The Challenge
Our client, an established trading business owner in Malaysia, was engaged in import and export
between Turkey, Europe, and China. While revenues were strong, the business faced two critical issues:
- High Corporate and Personal Taxation: Malaysia’s corporate tax rates were up to 24%, while personal income tax progressively reached 30%.
- Customs and Trade Barriers: Complex import duties, cross-border VAT, and inconsistent double-taxation relief for goods sourced from China and exported to Europe.
- Compliance Burden: Maintaining statutory obligations across multiple jurisdictions while drawing personal income created inefficiencies and exposure.
The result was reduced profitability, limited personal income flexibility, and rising compliance costs.
Our Solution
1Financial provided a comprehensive restructuring plan:
- Jurisdiction Selection & Incorporation: Incorporated a trading entity in the UAE, leveraging its tax-efficient environment (0% corporate and personal income tax under standard conditions) and global trade positioning.
- Tax Residency: Secured UAE tax residency for the client, enabling recognition under double tax treaties and reducing exposure to Malaysian taxation on worldwide income.
- Structuring Trade Flows: Imports from China and exports to Turkey/Europe were re-routed through the UAE company, benefiting from competitive customs treatment and simplified VAT regimes.
- Accounting & Compliance Framework: Rebuilt the client’s accounting system in line with UAE regulations, integrating receivables, payables, and trade finance reporting.
- Personal Wealth Planning: Designed a structured withdrawal mechanism aligning dividends, salaries, and asset transfers to maximise personal wealth without triggering unnecessary taxation.
The Outcome
- Massive Tax Savings: Eliminated Malaysian corporate and personal income tax obligations on international trade.
- Customs & Trade Efficiency: Lower effective customs costs and smoother VAT compliance through UAE’s trading framework.
- Sustainable Compliance: A streamlined governance and reporting system aligned with international standards.
- Personal Wealth Growth: Secured UAE tax residency allowed the client to optimise asset accumulation, succession planning, and personal income withdrawals in a tax-efficient manner.
- Future-Proofed Structure: The UAE company now serves as a stable hub for further expansion into Europe and MENA.
