MTEP Visa Advice

My husband tried and failed. They have very limited fields that they're looking for: AI, big data, e-commerce (whatever that means) and sometimes are ok if your business idea specifically targets the Malaysian market. They don't care if you have a successful software that makes USD selling to a global market. The person who makes the call is the director of immigration (as if he knows about IT). Frankly, the program has no clue how to build a real international IT community. For us it was a giant waste of time. MDEC executives who met up with us told us to reapply, then when my husband was denied entry into Malaysia, we told the execs that he wouldn't be able to come in person for the presentation but twice they invited him to come at the last minute. Like did you not understand the email? And they wouldn't write any support letter for him to get into Malaysia either. We would have saved a lot of time and energy if we just registered the company here (you'll need a local partner) and tried to get MSC status for the visa (back then). Now MSC status applications are on hold and the new regulations make it a lot harder to get MSC status in the future... so yeah I guess if you have few choices then worth a shot, but try to market your idea within the fields I listed above (or check with them if they have some new targets as they may have changed). Good luck!

Thanks for this - yes I decided against doing the MTEP visa - as you said it seems they are very focused on Big data startups.

I just received a tip about starting a Labuan offshore company (selling software/services overseas). They provide 2 years work permit for the director. Excellent tax rate of three-percent (seems this forum doesn't allow digits and % - calls me a spammer!) for corporate and personal tax-free for directors. And with the work permit, you qualify as a Malaysia tax resident. A bit expensive to run if you aren't at the stage of making money yet, but if you are already making an income from the business, the tax savings exceed the fees required. Edit: I missed the fact about RM250k paid up capital being required for the work permit. But my tax planner mentioned that there were some changes for 2019 so i'm not sure if this is one of them.....

Last published requirement was RM 250,000 Paid Up Capital in the company to qualify for an Employment Pass. There may now be some minimum turnover requirements for approval and renewal

chiakaivalya wrote:

I just received a tip about starting a Labuan offshore  company (selling software/services overseas). They provide 2 years work permit for the director. Excellent tax rate  of 3% for corporate  and personal  tax-free for directors. And with the work permit, you qualify as a Malaysia tax  resident. A bit expensive to run if you aren't at the stage of making money yet, but if you are already making an income from the business, the tax savings exceed the fees required.

Oops yes the tax planner missed to inform me about this point. I'm checking with her now whether there has been any changes as she said there were a few for 2019 but it hasn't been gazetted yet! Will update with any news.

Also, it's most suitable for IT businesses that don't sell to Malaysians at all, and income is usually in a foreign currency too. The tax rate for Malaysian business is still bearable though, if it's a small percentage.

Strange comment from the tax planner about gazetting?  All changes have been gazetted already. The MYR 250k PUC has been in place for at least a couple of years.

It's worse news - apparently:

* No transactions in Malaysian Ringgit or with Residents allowed
* Election for Fixed Tax Rate of RM 20k also abolished.

https://www.labuanibfc.com/clients/Labu … 20IBFC.pdf

There are requirements for adequate staffing levels and sufficient operational income. Sounds ominous.

Also get the impression have to be running a company elsewhere to qualify to incorporate a Labuan one. Hence the need to show existing turnover.

Here's the latest announcements about staff and operating costs etc. from 25th March and its BAD:

"Under the regulation, a Labuan entity carrying on a Labuan business activity must establish an office in Labuan with a minimum of two to four full-time employees depending on the type of entity and an annual operating expenditure in Labuan in the range of RM50,000 to RM3 million depending on the type of business."

https://www.theedgemarkets.com/article/ … ns-economy

LABUAN (March 25): Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018, which requires a Labuan entity to have adequate full-time employees on the island as well as adequate amount of operating expenditure, will be a boon for the Labuan economy.

Labuan Financial Services Authority (Labuan FSA) director-general Danial Mah Abdullah expressed this positive view on the regulation, which came into effect on Jan 1.

The regulation, he said, would ensure the Labuan International Business and Financial Centre (Labuan IBFC) and the industry players were in compliance with the substance requirements imposed by the Organisation for Economic Co-operation and Development (OECD) on all jurisdictions worldwide.

“The regulation will be an economic boost to Labuan. We have been around for 28 years and for the companies to enjoy Labuan's incentives, logically they must be in Labuan,” he told a press conference after the presentation of Labuan IBFC's inaugural Market Report 2018 at a hotel here today.

Under the regulation, a Labuan entity carrying on a Labuan business activity must establish an office in Labuan with a minimum of two to four full-time employees depending on the type of entity and an annual operating expenditure in Labuan in the range of RM50,000 to RM3 million depending on the type of business.

Danial said the jurisdiction wanted to ensure Labuan benefited economically from the new requirements, and if there was full compliance, it would create employment for more than 5,000 people on the island from some 2,000 companies.

“To me, getting 5,000 employees on the island is not an issue, as the companies can hire school leavers and graduates from Universiti Malaysia Sabah Labuan International Campus (UMSKAL) or retrenched oil and gas employees, which in turn helps reduce the unemployment rate on the island.

“Of course, there will be a lot of adjusting problems, but at the end of the day, things will fall into place,” he said.

He said there were a lot of enquiries in the first month of implementation, but things had gradually improved with a number of job interviews for new employees conducted and search for office space begun.

The inaugural Market Report 2018 unveiled by the Labuan IBFC today highlighted the centre's continued growth with non-resident businesses driving the expansion in business conducted via the centre.

New company incorporation registered double-digit growth of 12.5 per cent or 1,059 incorporations, mainly from the Far East region, with the most from Japan, China and South Korea.

Increased company incorporation boosted the growth of trust and corporate service providers, with a total of 58 trust companies, including the granting of six new licenses — an increase of 11.5 percent year on year providing value-added services to Labuan corporate entities and expanding the reach of Labuan IBFC across Asia.

“Labuan banks have so far complied with the regulation with some of them having 20 and 80 employees. The regulation is not actually an issue but rather, it is putting things into law,” he said.

Danial said in the first three months after the implementation, the number of registered companies remained unchanged, “and we expect new companies like those in the financial technology sector to come in.”

“We strongly believe the companies want the substance requirements as they want to be regulated,” he said.

Labuan FSA chairman Datuk Oh Chong Peng said there might some companies deregistered following the new ruling.

“We cannot really forecast accurately, as we know we have some new ruling that may impact the IBFC. Possibly there are companies that will be deregistered. We will wait and see, but it is very possible,” he said.

He said Labuan IBFC had created a fair amount of economic activities on the island.

“It is very possible that some non-licensed companies will find it not worthwhile to have the substance requirements for their type of business so, they may just be deregistered.

“But we are positive on the changes. Hopefully, there may be companies, especially the Asia-based companies, that will come in for licensing — those registered in the blacklisted jurisdictions,” he added.

Hi gravitas,
The tax planner doesn't herself deal with labuan entities but just recommends options to her clients. So she needs to still check the details with the labuan agent she confirms that the 250k paid up capital for work permit is still required (but normally it's more for foreign owned companies incorporated in Malaysia). You're right the 2019 rules are gazetted, thanks for the link! I think it's just the forms and details are not fully announced yet e.g. the operating expenditure minimum. Btw, the good news for 2019 is that labuan companies CAN deal with Malaysian business now and in RM, just at a normal tax rate of 24% rather than at 3%. Hope to find out more about these operating expenditure and staff requirements... IT businesses don't have much operating expenditure apart from personal salaries/director's fee!
Edit : just saw your second post sorry!!!!! You're so resourceful! Those articles didn't show up in my google search. Man those requirements are tough now. Sigh. I was so excited about that 3% tax rate!!!!! They will lose all their businesses now because who has such high operating expenses in labuan?! (Unless they count directors fee/salary as an operating expense... in which case it is doable. Also the employed persons can be living elsewhere? Or will they insist you have a labuan IC address? )

Seems like the employees must be local to Labuan as it is an exercise that will reduce unemployment. In the past it was possible to have a sales office elsewhere in Malaysia so it seems that the expenses for that are being Channelled back to it being on Labuan. I guess it is still possible to open one say in KL but that would be in addition to the Labuan office. It's not possible to have a residential address as a sales office. so still may need a soho or office space rental in KL say. Another question to ask is about having to attend briefings on Labuan a couple of times a year and presumably deal with your staff. Expenses mount up that way believe me. Still need to pay the directors minimum 10k per month salary. This will require some bank assets or moving money around. Every time salary is paid the company secretary has administrative actions re pay slip, tax and remitting same to LHDN and getting a realistic projection of CS costs will be important.

Thanks Gravitas, you are a wealth of information! Unfortunately even MSC status has become really difficult....it would have been a no-brainer for IT companies prior to 2018 (easy work permits, zero taxes!). Now they require people to hire lots of staff and pay them over the standard Malaysian rate. I'm not sure who will bother to take it up, considering that even with the really good MSC benefits before the change, many international companies did not bother to take Malaysia seriously as we have a shortage of talent compared to Vietnam, Indonesia etc. Now with even stricter rules for Labuan, I think most will rather move to a vibrant low-tax country like Singapore or Hong Kong.

Malaysia is currently closing a previously wide open door which is why it seems difficult to visa hunters. I think a lot of people will be unsuccessful in renewals in future too. So yes everyone will be looking for the next loophole

Hi,
according to you, is it easier to get a visa through a MSC Company ?
I need a long term visa, and i have found different solution :
- MM2H but i dont fulfil all requirements (capital deposit or age)
- MTEC : do you think if i want to open web agency, it could work ?
- Ask my cousin who is local, to open a company and hire me ?
- Labuan company, but it cost more than 4900 USD and 2500 USD each year

lyvio974 wrote:

Hi,
according to you, is it easier to get a visa through a MSC Company ?
I need a long term visa, and i have found different solution :
- MM2H but i dont fulfil all requirements (capital deposit or age)
- MTEC : do you think if i want to open web agency, it could work ?

**MTEC approvals still have to be businesses relevant to improving the Malaysian economy and it's medium term economic goals**


- Ask my cousin who is local, to open a company and hire me ?

**He will need the same sort of skills as you to open a Web company and put in capital to hire foreigners via a competitive selection process advertising on job portals and proving no Malaysians were available to do the job. It's probably a long shot it will succeed**


- Labuan company, but it cost more than 4900 USD and 2500 USD each year

100% locally owned company requires RM 250,000 equity before hiring a nonmalaysian

The financial risk is quite high.

Your French language skills might be the key to finding a job Malaysians can't do. This might give some ideas
https://my.ambafrance.org/Others-institutions

Thanks for your quick reply.
I'm a business owner since 2008 in France.
I have an e-shop, where i sell products from china to my customers.
I have good skills on webmarketing and on the european market customers.
With my wife, we would like to promote local malaysian products (or all asean products), like traditional clothes for example, and sell them to France particularly.
I born in France but i'm originally from Cambodia. I would like to sell some local cambodian products to France as well.
But i don't know if this kind of project could match with the MTEC program.
Moreover, there are some fees to pay, and i don't know if i have to pay them before to be accepted.

Ecommerce is mentioned above as an area of interest and economic growth inside Malaysia so good start. There have been some incubators around in that area. They got government perks to set up here to promote online ecommerce businesses run by Malaysians

This link shows the actual requirements for the established business 5 year visa which it sounds like you would fall under.

https://www.mtep.my

Suggest you do some research to see what is happening now. ASEAN countries also have so different government supported synergies.

To be honest the new government is not announcing it's intentions at least not in English medium news. You could phone them or email to see if you can get more information and whether the program is still active.

The cost of getting the paperwork together and the application fee are significant.