia’s legal standards.

HR and Payroll Compliance in Malaysia: Monthly, Annual, and Ongoing Duties

Once your company is set up and you begin hiring (whether local or foreign staff), HR and payroll compliance becomes mandatory the moment a contract is signed. This applies to full-time, part-time, and even probationary roles. You’ll be responsible for: 

• Monthly submissions: EPF, SOCSO, EIS, and MTD
• Annual forms: Employer (E) and Employee (EA) returns
• Ongoing tracking: Salaries, leave balances, and deductions

Emerhub’s payroll and compliance experts can handle all of these for you– from setting up compliant payroll systems to managing submissions and audits.

Monthly Payroll and Statutory Contributions

Once a contract is signed, employers are legally required to register employees and begin submitting monthly contributions to the following statutory bodies:

Scheme	Employee Rate	Employer Rate	Salary Ceiling	Additional Considerations
EPF (Employees Provident Fund)	11% (all salaries)	13% for ≤ RM5,000; 12% for > RM5,000	None	Reduced to 0% (employee) and 4% (employer) if 60+ years old
SOCSO (PERKESO)	0.5%	1.75%	RM6,000	Wage ceiling increased from RM5,000 to RM6,000 effective October 2024
EIS (Employment Insurance)	0.2%	0.2%	RM6,000	Applies to employees under age 60
PCB / MTD (Monthly Tax Deduction)	–	–	Based on income brackets	Employers deduct based on taxable income (0–30%) and remit by the 15th of next month.
HRDF (Human Resource Development Fund) Levy	–	0.5% (if ≥ 5 Malay staff) / 1% (if ≥ 10 Malay staff)	None	Applies only to employers in sectors under the PSMB Act 2001 (e.g. manufacturing, services). Registration is mandatory once threshold is met.

Annual Employer Filings and Statutory Leave Entitlements

In addition to monthly payroll contributions, you must also submit two crucial annual tax forms to the Inland Revenue Board (LHDN). These documents must reflect accurate salary, benefits, and tax deductions for each employee under your payroll: 

Form	Purpose	Deadline	Details
Form E (CP8E)	Employer’s declaration of the total remuneration paid to all employees for the year.	March 31st of the following year	Must include all salaries, bonuses, benefits-in-kind, and PCB deductions. Required even for dormant companies with staff.
Form EA (CP8A)	Issued to employees for personal tax filing (Form BE).	End of February each year	Must include EPF, SOCSO, EIS, and PCB deductions.

On top of this, all employees earning less than RM4,000/month (or engaged in manual labor regardless of income) are entitled to minimum leave benefits, as per the Employment Act 1955. These include:

• Annual Leave: Minimum of 8 days per year, increasing to 10 or 12 days based on years of continuous service. Leave begins accruing after 12 months of employment.
• Sick Leave: 14 to 22 days annually, plus up to 60 days with hospitalisation, provided certified by a registered medical practitioner.
• Maternity Leave: 98 consecutive days, if the employee has worked 90+ days in the 9 months before delivery.
• Paternity Leave: 7 consecutive days for married male employees (capped at 5 births with the same employer; in effect since 2023).
• Public Holidays: Employers must observe 11 paid public holidays per calendar year, of which 5 must be fixed in advance. The remaining can be chosen based on national or state gazettes.

Ad-Hoc Events That Trigger Payroll and HR Compliance

While most HR and payroll duties follow a set calendar, certain events trigger immediate legal obligations:

• New Hires: All new employees must be registered with EPF and SOCSO within 7 days of onboarding. For foreign hires, valid work permits must be secured in advance.
• Employee Terminations: Final payslips must reflect all outstanding amounts, including prorated salary, unused leave, bonuses, and statutory contributions.
• Bonuses, Commissions & Overtime: These must be declared in payroll and taxed accordingly. Overtime pay is mandatory for employees earning under RM4,000/month, with rates of up to 3× on public holidays.
• Salary Revisions & Contract Updates: Any changes to salary or employment terms must be reflected in payslips and updated across EPF, SOCSO, and LHDN submissions to avoid audit discrepancies.
• Recordkeeping: All payroll records, tax filings, contracts, and leave logs must be retained for at least 7 years to meet audit and statutory inspection requirements.

Each of these changes must be recorded accurately and reported through the relevant statutory platforms. Emerhub supports employers in managing these events in real-time, ensuring every change is logged, filed, and compliant with Malaysian labor law.

Tax and Accounting Compliance in Malaysia: Filings, Deadlines, and Risks

Tax and accounting compliance form a separate pillar of your corporate obligations in Malaysia. While payroll is typically handled monthly, these obligations follow an annual cycle and involve direct submissions to LHDN (Inland Revenue Board) and SSM (Companies Commission of Malaysia), often through your appointed tax agent, auditor, or finance team.

These duties apply whether your company is fully operational, in a holding phase, or dormant. Directors remain legally responsible for meeting all statutory filings, and non-compliance can trigger fines, blacklisting, or even prosecution. Here are the core requirements:

• Form C (Corporate Income Tax Returns): Must be filed within 7 months after your financial year-end, based on audited accounts. This form declares your company’s taxable income to LHDN.
• CP204 / CP204A: Estimated Chargeable Income: Required within 3 months of the financial year start. Companies must estimate their chargeable income and pay monthly tax installments accordingly.
• Annual Returns & Financial Statements to SSM: Your Annual Return is due within 30 days of your incorporation anniversary, while audited financials must be lodged within 6 months after your year-end.
• SST Registration & Filing (If Applicable): When your taxable turnover exceeds RM500,000 annually, SST registration becomes mandatory. Filings are bi-monthly, with strict documentation and invoice rules set by the Royal Malaysian Customs Department.

Emerhub’s Expert Support for Corporate Compliance in Malaysia

When it comes to corporate compliance duties in Malaysia, what applies at your company setup rarely ends there. Every new hire, policy shift, or tax cycle essentially brings respective ongoing requirements to fulfill. Even dormant entities must stay responsive to statutory deadlines.

Emerhub supports businesses across every stage– from incorporation and payroll setup to year-end audits and tax filings. We work alongside licensed company secretaries, tax agents, and auditors to:

• Align your operations with Companies Act and SSM requirements
• Manage monthly payroll contributions and employment filings
• Coordinate annual Form C, CP204, SST, and audit submissions
• Flag compliance gaps before they escalate into penalties

Whether you’re hiring, scaling, or simply maintaining your registrations, our team ensures you stay compliant, with every requirement met on time, seamlessly. Need support navigating corporate compliance for your company in Malaysia? Fill out the form below to connect with our experts.