Estonian Company Run from Malaysia: Tax Rules

Some entrepreneurs who live in Malaysia form or buy an Estonian private limited company (OÜ), often as e-residents, and run it from Kuala Lumpur or Penang. That works, but Malaysian income tax does not look only at where a company was founded: a company carrying on a business is resident in Malaysia if at any time in the basis year the management and control of its business is exercised in Malaysia. Income tax is charged on income accruing in or derived from Malaysia, and on income received in Malaysia from outside Malaysia. Estonia and Malaysia have no tax treaty. This guide sets out these rules with the official text, and what we do on the Estonian side.

The guide is general information, not tax advice. How your company and you are taxed depends on the facts of your case; ask a Malaysian tax adviser before you form or buy the company. We read the Income Tax Act 1967 (Act 53) in the updated text of the Attorney General's Chambers as at 21 May 2024, published by the Inland Revenue Board of Malaysia, and the Estonian Ministry of Finance's list of tax treaties, on 24 October 2026. Later Finance Acts are not in that text; ask your adviser whether they change the sections below.

In Estonia: an Estonian company is Estonian

A company established under Estonian law is resident in Estonia for tax purposes (Income Tax Act § 6). Its profit is taxed when it is distributed, not while it stays in the company — the guide how Estonia taxes company profit explains the rule. The company keeps its Estonian duties wherever its owners live: accounts, an annual report to the commercial register and, if its address is abroad, a contact person in Estonia.

In Malaysia: the company side

Management and control in Malaysia. A company carrying on a business is resident in Malaysia for the basis year if at any time during that basis year the management and control of its business, or of any one of its businesses, are exercised in Malaysia (Income Tax Act 1967, section 8(1)(b)).
What is taxed. Income tax is charged for each year of assessment on the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia (section 3).
Rate. A company pays income tax at 24 per cent of its chargeable income (Schedule 1, paragraph 2(1)); lower rates apply to some smaller companies resident and incorporated in Malaysia (paragraph 2A), which an Estonian OÜ is not.

An Estonian OÜ is incorporated in Estonia. If you live in Malaysia and the business is in fact managed and controlled from there, Malaysia can treat the company as resident; and its income derived from Malaysia is taxable there in any case. Your Malaysian tax adviser answers that with the facts of your case.

In Malaysia: the owner side

Who is a resident individual. An individual is resident in Malaysia for the basis year if they are in Malaysia for periods amounting to 182 days or more in that year, or meet one of the other tests of the Act (section 7(1)).
No controlled foreign company rule of its own. The Act as we read it has no rule that adds the retained profit of a foreign company to its Malaysian owner's income; the term appears only in the provisions on the global minimum tax for large multinational groups, where it refers to the rules of other countries.

How an owner living in Malaysia is taxed on what the Estonian company pays out is a question for your Malaysian tax adviser.

No tax treaty between Estonia and Malaysia

No treaty. Malaysia is not on the Estonian Ministry of Finance's list of tax treaties in force, signed or initialled.
What that means. There is no treaty rule on a company resident in both countries, on a permanent establishment or on the tax on dividends and board fees — each country applies its own law. See board member fee or dividend from abroad for the Estonian side.

What to decide before you form or buy the company

Where the business is managed and controlled. That is the fact the Malaysian residence rule looks at.
Where the income comes from. Income derived from Malaysia is taxed there whoever owns the company.
How profits reach you. Without a treaty, each country applies its own rules to dividends and board fees.

What we do on the Estonian side

for your own company, a written analysis of its tax residence and permanent establishment under these rules — an analysis, not tax advice;
online formation for an e-resident — €950 Registered address and contact person service for one year are included., or formation by power of attorney — €1,250;
a ready-made company bought remotely — €1,200 Registered address and contact person service for one year are included.;
accounting — from €150 / month and the annual report — from €450;
the registered address and contact person after the first 12 months — €350 / year.

Our accounting covers the Estonian company's Estonian obligations. Malaysian tax returns and Malaysian tax advice are not included. Owners in other countries: Estonian company run from abroad compares the rules side by side.

Prices exclude VAT. All communication takes place by email.

Ready to start? A new Estonian company — online for e-residents or by power of attorney; Malaysian tax advice is not included. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Income Tax Act — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

Is my Estonian company taxed in Malaysia if I run it from Malaysia?

It can be. A company carrying on a business is resident in Malaysia if at any time in the basis year the management and control of its business is exercised in Malaysia (Income Tax Act 1967, section 8(1)(b)), and income tax is charged on income derived from Malaysia or received in Malaysia from outside Malaysia (section 3), at 24 per cent for a company (Schedule 1). In Estonia the company stays resident because it was established under Estonian law (Income Tax Act § 6). Estonia and Malaysia have no tax treaty, so each country applies its own law. Ask a Malaysian tax adviser before you form or buy the company; we handle the Estonian side.

Estonian company run from Malaysia: what is taxed where