Introduction
The difference between LLP, partnership and company in Malaysia lies mainly in their structure, liability, tax treatment, and compliance obligations. Each business type is governed by different laws — the Limited Liability Partnerships Act 2012 (LLPA) for LLPs, the Partnership Act 1961 for partnerships, and the Companies Act 2016 for companies. Understanding these differences helps entrepreneurs choose the right entity for their business and comply with the Malaysia Income Tax Act 1967 (ITA).
What Is a Limited Liability Partnership (LLP)?
A Limited Liability Partnership (LLP) is a hybrid structure that combines the flexibility of a traditional partnership with the limited liability benefits of a company.
- Governed by the Limited Liability Partnerships Act 2012
- Registered under the Companies Commission of Malaysia (CCM)
- Recognised as a separate legal entity
- Partners have limited liability for business debts
An LLP must have at least two partners, and there is no maximum limit. It can own property, enter contracts, and continue operations despite changes in partners.
Comparison Between LLP, Partnership, and Company
| Features | LLP | Partnership | Company |
| Limited Liability | Yes | No | Yes |
| Legal Entity | Yes | No | Yes |
| Perpetual Succession | Yes | No | Yes |
| Capital Contribution | According to the agreement | According to the agreement | Subscription to shares |
| Minimum Members | 2 | 2 | 2 |
| Maximum Members | Unlimited | 20 | Private: 50 / Public: Unlimited |
| Management | According to the agreement | According to the agreement | Board of Directors |
| Internal Rules | Based on the agreement | Based on the agreement | Companies Act 2016 / M&A |
| Access to Finance | Partners’ investment and borrowings | Partners’ investment and borrowings | Shareholders and capital markets |
| Returns | Share of profits | Share of profits | Dividends |
| Dissolution by Court | Yes | Yes | Yes |
Tax Treatment Under the Malaysia Income Tax Act 1967
| Entity Type | Tax Rate | Tax Filing Form | Distribution to Members |
| LLP | 24% (corporate rate) | Form PT | Not taxed again |
| Partnership | Partners taxed individually | Form P | Included in partners’ personal income |
| Company | 24% (corporate rate) | Form C | Dividends exempt from further tax |
✅ Reference: Section 8(1A), Section 75B, and related provisions of the Income Tax Act 1967.
Compliance and Legal Obligations
For LLP
- Must appoint a Compliance Officer under Section 75B ITA
- Maintain accounting records for 7 years
- File Form PT and tax estimates (CP204)
- Annual declaration with CCM
For Partnership
- Partners are jointly liable for debts
- Must file Form P (each partner also files Form B or BE)
For Company
- Must appoint auditors and directors
- Submit audited financial statements to SSM
- File Form C and CP204 estimates annually
Key Takeaways
- LLP combines flexibility of a partnership and protection of a company
- Companies require more compliance but offer credibility and funding access
- Partnerships are easy to start but carry full personal liability
- Tax obligations depend on entity type under the Income Tax Act 1967
ANC Group – Your Personal Tax Advisor
Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies.
Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends.
ANC Group keep you abreast with Malaysia tax updates and any changes in the local regulations.
We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.
If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.
