How to Register an E-commerce Business in Malaysia: A Step-by-Step Guide

Launching an e-commerce in Malaysia places you in one of Southeast Asia’s fastest-growing digital economies. Whether you are a local entrepreneur or a foreign investor, understanding the legal framework and compliance requirements is the essential first step. This guide provides a detailed, seven-step process to legally register and set up your online retail operation in Malaysia.

What Defines E-commerce in Malaysia?

An e-commerce business involves the commercial transaction of goods or services conducted over electronic systems, such as the internet. It is important to distinguish between various business models:

• B2C (Business-to-Consumer): Selling products directly to end-users (for example, a website selling clothes).
• B2B (Business-to-Business): Selling products or services to other companies (for example, selling industrial components online).
• C2C (Consumer-to-Consumer): Transactions facilitated between consumers (for example, platforms like Shopee or Carousell).
• D2C (Direct-to-Consumer): A brand or manufacturer selling directly to consumers, bypassing traditional retail intermediaries.

E-commerce vs. Online Business

While all e-commerce is an online business, not all online businesses are e-commerce. An online business might be a consulting firm, a digital marketing agency, or a content creator selling services. An e-commerce business specifically focuses on the digital sale and delivery (physical or digital) of goods.

Growth and Support of E-commerce in Malaysia

Malaysia’s digital economy has seen significant growth, supported by government initiatives like MyDIGITAL and the Digital Economy Blueprint. These programs aim to attract investment and provide tax incentives and grants to Small and Medium Enterprises (SMEs) to accelerate digital adoption. This favourable environment makes registering your e-commerce in Malaysia a strategic move.

Step 1: Preparing for Business Registration

Before heading to the registration authority, you must define your business’s legal identity.

Choosing and Checking the Business Name

The first task is selecting a unique business name. You must check the availability of your proposed name through the Suruhanjaya Syarikat Malaysia (SSM) registry. The name must adhere to SSM’s guidelines, avoiding reserved words or names that are identical to existing companies.

Determining Business Structure

The structure determines your liability, compliance burden, and tax requirements.

Most e-commerce in Malaysia transition to an Sdn Bhd. This structure ensures greater protection, easier scaling, and the ability to accept foreign investment.

Minimum Requirements for Sdn Bhd

For an Sdn Bhd, the legal minimums are:

• 1 Director (must be at least 18 years old and “ordinarily resident” in Malaysia).
• 1 Shareholder (can be the same person and can be 100% foreign-owned).
• 1 Company Secretary (must be licensed and appointed within 30 days of incorporation). [2] 

Step 2: Registering Your Business with SSM

SSM (Companies Commission of Malaysia) is the governmental body responsible for business registration and regulatory compliance.

The Registration Portals

The platform you use depends on your chosen business structure:

• EzBiz Portal (for Sole Proprietorship/Partnership): Used by Malaysian citizens or Permanent Residents (PRs) to register under the ROBA 1956.
• MyCoID Portal (for Sdn Bhd): Used for the incorporation of Private Limited Companies under the CA 2016. A company secretary typically manages this process. (Source 1)

Obtaining Business Registration Number and Certificate

Upon submission, payment, and approval, you will receive the official Certificate of Registration. This certificate is essential for opening bank accounts and proceeding with other compliance steps.

Step 3: Registering Foreign-Owned Companies (Sdn Bhd)

Foreign individuals or entities looking to start an e-commerce in Malaysia must incorporate an Sdn Bhd.

Appointment of Local Directors and Company Secretaries

The director must be “ordinarily resident.” This means the person must be a Malaysian citizen, a Permanent Resident, or hold a valid Employment Pass or Residence Pass in Malaysia. This director acts as a local contact for compliance. (Source 2)

Compliance with Foreign Investment Policies

Depending on the sector, foreign-owned retail operations may be subject to certain minimum paid-up capital requirements or specific domestic trade and foreign investment guidelines.

Step 4: Obtaining Licenses and Permits Relevant To Your Business

Most general e-commerce operations selling common goods do not require an immediate license, but certain activities and foreign ownership status trigger mandatory requirements.

The Critical WRT License for Foreign Owners

Suppose your company has more than 50% foreign equity and is engaged in wholesale, retail, or trading activities (including e-commerce). In that case, it is MANDATORY to apply for the Wholesale and Retail Trade (WRT) License from the Ministry of Domestic Trade and Cost of Living (KPDN). (Source 4)

Registration for Sales and Service Tax (SST)

You must register with the Royal Malaysian Customs Department (RMCD) for SST if your taxable sales value of goods or services exceeds the RM500,000 threshold over 12 months. (Source 3)

Other Sector-Specific Permits

• Direct Selling License: Required if your model involves multi-level marketing (MLM) or direct selling (must be approved by KPDN).
• Import/Export: Required if you plan on directly importing goods in bulk from overseas; this involves registering with the Malaysian Customs.

Step 5: Tax Registration and Compliance

Proper tax compliance starts immediately after business registration with SSM.

Registering with the Inland Revenue Board (LHDN)

Every registered company or business must register with the Inland Revenue Board of Malaysia (LHDN) to obtain a tax file number.

• Sdn Bhd: Registers for Corporate Income Tax (CIT). Tax filings (Form C) are done annually within 7 months from the close of the accounting period. (Source 5)
• Sole Proprietors/Partnerships: Use their personal tax file (Form B).

Withholding Tax (WHT)

If your Malaysian entity pays non-resident companies or individuals (for example, for technical fees, royalties, or interest), you must deduct and remit Withholding Tax (WHT) to the LHDN. This is crucial for e-commerce in Malaysia that pay for foreign software or technical support. (Source 5)

Requirements for Tax Filings and Record-Keeping

Under the Income Tax Act 1967, businesses must maintain all financial records for a minimum of 7 years for auditing purposes. (Source 6)

Step 6: Opening a Business Bank Account

Separating personal and business finances is vital for compliance, auditing, and scaling.

Documentation Needed for Local and Foreign Owners

Local banks require the following documents: SSM Registration Certificate, certified copy of the company constitution, a Board Resolution approving the bank account opening, and IC/Passport copies for all directors and authorised signatories.

Multi-currency Accounts and International Transactions

For e-commerce in Malaysia serving international customers, opening a multi-currency account is highly recommended. This helps manage foreign exchange risk and simplifies payment receipt from international payment gateways like PayPal or Stripe.

Step 7: Maintaining Registration Compliance

Registration is an ongoing obligation that requires annual renewal and adherence to statutory duties.

Annual Filings and Renewals with SSM

• Sole Proprietorships/Partnerships: Must renew their registration annually (or up to five years) via the EzBiz portal.
• Sdn Bhd: Must file an annual return with SSM, lodge Audited Financial Statements, and ensure all statutory records are up-to-date, managed typically by the company secretary. (Source 1)

Ongoing Compliance with PDPA and Consumer Protection

• Personal Data Protection Act (PDPA) 2010: You must comply with the PDPA by obtaining consent and ensuring data security when handling customer information.
• Consumer Protection Act (CPA) 1999: Ensure your returns policy, guarantees, and product descriptions comply with consumer rights protection.

Tips for E-commerce in Malaysia: Local vs Foreign

To maximise your success in the Malaysian market, tailor your strategy to your residency status.

Local Businesses:

• Government Grants and Incentives: Actively seek out grants and programs from Malaysia Digital Economy Corporation (MDEC), SME Corp, and other agencies. These provide funding for digital acceleration, upskilling, and market expansion.

• Logistics: Build strong local logistics and supplier networks for fast, affordable last-mile delivery.

• Digital Marketing: Leverage local digital marketing channels and deep consumer behaviour insights specific to Malaysian shoppers.

Foreign Businesses:

• Compliance First: Ensure strict compliance with foreign ownership regulations (especially the WRT License).
• Cross-Border Tax: Clearly understand cross-border taxation (WHT, SST on imported services) and import/export laws.
• Local Partnership: Partner with local service providers for specialised support in licensing, tax, and local fulfilment.
• Trade Agreements: Utilise Malaysia’s free trade agreements (for example, through ASEAN) to simplify regional expansion.

Post-Registration Setup Recommendations

Once the legal foundation is laid, you can focus on operational success.

• Setting Up Payment Gateways and Logistics: Select secure and reliable payment gateways (for example, Stripe, local banks, PayNet) that support local methods like FPX and digital wallets.
• Marketplace Strategy: Choose between established marketplaces (Shopee, Lazada) for immediate traffic or investing in an individual storefront (Shopify, WooCommerce) for greater brand control.
• Customer Acquisition: Implement digital marketing and customer acquisition strategies, focusing on mobile optimisation, as the vast majority of Malaysian e-commerce traffic is mobile-based.

Advanced Regulatory Considerations

For long-term stability and scaling, these regulatory points must be addressed.

• Intellectual Property registration and protection: Register your trademark with the Intellectual Property Corporation of Malaysia (MyIPO).
• Advertising law compliance: Ensure all marketing claims are truthful and compliant with local standards.
• AML/KYC policies for online transactions: Implement appropriate customer verification steps, especially for high-value transactions.
• Cybersecurity and cross-border data flow rules: Ensure your platform is secure and complies with local data residency laws.
• Implications of foreign ownership on compliance: Note that higher foreign ownership often entails greater compliance burdens, particularly regarding licensing thresholds.

Conclusion and Next Steps

E-commerce in Malaysia presents immense opportunities, but building a successful business requires a robust legal foundation. Every step, from registering with SSM and LHDN to securing the necessary WRT licenses, contributes to your company’s long-term credibility and growth potential. Compliance is not merely an obligation; it is an investment in your operational stability, protecting you from future penalties and positioning your business as a trustworthy market player. Do not delay your official launch. Your first and most critical step should be to visit the SSM portal today to confirm your business name availability and begin your registration process.

Sources

1. Suruhanjaya Syarikat Malaysia (SSM)-Registration and Incorporation:  SSM Official Website – Services & Acts 
2. SSM- Sdn Bhd Incorporation Requirements (Director, Secretary): SSM Guide on Company Incorporation
3. Royal Malaysian Customs Department (RMCD)- SST Registration Threshold: RMCD Official Website – Sales Tax and Service Tax
4. Ministry of Domestic Trade and Cost of Living (KPDN) – Wholesale & Retail Trade (WRT/WRC) License: KPDN Official Website – WRT License Information
5. Inland Revenue Board of Malaysia (LHDN) – Corporate Tax Filing Deadline (Form C) and Withholding Tax: LHDN Official Website – Corporate Income Tax
6. LHDN- Record Keeping Requirement: LHDN Official Website – Requirements for Record Keeping

Disclaimer: The information provided in this article is intended for general guidance only and reflects regulations as of the publication date. Given that compliance requirements, processes, and fees may change over time, readers are advised to consult official sources such as ACRA for the most up-to-date information or seek professional guidance from our team