If a foreign group wants to run its Asian or global operations out of Malaysia — treasury, procurement, shared services, regional management, R&D support — there is a specific tax incentive built for exactly that, and it is one of the most generous Malaysia offers: the Global Services Hub (GS-Hub). Approved companies pay corporate income tax at just 5% or 10% for up to ten years, against the standard 24%. But GS-Hub is not a company you register; it is an incentive you win from MIDA against defined thresholds — a minimum annual spend, a minimum count of high-value jobs at a real salary floor, and a genuine substance in Malaysia. This guide explains what the GS-Hub is, how it replaced the old Principal Hub, the exact tier structure and rates, the headcount and expenditure conditions you must meet, the separate 15% personal-tax sweetener for C-suite expatriates, and how the incoming New Incentive Framework changes the timeline you are working against.
What a Global Services Hub actually is
A Global Services Hub is a locally incorporated company that uses Malaysia as a base to manage, control and support its regional or global business operations. Rather than each country running its own back office, the group centralises high-value functions in one Malaysian entity that serves the wider network. Qualifying activities are the kind of functions a modern multinational consolidates: regional headquarters management, strategic business planning, treasury and financial management, procurement, logistics coordination, shared services (finance, HR, IT), research and development, technical support and data analytics. The common thread is that these are high-value service functions serving related and third-party companies across borders — not a factory, not a local retail operation.
The policy logic is straightforward. Malaysia wants the well-paid, knowledge-intensive jobs and the capital that come with a regional hub — the treasury team, the analytics centre, the procurement desk that buys for the whole of Southeast Asia. To attract them it discounts the corporate tax rate steeply for companies that bring real substance: real headcount, real salaries, real local spending. The GS-Hub is the vehicle for that bargain.
From Principal Hub to Global Services Hub
Foreign advisers still talk about the Principal Hub, and it helps to know how the two relate. The Principal Hub incentive was introduced in May 2015 to attract regional and global headquarters. Its main window expired on 31 December 2022. In Budget 2024 the government replaced and enhanced it with the Global Services Hub (GS-Hub) scheme — an extension of the Principal Hub concept, retuned toward high-value services and outcome-based conditions. Applications are received by MIDA from 14 October 2023 to 31 December 2027. If you read an older guide referencing "Principal Hub 2.0/3.0," the current, live scheme for new applicants is the GS-Hub.
The shift matters because the emphasis moved. The Principal Hub was closely associated with a fixed list of qualifying services and headcount tiers; the GS-Hub keeps the substance requirements but frames them around outcomes and value-added income, and it fits inside Malaysia's broader move — the New Incentive Framework — away from purely rules-based incentives toward a more strategic, negotiated approach.
The rates and tiers: 5% or 10%
The headline is the tax rate, and it depends on whether you are a new company applying for the first time or an existing company expanding, and on which tier you qualify for.
| Applicant | Tier 1 | Tier 2 | Income covered |
|---|---|---|---|
| New company | 5% tax for 5 years, extendable to 10 (5+5) | 10% tax for 5 years | Statutory income from qualifying services (or services + trading) income |
| Existing company (expansion / diversification) | 5% on value-added income | 10% on value-added income | The incremental value-added income from the new activity |
Against Malaysia's standard 24% corporate tax rate, a Tier 1 GS-Hub paying 5% is keeping roughly four-fifths of the tax it would otherwise owe on that income — for up to a decade. Even Tier 2 at 10% is a substantial saving. The type of income that enjoys the rate is either services income alone, or services plus trading income, depending on the approval — which makes the GS-Hub attractive not only to pure back-office operations but to groups that combine regional services with a trading function.
The conditions you must actually meet
The substance requirements are where most of the real work sits. Based on the GS-Hub guidelines, a company seeking the incentive is expected to commit to outcome-based conditions covering local spending, high-value employment and Malaysian participation. The core thresholds that recur in the guidance are:
| Condition | Threshold (guideline) |
|---|---|
| Minimum annual operating expenditure from the qualifying activity | RM1.5 million per year (with an adequate increase over the incentive period) |
| Minimum high-value full-time employees | 15 high-value jobs |
| Minimum basic monthly salary for those high-value jobs | RM5,000 per month |
| Malaysian participation in high-value roles | At least 50% of the high-value jobs filled by Malaysians |
| Local ancillary services | Operating spend must include local insurance, legal, banking, ICT and transport services |
Two points deserve emphasis. First, the expenditure must be local in character — the guidelines specifically expect the operating spend to flow to Malaysian insurance, legal, banking, ICT and transport providers, ensuring the hub genuinely feeds the local economy. Second, the 50% Malaysian requirement on high-value jobs means a GS-Hub cannot be staffed entirely by imported expatriates; at least half of the high-value headcount must be local hires. These are the real commitments behind the 5% rate, and they must be sustained — with adequate increases — across the incentive period, not just at approval.
The C-suite bonus: 15% personal tax for key expatriates
Alongside the company-level rate, Budget 2024 attached a personal-tax sweetener aimed at getting decision-makers physically based in Malaysia. For a new company approved under the GS-Hub incentive, up to three non-citizen individuals in key or C-suite positions can enjoy a flat 15% personal income tax rate for three consecutive years, provided each earns a minimum basic monthly salary of RM35,000. Against Malaysia's progressive personal rates that top out at 30%, that is a meaningful cut for senior expatriates — and it is designed to make Malaysia a comfortable place for the group's regional leadership to actually live and work, not just to book profit.
Keep the two salary figures distinct, because they are easy to confuse: the RM5,000/month floor applies to the 15 high-value company jobs that satisfy the substance test, while the RM35,000/month threshold applies to the up-to-three C-suite expatriates who qualify for the 15% personal rate. They serve different purposes and sit at very different levels.
How GS-Hub compares to the alternatives
The GS-Hub is one of several routes a foreign group can take into Malaysia, and choosing correctly depends on what the entity will actually do.
| Route | Best for | Tax position |
|---|---|---|
| Global Services Hub | An operating regional hub — treasury, procurement, shared services, R&D, serving the group and third parties | 5% or 10% for up to 10 years on qualifying income |
| Representative / Regional Office (RO/ReO) | Market research and coordination only — no revenue-generating activity | Not a taxable trading entity; cannot invoice or earn income |
| JS-SEZ special-zone company | Businesses locating in the Johor-Singapore Special Economic Zone flagship areas | 5% corporate tax (zone-specific, separate scheme) |
| Ordinary Sdn. Bhd. | Any standard operating business without a hub mandate | Standard 24% (SME graduated rates where eligible) |
The key distinction from a Representative/Regional Office is that a GS-Hub is a real, revenue-earning operating company, taxed — but at a deeply discounted rate — whereas an RO/ReO cannot trade or invoice at all. If your regional entity will genuinely provide services and earn income, the GS-Hub is the vehicle that rewards that activity; if it is purely a listening post, an RO/ReO is the lighter-touch route. Groups that also do manufacturing should weigh the GS-Hub against the manufacturing-focused incentives under MIDA's framework, and those eyeing the southern corridor should compare it with the JS-SEZ zone rate.
Is a GS-Hub right for your group?
The GS-Hub rewards genuine consolidation, not paper structuring. It makes strong sense when your group is ready to move real functions and real people to Malaysia: a treasury or shared-services centre serving multiple countries, a procurement desk buying regionally, an analytics or R&D-support team, a regional management layer. It works less well as a thin holding shell, because the incentive is conditioned on spending RM1.5 million a year locally and employing fifteen well-paid people, at least half of them Malaysian — commitments that only pay off if the hub is doing substantive work.
The decision therefore starts with the operating plan, not the tax rate. Map the functions you intend to centralise, the headcount and salaries that implies, and the local spend that follows; then test that plan against the GS-Hub thresholds and the current MIDA guidance. If the numbers clear the bar, a 5% effective rate for a decade is one of the most powerful reasons to make Malaysia your regional base.
The application in practice
A GS-Hub application is a MIDA submission, and it is judged on the credibility of the operating plan behind it. In practice the path runs: incorporate (or identify) the Malaysian entity that will be the hub; define the qualifying services it will perform and the group and third-party customers it will serve; build the five-year projections for headcount, salaries and local operating expenditure that clear the substance thresholds; and lodge the application to MIDA with the supporting business case. Because the incentive is outcome-based, MIDA is not merely ticking boxes at approval — the company commits to delivering the substance over the incentive period, and the tax rate is contingent on continuing to meet it, so the projections you submit are commitments, not aspirations.
Two practical cautions follow. First, sequence the capital and the Employment Passes with the incentive: a hub that will host senior expatriates needs paid-up capital sized to sponsor those passes, and the 15% personal-tax election for C-suite hires is tied to the same approval. Second, treat the timing as live — with applications open to MIDA until 31 December 2027 and the New Incentive Framework reshaping services incentives from Q2 2026, the exact conditions and the approving posture can move within the year, so a plan scoped six months ago should be re-checked against the current guidance before you file.
How ONEKEY BIZ helps
Winning a GS-Hub approval is an exercise in matching a credible operating plan to MIDA's conditions and presenting it well. We assess whether your intended regional functions qualify, model the headcount, salary and expenditure commitments against the current thresholds, structure the Malaysian entity and its capital, prepare and lodge the MIDA application, and coordinate the 15% personal-tax election for your key expatriates alongside their Employment Passes. Because the incentive landscape is shifting under the New Incentive Framework through 2026, we scope every application against the live MIDA position rather than a stale guideline. This article is general guidance on the 2026 position and not a substitute for advice on your specific case.
Read next: our guide to the Johor-Singapore Special Economic Zone and its 5% zone rate, our Representative & Regional Office market-entry guide for the no-trading alternative, and our Employment Pass & NEEP guide for the expatriate side of staffing a hub. When you are ready, see our MIDA incentive service or contact our team.
Frequently asked questions
What tax rate does an approved Global Services Hub pay?
A new company approved under Tier 1 pays just 5% corporate income tax for five years, extendable to ten (5+5); Tier 2 is 10% for five years — both against Malaysia's standard 24% rate. An existing company expanding into hub activities gets 5% (Tier 1) or 10% (Tier 2) on its value-added income. The rate applies only to the income MIDA's approval covers — services income, or services and trading income — and only while the company keeps meeting the conditions.
What conditions must a company meet to qualify for the GS-Hub incentive?
The core substance thresholds in the guidelines are a minimum annual operating expenditure of RM1.5 million from the qualifying activity (with an adequate increase over the incentive period), at least 15 high-value full-time jobs, a minimum basic monthly salary of RM5,000 for those jobs, and at least 50% of the high-value jobs filled by Malaysians. The operating spend must include local ancillary services — insurance, legal, banking, ICT and transport — so the hub genuinely feeds the Malaysian economy.
How is the GS-Hub different from the old Principal Hub?
The Principal Hub incentive ran from May 2015 and its main window expired on 31 December 2022. Budget 2024 replaced and enhanced it with the Global Services Hub, an extension of the same concept retuned toward high-value services and outcome-based, value-added-income conditions. MIDA receives GS-Hub applications from 14 October 2023 to 31 December 2027. For new applicants, the GS-Hub — not the Principal Hub — is the current live scheme.
Is there a personal tax break for the expatriates running the hub?
Yes. For a new company approved under the GS-Hub incentive, up to three non-citizen individuals in key or C-suite positions can enjoy a flat 15% personal income tax rate for three consecutive years, provided each earns a minimum basic monthly salary of RM35,000. Do not confuse this RM35,000 C-suite threshold with the RM5,000/month floor for the 15 high-value company jobs that satisfy the substance test — they are different measures at very different levels.
Sources & references
This article is general information only, not legal, tax or immigration advice. Policies, thresholds and official fees are set by the relevant Malaysian authorities and may change. Talk to our consultants about your specific situation.