Foreigner Buying Malaysian Property Through a Company: Worth It?

Buying Malaysian property through a company sounds like a smart tax play. In most cases, it is the opposite. The compliance costs, audit requirements, and administrative overhead of maintaining a Malaysian Sdn Bhd eat into any marginal tax benefit — and for single-property investors, there is often no tax benefit at all.

Yet this question comes up constantly. Singaporean investors hear about it from accountants. Hong Kong buyers read about it on forums. The logic seems sound on the surface: company tax rate is 24%, non-resident individual rate is 30%, so you save 6% by going through a company. But that calculation ignores setup costs, annual compliance, double taxation on dividend extraction, and the fact that RPGT treatment offers zero advantage for companies over foreign individuals.

This guide breaks down both structures with actual numbers so you can make the decision based on data, not assumptions.

The Two Company Structures

Foreigners looking at corporate ownership in Malaysia have two paths:

1. Malaysian Sdn Bhd (Locally Incorporated)

A Sendirian Berhad (Sdn Bhd) is a private limited company incorporated in Malaysia under the Companies Act 2016. This is the standard vehicle for corporate property ownership.

Requirements:

• Minimum 1 director (can be a foreigner with a valid Employment Pass or work permit)
• At least 1 local resident director who ordinarily resides in Malaysia (Section 196(4) Companies Act 2016) — this is a Malaysian citizen or permanent resident with principal place of residence in Malaysia
• Minimum paid-up capital: RM1 (no minimum capital requirement for most businesses since 2016)
• Registered office address in Malaysia
• Company secretary (must be a natural person who is a Malaysian citizen or permanent resident — annual retainer RM1,000-2,500)

Setup cost: RM3,000 – RM5,000 through a corporate services firm. This covers SSM (Suruhanjaya Syarikat Malaysia) registration, name search, constitution drafting, and initial compliance setup.

Timeline: 5-10 working days for incorporation.

2. Foreign Company (Branch or Representative Office)

A foreign-registered company can register a branch in Malaysia under Part VII of the Companies Act 2016. However, this route is rarely used for property investment because:

• Branch registration is more complex and expensive (RM5,000+ in fees)
• A branch is taxed at 24% on Malaysian-sourced income — same as a Sdn Bhd
• No ring-fencing of liability — the parent company is fully liable
• Some states may impose additional restrictions on property purchases by foreign companies

In practice, virtually all foreigners who choose the company route use a locally incorporated Sdn Bhd. The foreign branch structure has no advantages for property holding.

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Individual vs Company Ownership: The Full Comparison

This is the table that matters. Every row is a decision variable.

*SME rate (17% on first RM600,000 chargeable income) requires: paid-up capital not exceeding RM2.5M, and gross income not exceeding RM50M. Most single-property holding companies qualify.

The Tax Rate Illusion

The headline comparison — 24% company rate vs 30% non-resident rate — suggests a 6% saving. But that ignores the full picture.

Annual compliance costs absorb the difference. On a RM60,000 net rental income:

• Tax saving: 6% x RM60,000 = RM3,600
• Additional compliance cost: RM6,500 – RM13,500 (audit, secretarial, accounting above what an individual pays)
• Net benefit: negative RM2,900 to negative RM9,900

You are paying more in accountant and auditor fees than you save in tax. The company structure only breaks even on compliance costs when net rental income exceeds approximately RM110,000 – RM225,000 per year, depending on your service provider costs. That is RM9,000 – RM18,750 per month in net rental income. Most single-property investors are nowhere near that level.

RPGT: No Advantage Whatsoever

This is the most common misconception. Foreigners assume company ownership provides RPGT benefits. It does not.

Note: A foreign-owned Sdn Bhd incorporated in Malaysia follows the Malaysian company rates (Part II Schedule 5). A company not incorporated in Malaysia follows Part III rates (same as foreign individuals: 30% years 1-5, 10% year 6+). The Malaysian company rate is slightly better in years 4 and 5. But from year 6 onwards — which is when most investors sell — both pay 10%. And the year 4-5 window is a narrow scenario that rarely justifies the ongoing compliance burden.

Financing: Significantly Harder

Malaysian banks treat corporate borrowers differently from individual borrowers. For a Sdn Bhd buying property:

• Loan-to-value: Lower than individual — typically 50-60% vs 60-70% for foreign individuals
• Interest rate: Higher margin — expect 0.5-1.0% above individual rates
• Requirements: Corporate financial statements, business plan, personal guarantees from directors
• Processing: Slower, more documentation
• Some banks refuse entirely to provide mortgages to newly incorporated holding companies with no operating history

If you are relying on bank financing, the company structure makes your purchase harder and more expensive.

When Company Ownership Makes Sense

Despite the general disadvantage, there are specific scenarios where a Sdn Bhd is the better structure:

Multiple properties (portfolio approach). If you are buying 3+ properties, the compliance costs are spread across a larger rental base. At RM15,000/month total net rental, the 6% tax saving generates RM10,800/year — enough to cover the additional compliance and leave a margin.

Partnership or joint investment. Bringing in partners is cleaner through a company. Shareholdings define ownership percentages. Partners can enter and exit by buying/selling shares (subject to RPC rules — see below). Trying to structure a multi-party property investment through individual co-ownership creates legal complexity around joint tenancy vs tenancy in common.

Estate planning. Shares in a Malaysian company are easier to transfer on death than real property. Real property requires probate or letters of administration through the Malaysian courts — a process that takes 1-3 years for foreign estates. Shares can be transferred through the company's constitution and directors' resolution, potentially much faster. Some investors create a Sdn Bhd specifically for succession planning.

Operational expenses. A company can claim a wider range of operational expenses: director travel (if genuinely for property inspection), office costs, professional fees, and depreciation on fixtures and fittings through capital allowances. An individual cannot claim travel costs to visit the property.

Privacy. Company ownership adds a layer between your name and the property. While SSM records are public and show shareholders, the property title shows the company name, not yours.

When Company Ownership Does Not Make Sense

Single property. The maths do not work. Compliance costs exceed tax savings.

Plan to hold and sell. No RPGT benefit from year 6 onwards. The company structure adds exit complexity without reducing the tax bill.

Do not want ongoing obligations. A Sdn Bhd requires annual audited financial statements, an annual return to SSM, ongoing company secretary services, and corporate tax filing. Miss any of these and SSM can strike off the company or impose penalties. An individual files one Form M per year and is done.

Short-term hold. If you plan to sell within 5 years, the company RPGT rate in years 4-5 (20% and 15%) is lower than the individual foreign rate (30%). But the cumulative compliance costs over those years, plus the exit complexity, typically erode any benefit.

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The "Sell Shares Instead of Property" Strategy

This is the most discussed loophole — and it has been largely closed.

The theory: instead of selling the property (which triggers RPGT), you sell 100% of the shares in the Sdn Bhd that owns the property. Share sales are not subject to RPGT. The buyer gets control of the company and its property asset. You get cash without paying capital gains tax.

The problem: Real Property Company (RPC) rules.

Under the RPGT Act, if a company is a "Real Property Company" — defined as a company where the value of real property (or shares in other RPCs) is 75% or more of total tangible assets — then the disposal of shares in that company is treated as a disposal of real property. RPGT applies.

A single-property holding company is almost always an RPC. The property is the only significant asset. The share sale triggers RPGT just as if you sold the property directly.

Can you get around this? Theoretically, you could inject other assets into the company to bring real property below 75% of total tangible assets. In practice:

• LHDN scrutinises asset-padding arrangements
• The assets must be genuine and commercial
• Injecting RM3M in cash alongside a RM3M property still leaves real property at 50% — but LHDN may look at substance over form
• The 75% threshold is assessed at the point of share disposal, not incorporation

This is not a reliable tax strategy. Assume RPGT applies to your share sale if the company is a property holding vehicle.

Stamp Duty on Share Transfers vs Property Transfers

The stamp duty on a share transfer (0.3%) is significantly lower than on a property transfer (up to 4%). This is a genuine advantage of the company route — but only if the RPC rules do not reclassify the transaction.

In practice, the stamp duty saving on a RM2M property is approximately RM55,000 (property stamp duty) vs RM6,000 (share stamp duty) — a RM49,000 difference. But if RPGT also applies to the share sale, the overall tax position may not be better.

The Nominee Structure Warning

Using a Malaysian citizen or resident as a nominee to hold property on behalf of a foreigner is illegal under the National Land Code 1965.

Section 433B of the National Land Code specifically prohibits arrangements where a non-citizen engages a citizen to acquire land on their behalf with the intention of circumventing foreign ownership restrictions or minimum price thresholds.

Consequences:

• The transaction can be declared void by the court
• The property may be forfeited
• Criminal prosecution of both the foreigner and the nominee is possible
• Fines of up to RM1 million and/or imprisonment

This applies equally to arrangements disguised through trust deeds, power of attorney, or informal agreements. LHDN and state land offices actively look for these structures, particularly in states with high foreign buyer activity like Penang and Johor.

If you cannot buy the property in your own name (or through a properly structured Sdn Bhd), do not buy it through a nominee. The legal risk is existential.

Decision Framework

Use this flowchart:

1. How many properties are you buying?

   • One property: individual ownership. Stop here.
   • Two properties: still individual, unless the combined rental income exceeds RM10,000/month net.
   • Three or more: evaluate company structure.

2. Do you need partners or co-investors?

   • Yes: company structure is cleaner for multi-party arrangements.
   • No: individual.

3. Is estate planning a priority?

   • Yes, and your estate in Malaysia would be complex: consider company structure.
   • No: individual.

4. How long will you hold?

   • 5+ years: no RPGT advantage either way from year 6.
   • Under 5 years: company has marginal RPGT benefit in years 4-5, but compliance costs likely offset it.

For the majority of foreign investors buying a single Malaysian property as a rental investment, individual ownership is the correct structure. Simpler, cheaper, and no meaningful tax disadvantage once you hold past year 5. Before starting, check your property's eligibility with our foreigner eligibility checker and estimate acquisition costs with the stamp duty calculator.

Related Resources

For the step-by-step process of buying as a foreign individual, see our complete foreign buyer guide. To understand how RPGT affects your eventual sale, read the RPGT guide. For the tax treatment of your rental income as a foreign individual, see foreigner rental income tax obligations. And if you are considering selling an existing property, check our guide on RPGT when selling as a foreigner.

Sources

• Companies Act 2016 — SSM
• Resident Director Requirement — Section 196(4)
• RPGT Rates — LHDN Schedule 5 (Parts I, II, III)
• National Land Code — Section 433B (Nominee Prohibition)
• LHDN — Non-Resident Tax Treatment
• Income Tax Act 1967 — Corporate Tax Rates