Quick answer: A startup can apply for Malaysia Digital (MD) status. The entry bar is low: incorporation under the Companies Act 2016, residence in Malaysia, an MD activity that can still be proposed, and RM1,000 paid-up capital. The hard part is the 12-month conditions after award: at least two full-time knowledge workers at RM5,000 average base salary and at least RM50,000 a year of operating expenditure. A startup should plan its hiring and cash for these before it applies.
- A startup can apply while still proposing its activity.
- The entry tests are light: RM1,000 paid-up capital.
- The cost is in the 12-month conditions: two knowledge workers and RM50,000 annual spend.
- Two knowledge workers at the minimum is RM120,000 a year in payroll.
- Confirm with MDEC whether founders on payroll count as knowledge workers.
What a Startup Needs to Apply
| Test | Startup requirement |
|---|---|
| Company | Incorporated under the Companies Act 2016, resident in Malaysia |
| Activity | A proposed or running MD activity |
| Capital | At least RM1,000 paid-up |
What a Startup Must Fund Afterwards
| Condition | Amount | Annual cost at the minimum |
|---|---|---|
| Two knowledge workers | RM5,000 average base salary each | RM120,000 |
| Operating expenditure | At least RM50,000 | Covered by payroll if tied to MD activities |
| Paid-up capital | RM1,000 | RM1,000 |
Can Founders Count as Knowledge Workers?
The guidelines count full-time employees who meet the knowledge worker definition and are employed for the MD activities, at a minimum average monthly base salary of RM5,000. Whether a founder-director on payroll counts is not spelled out, so confirm with MDEC before you rely on it.
Planning Your First 12 Months
Month 0
Incorporate, apply and wait for the decision letter.
Month 1 to 3
Recruit the first knowledge worker.
Month 4 to 6
Recruit the second and build the product.
Month 7 to 11
Track spending and payroll against the conditions.
Month 12
Confirm both hiring and spending conditions are met.
Not sure where you stand? WhatsApp us. We will check it before you apply.
Startup Pitfalls
Applying with no hiring plan
Two full-time knowledge workers are required within 12 months.
Counting freelancers
The condition is for full-time employees.
Under-budgeting
Payroll at the minimum is RM120,000 a year.
Overlooking reporting
The annual declaration is verified by an independent auditor.
Three Scenarios
Scenario 1. Two co-founders build an AI product and hire two engineers at RM6,000. The payroll satisfies both the hiring and the spending tests.
Scenario 2. A solo founder applies without hires. Without two knowledge workers within 12 months, the company risks non-compliance.
Scenario 3. A pre-revenue startup has no incorporation yet. It incorporates first, since the company must exist before it can apply.
How We Help
What we handle for you
Before you apply
- Test your activity, hiring plan and cost base against MDEC's conditions.
- Advise whether MD status, a tax incentive or both make sense for your business.
- Prepare your business plan and financial plan based on your company idea or business model.
Application
- Prepare and submit the application and answer MDEC's questions.
Why companies choose us
End-to-end under one roof
- We handle company incorporation, accounting and payroll, as well as MD status and expatriate pass applications, so your structure, records and hiring plan stay aligned.
- The company is set up correctly from day one.
We check before you invest
- We confirm eligibility, including whether you can hire the expatriates you need, before a foreign investor decides to incorporate in Malaysia.
- Neutral Consulting PLT is a Kuala Lumpur firm led by a Managing Partner who is a member of the Malaysian Institute of Accountants.
Frequently Asked Questions
Quick answers.
Can a startup apply for Malaysia Digital status?
Yes, if it is incorporated under the Companies Act 2016, resident in Malaysia, proposes an MD activity and has RM1,000 paid-up capital.
Does the startup need revenue?
The guidelines do not set a revenue test. The conditions are about hiring, spending and activity.
How many staff does a startup need?
At least two full-time knowledge workers within 12 months, at an average monthly base salary of at least RM5,000.
Can founders count as knowledge workers?
The guidelines do not spell this out, so confirm with MDEC.
What is the minimum spend?
At least RM50,000 a year on the MD activities, which payroll for two knowledge workers will exceed.
How much cash does a startup need?
Payroll for two knowledge workers at the minimum is RM120,000 a year, plus other operating costs.
Can a startup apply before it has a product?
Yes. The company can propose to carry out the MD activity.
What if we cannot hire two people in time?
You risk non-compliance, so plan recruitment for the 12-month window.
Is the tax incentive automatic for startups?
No. It is a separate application.
Can a foreign founder apply?
Yes. MD status exempts companies from local ownership requirements.
What if our startup pivots?
Changes to activities need MDEC approval, so tell MDEC before you move outside the approved activities.
Can you help a startup apply?
Yes. We prepare the business plan and financial plan from your model and handle the application.
Sources
Official sources
This page is general information, not legal advice. Agencies change their requirements, so confirm the current rules with MDEC, or with us, before you act. Checked November 2026.
Talk To Us Now
Thinking of applying for MD status? We will assess it first. All consultations are by video call.