Incentives for OHQ

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Incentives for Operational Headquarters (OHQs)

“Approved operational headquarters” (OHQ) refers to a locally incorporated company, whether local-owned or foreign-owned, which carries on a business in Malaysia of providing qualifying services to its offices or its related companies outside Malaysia.

Companies granted OHQ status will enjoy a concessionary tax rate of 10% for income from qualifying services rendered to, interest on foreign currency loans extended to, and royalties received from R & D work carried out on behalf of their offices or related companies outside Malaysia.

To be eligible for the incentives provided, the paid-up capital of the company should be a minimum of RM0.5 million and total business spending should be at least RM1.5 million per annum. The company should also carry out a minimum of three of the following qualifying services to its offices or related companies outside Malaysia:

management and administrative services
treasury and fund management services
corporate financial advisory services
research and development
training and personnel management.

Approved OHQs can also enjoy non-fiscal incentives as follows:-

Apply for expatriate posts which will be approved based on expertise, skill requirements and needs of the company. Duration of work permits will be between three to five years.
Borrow freely from domestic sources in foreign currency without the approval of the central bank for treasury and fund management operations for their related companies outside Malaysia.
Borrow freely from domestic sources in Malaysian Ringgit (RM) up to a maximum of RM10 million for use in Malaysia. Borrowing in excess of RM10 million requires prior approval from the central bank.
Invest freely in foreign securities and lend to related companies outside Malaysia as long as the domestic borrowing in RM is within the RM10 million limit and the remittances are made in foreign currency equivalent.
Open one foreign currency account or one multi-currency account with any of the designated banks to retain export proceeds in foreign currency.
Open foreign currency accounts with the designated banks in Malaysia, including the offshore banks in Labuan, or overseas banks for crediting foreign currency receivables other than export proceeds.
Use professional services of a foreign firm if such services are not available in Malaysia.

Applications for these incentives should be submitted to the Ministry of Finance.

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