Hello fellow Malaysian business owner! If you are operating your business in the USA, you may already be familiar with the different compliance and legal requirements that come with running a business in a foreign country. However, navigating the complex world of beneficial ownership reporting can be a daunting task, especially when it comes to ensuring that you are meeting all the necessary regulations and guidelines. In this blog, we will explore the specific reporting requirements that Malaysian businesses operating in the USA need to be aware of, and provide you with valuable insights and tips to help you stay compliant and avoid any potential legal issues. Let’s dive in and make sure your business is on the right track!

Registration Requirements

The United States consists of 50 states and 5 territories, each with its own set of business regulations. To operate legally, businesses must adhere to both state-specific rules and federal laws.

State-Level Registration:

When establishing a business presence in the United States, businesses from Malaysia must complete state-level registration in any state where significant business activities occur. This requirement typically applies if your company:

• Has a physical presence in the state
• Frequently meets with clients in the state
• Derives a significant portion of revenue from the state
• Has employees working in the state

Incorporating your Malaysian Company in the US

Even if none of the specific criteria apply, a Malaysian company must still choose a home state for registration when conducting business in the US. This involves forming a U.S. entity, such as a corporation, LLC, or other business structure, in that state. This registration ensures that the company is officially recognized and compliant with US regulations, regardless of its level of business activity in any individual state.

The newly formed U.S. entity will operate as a subsidiary of the foreign company. This means that while the U.S. entity is legally independent, it remains under the ownership and control of the parent company based in Malaysia. This structure allows the company to conduct business in the US while maintaining its international headquarters.

We recommend using Northwest Registered Agent if your foreign company needs to incorporate. They offer expert guidance and can serve as a reliable registered agent for your business, ensuring compliance and smooth operations.

Federal Requirements

In addition to state requirements, Malaysian companies must also comply with federal regulations:

• Federal Tax ID: Obtain an Employer Identification Number (EIN) from the IRS. This number is essential for tax reporting and opening U.S. bank accounts.
• Industry Regulations: Companies may need to follow specific federal regulations depending on the industry. For example:
• Import/Export Laws: If the company is involved in importing or exporting goods, it must meet U.S. customs regulations. This includes adhering to rules for tariffs, duties, and necessary documentation.

Beneficial Ownership Information Reporting Requirements

For Malaysian businesses conducting operations in the U.S., adhering to Beneficial Ownership Information Reporting (BOIR) requirements is crucial. The Corporate Transparency Act mandates that companies disclose the individuals who own or control them. This applies to most entities, including those that are incorporated or registered in any U.S. state. The goal is to enhance transparency and combat illicit activities such as money laundering and terrorism financing.

A beneficial owner is an individual who controls the company or owns 25% or more of its shares, either directly or indirectly. For compliance with BOIR requirements, businesses must report information about these individuals, including their names, addresses, and identification details. Failure to file this report can result in significant penalties and legal consequences. Therefore, companies from Malaysia need to ensure they meet these reporting obligations promptly and accurately.

For your convenience, you can file your Beneficial Ownership Information Report directly on our website. Click here to complete the process in just a few minutes and ensure your business complies with U.S. regulations.

Additional Considerations for Malaysian Businesses:

Tax Treaties

As a Malaysian business operating in the United States, it’s crucial to understand that there is no tax treaty between Malaysia and the USA. This absence of a tax treaty means that your company may be subject to taxation in both countries on the same income, potentially leading to double taxation. Without the protections and benefits typically provided by a tax treaty, your business may face higher overall tax burdens and increased complexity in managing tax obligations across both jurisdictions. It’s advisable to consult with international tax experts to develop strategies for minimizing tax liabilities and ensuring compliance with both Malaysian and US tax laws.

Trade Considerations

When conducting business with the USA, Malaysian companies should be aware of the Trade and Investment Framework Agreement (TIFA) between the two countries, which provides a platform for bilateral trade discussions and cooperation. While Malaysia is not currently part of any free trade agreement with the USA, it’s important to stay informed about ongoing negotiations for potential future agreements. Additionally, Malaysian businesses should familiarize themselves with US import regulations, including tariffs, quotas, and product safety standards specific to their industry. It’s crucial to research and comply with relevant US agencies’ requirements, such as the Food and Drug Administration (FDA) for food and medical products, or the Consumer Product Safety Commission (CPSC) for consumer goods. Staying up-to-date with these regulations and potential changes in trade policies will help ensure smooth business operations and compliance with US trade laws.

Your Path to Compliance: Key Takeaways for Malaysian Businesses in the U.S.

Operating a Malaysian business within the USA requires careful attention to legal obligations, from establishing your home state to incorporating and filing a beneficial ownership report. Meeting these requirements is essential for ensuring compliance and securing your business’s success in the American market. By understanding and adhering to these steps, you can confidently navigate the complexities of doing business in the U.S. and focus on growing your enterprise.

Ready to get started? Click here to file your BOIR in just a few short minutes. We make the process easy, fast, and secure so you can focus on what matters—your business.