Malaysia is a vibrant destination for business and investment, attracting expatriates who wish to establish companies and work in the country. Securing an Employment Pass (EP) is a critical step in this process, requiring compliance with regulations from Immigration Department of Malaysia and other relevant government agencies.
At POSH Corporate, we provide expert advisory services to guide expatriates through the complexities of employment pass applications, as well as Malaysia company registration and tax compliance.
Understanding the Expatriate Employment Pass (EP)
The EP is issued by the Immigration Department of Malaysia via the Expatriate Services Division (ESD) and allows expatriates to work under a registered company.
Key Benefits of EP
- Valid for up to 5 years (depending on category).
- Allows family dependents (spouse, children) to apply for Dependant Pass.
- Eligible for multiple entries into Malaysia.
- Can be renewed for continued employment.
Details of EP
EP is categorized into three types based on salary and contract duration:
| EP Category | Salary per month | Employment Contract | Renewable | Dependent Privileges |
| l | RM10,000 onwards | Up to 5 years | Yes | Yes |
| II | RM5,000 to RM9,999 | Up to 2 years | Yes | Yes |
| III | RM3,000 to RM4,999 | Up to 1 year | Maximum 2 times | No |
Key Procedures in the Expatriate Services Division (ESD)
| Stage 1: Company Registration & Activation | Before a company can hire expatriates, it must be registered with the Expatriate Services Division (ESD) online system and these are the steps: 1. Create an ESD Account – The company must register on the ESD Online Portal and complete the company profile. (i) Company must be registered with: a. The Companies Commission of Malaysia (SSM) under Companies Act 1965, OR b. The Registry of Societies Malaysia under the Organization Act 1966; OR c. Firms incorporated under specific acts. E.g., Law firms and accounting firms; OR d. Organizations supported by Ministries / Government Agencies, OR e. International organizations certified by the Ministry of Foreign Affairs (ii) Company paid-up capital requirement (not applicable to public limited companies, companies limited by guarantee, associations & organizations incorporated under specific acts) – Paid-up Capital RM 250,000, if 100% Local Owned. – Paid-up Capital RM 350,000, if Joint Venture. – Paid-up Capital RM 500,000, if 100% Foreign Owned. – Paid-up Capital RM 1,000,000, if Foreign-owned companies (foreign equity at 51% and above) operating in the Wholesale, Retail and Trade (WRT) sectors (mandatory requirement to submit valid WRT approval letter, if applicable); OR Foreign-owned companies (foreign equity at 51% and above) involved in the sub sectors on unregulated services. 2. Submit Required Documents – Companies must provide supporting documents, including: – Copy of all current company directors’ MyKad / Passport copy as per SSM registration certificate – SSM Forms (9, 24 & 49) – Comprehensive Company Profile – Copy of Company’s Latest Phone Bill – Tenancy agreement – Audited Financial Statements 3. Approval & Activation – Once the documents are verified, the company signs a Letter of Undertaking (LoU), and upon approval, it gains access to apply for expatriate passes. |
| Stage 2: Expatriate Quota & Position Approval | 1. Determine Manpower Needs – The company must justify the necessity of hiring expatriates and project the number of positions required. 2. Apply for Quota Approval – Companies apply for an expatriate quota via the ESD Online Portal. Some industries may require additional approvals from regulatory bodies through the Xpats Gateway. 3. Position Approval – If a position is not listed in ESD, a request must be submitted, typically taking five (5) working days for processing. |
| Stage 3: Employment Pass Application | 1. Application Submission – Once the quota is approved, the employer submits the EP application online with: – Applicant’s passport details – Employment contract – Academic qualifications – Justification letter for employment 2. Processing & Approval – Applications are processed based on company tiering: – Fast-track processing: 3 working days for Tier 1 & 2 companies – Normal processing: 10 working days for other companies 3. Issuance of Approval Letter – Once approved, an Approval Letter is issued, allowing the expatriate to enter Malaysia and proceed with visa endorsement. |
| Stage 4: Pass Endorsement & Collection | 1. Biometric Data Submission – The expatriate visits MYXpats Centre for biometric submission and verification. 2. Employment Pass Sticker Issuance – The passport is endorsed with the EP sticker, valid for the approved duration (1-5 years based on the EP category). 3. Final Compliance Checks – The expatriate must register with LHDN for tax purposes and ensure compliance with local regulations. |
Companies that are regulated by an Agencies need to submit an approval letter for each Employment Pass (Category I, II and III) application from the relevant Agencies, the list as below:
| No. | Sector | Agencies |
| 1. | Manufacturing and Selected Services Sectors | Malaysian Investment Development Authority (MIDA) |
| 2. | Financial Services (Licensed Institutions, Payment Services Regulatees and Representative Offices) | Central Bank of Malaysia (BNM) |
| 3. | Securities and Derivatives Markets | Securities Commission Malaysia (SC) |
| 4. | Companies operating within East Coast | East Coast Economic Region Development Council (ECERDC) |
| 5. | Healthcare (Field: Traditional and Complementary Medicine) | Traditional & Complementary Medicine Division, Ministry of Health (MOH) |
| 6. | Tourism | Ministry of Tourism, Arts & Culture (MOTAC) |
| 7. | Biotechnology and Bio-based Sector | Malaysian Bioeconomy Development Corporation (Bioeconomy Corporation) |
| 8. | Aviation | Civil Aviation Authority of Malaysia (CAAM) |
| 9. | Construction | Construction Industry Development Board (CIDB) |
| 10. | Education | Ministry of Education (MOE) |
| 11. | Mining, Quarrying & Mineral Processing | Department of Mineral & Geoscience (JMG) |
| 12. | Women, Family & Community Development related organization | Ministry of Women, Family & Community Development (KPWKM) |
| 13. | Sports | National Sports Council (MSN) |
| 14. | Football | Football Association Malaysia (FAM) |
| 15. | Broadcasting | Radio Televisyen Malaysia (RTM), Ministry of Communications & Digital (KKD) |
| 16. | Healthcare (Field: Nursing) | Malaysia Nursing Board, Ministry of Health (MOH) |
| 17. | Healthcare (Field: Allied Health Science) | Allied Health Science Division, Ministry of Health (MOH) |
| 18. | Film Industry | National Film Development Corporation Malaysia (FINAS) |
| 19. | Architectural | Board of Architect (LAM) |
| 20. | Equestrian Activities | Equestrian Association of Malaysia (EAM) |
| 21. | Horse Racing | Malayan Racing Association (MRA) |
| 22. | Crops, Livestock and Aquaculture | Ministry of Agriculture & Food Security Malaysia (MAFS) |
| 23. | Companies operating within Iskandar Region | Iskandar Regional Development Authority (IRDA) |
| 24. | Higher Education | Ministry of Higher Education (MOHE) |
| 25. | Information and Communication Technology | Malaysia Digital Economy Corporation (MDEC) |
Common Pitfalls to Avoid
- Incomplete Documentation: Missing or incorrectly submitted documents such as financial reports, tenancy agreements, or regulatory approvals can cause significant delays or rejections. Ensure all paperwork is complete, up to date, and correctly formatted before submission.
- Failure to Meet Salary Requirements: The EP has strict salary thresholds based on category. If an application does not meet the required salary criteria (e.g., RM10,000 for Category I, RM5,000-RM9,999 for Category II, RM3,000-RM4,999 for Category III), it may be rejected. Employers must structure salaries accordingly and provide proper documentation.
- Non-Compliance with Tax & Regulations: Companies must adhere to regulations set by SSM, LHDN, and the Immigration Department. Failure to comply, such as not filing taxes, inadequate financial reporting, or operating without necessary licenses, can lead to penalties, blacklisting, or application rejection.
- Ignoring Tax Obligations: Expatriates must register with LHDN upon receiving their EP and ensure their taxes are filed correctly. Common issues include late registration, incorrect tax classification, or failure to declare income from multiple sources, which can result in fines or legal complications.
- Ignoring Visa Validity: Expatriates must be mindful of their EP expiration dates and submit renewal applications well in advance. Overstaying or failing to renew the pass on time can result in fines, employment disruptions, and even deportation.
How POSH Corporate Can Help
With our deep expertise in corporate services, POSH Corporate ensures smooth navigation through Malaysia’s expatriate employment process:
💼 End-to-End Assistance
🔍 Personalized Guidance
📄 Compliance & Tax Experts
Conclusion
Setting up a business and securing an Employment Pass in Malaysia involves navigating complex regulatory frameworks. With POSH Corporate’s expertise, expatriates can confidently establish their businesses while ensuring full compliance with immigration, corporate, and tax laws.
Contact us today for a hassle-free experience in Malaysia.
