If you are a contractor, you are probably familiar with working through your own Limited company. You most likely prefer this option as it offers many benefits and positives when working in your own country or in some international locations. However, working in this way will pose a number of difficulties if you are considering a contract position in Malaysia.
In the interest of balance, it is worth explaining the process involved with working as a Limited company in Malaysia before discussing the benefits of using an international agency such as Leap29 when taking on a new contract.
What are the advantages for using your own Ltd Company?
- As you will be filing your taxes in your home country, you should already be familiar with the documentation and the process involved. (In addition, you will still be subject to 10% withholding tax in Malaysia).
- You can claim for your expenses through your Ltd company
- You maintain an element of control over your work process, however, this somewhat of an illusion. It will require substantially more time and effort to ensure you have filed all the correct tax, health insurance and banking documentation for working in Malaysia and you also cannot sponsor your own work permits.
Benefits of using an international agency such as Leap29 when working in Malaysia
- Agencies working in the part of the ‘employer’ can Sponsor, Secure and Renew work permits. Using local Malaysian partners, this process is much quicker and time efficient than applying as an individual contractor.
- Agencies will be experts in Malaysian Tax ensuring contractors keeps the full amount of money they are entitled to. They will also file all tax documentation with the relevant government department to ensure compliance with Malaysian Tax law.
- The agency will hold all necessary insurance documentation. This ensures the level of cover will be compliant with client requirements. Furthermore, Leap29 work to secure cheaper rates of insurance cover for consultants by achieving preferential rates with insurance agencies through repeat business.
- Contractors will not need to chase employers for invoice payment, as the agencies will pay contractors directly. Payroll, conducted through our payroll partners in Malaysia, means consultants receive payment for services within 10 working days of approved timesheets. Furthermore, unlike other agencies, Leap29 show priority to consultants by paying each consultant first and invoicing the client second thus safeguarding against payment delays. Leap29 will also not charge the consultants for services provided, which maintains that consultants keep their full salary entitlement.
- Agencies can provide a list of documentation required to undertake all the above services and, once received, the agency will undertake all other administration processes. This reduces the amount of administration work for the consultant and saves valuable time.
Disadvantages of using Ltd Company in Malaysia
- From beginning work in Malaysia, you will be liable for tax at 25% however; if you work more than 182 days in country then you will trigger residency tax in Malaysia that will make you liable for a lower rate of tax. You will be required to keep records of all days worked and tax paid. You must then apply for any change in rate of tax and file the appropriate paperwork with the relevant government department.
- You could become liable for further taxation in Malaysia as a result such as GST.
- You could be required to register your company in Malaysia, which would entail a large amount of paper work including registering your company for local tax and sales tax.
- Registering a company in Malaysia would require you to have a Malaysian citizen as a director who receives a salary from your company and who has permanent residency in Malaysia, as well as a permanent office address.
- You would be required to apply for all your own work permits/visas, insurance to the level specified by your client and file all tax documentation.
- Trying to find clear information and communicating with local Malaysian authorities from your home country can be extremely difficult due to language barriers and time differences.
- Trying to secure the correct work permit is very difficult as Malaysia is divided into four regions each requiring their own permit to work. As a Ltd contractor you cannot sponsor your own work permit so applying for permits in multiple regions would be very time consuming and difficult.
What Makes Leap29 the best choice when considering work in Malaysia?
As recruitment and contract management specialists, Leap29 have worked for a number of years with a variety of clients including operators, service companies and consultancies for their expatriate consultant requirements. We are also an approved supplier for the national oil company in Malaysia, and regularly source expatriates to work with them.
By working through an international recruitment agency, such as Leap29, they would act as your employer and your contract would be with the agency and not with the client directly. This would not alter your working arrangement as an independent contractor and would allow you the freedom to progress with your work without the frustration and paperwork associated with working with an international client directly.
So that the consultants working with us can make the most of their time working in Malaysia, Leap29 and our local Malaysian partner handle all Legal, Tax, Work Permits/Visas, Payroll, Expenses and Insurance. These services do not come at a cost to the consultant, as is the case with many other agencies, and we ensure that if any problems or questions arise, our dedicated teams liaise with the relevant local or international agencies to resolve issues quickly and effectively.
For further information about living or working in Malaysia please visit www.leap29.com or phone +44 1625 537 555