# Doing Business in Kuala Lumpur: What Federal Territory Status Changes

> Kuala Lumpur has no state government, so its licensing by-law is federal subsidiary legislation, its planning law is a different Act, and hotels and entertainment are licensed by Acts of Parliament rather than council by-laws.

- Category: business
- Language: en
- Status: published
- Updated: 2026-08-14
- Canonical: https://negaraku.md/en/business/doing-business-kuala-lumpur

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Kuala Lumpur is the one place in Malaysia where you can read your licence fee off the
federal gazette. Not a council circular, not a counter enquiry — the actual annual rate
for your activity, printed in a P.U.(A) anyone can download.

That is not a convenience. It is a symptom. Kuala Lumpur has no state government, and
almost everything procedurally different about doing business here flows from that one
constitutional fact.

## Who licenses you, and under what

DBKL is a local authority under the **Local Government Act 1976 (Act 171)**, the same as
MBPJ or MBPP. But s.103 of Act 171 says no by-law has effect until it is confirmed by the
**State Authority** — and Kuala Lumpur has no State Authority in the ordinary sense.

Read the end of the instrument itself. The **Licensing of Trades, Businesses and
Industries (Federal Territory of Kuala Lumpur) By-Laws 2016, P.U.(A) 230/2016** was
*made* on 26 August 2016 by the Commissioner of the City of Kuala Lumpur and *confirmed*
on 29 August 2016 by the **Minister of Federal Territories**. It was then gazetted in the
Federal Government Gazette on 30 August 2016.

That ministry no longer exists in that form. The **Ministry of Federal Territories was
dissolved on 22 December 2022** and the Federal Territories function was folded into the
Prime Minister's Department. The confirmation power for Kuala Lumpur by-laws now sits with
the **Minister in the Prime Minister's Department (Federal Territories)** — a federal
minister still, not a State Authority, so the substance of s.103 is unchanged.

Every Peninsular council's licensing by-law is confirmed by a state and published in a
state gazette. KL's is confirmed by a minister and published federally. That is why it is
findable — and why the rest of this page can quote numbers most council guides cannot.

DBKL's statutory footing also rests on three Acts rather than one: the **Federal Capital
Act 1960 (Act 190)**, the **City of Kuala Lumpur Act 1971 (Act 59)** and Act 171.

## Planning law is a different Act entirely

Every Peninsular state runs planning under the **Town and Country Planning Act 1976
(Act 172)**. Kuala Lumpur does not. It runs under the **Federal Territory (Planning) Act
1982 (Act 267)**.

That matters because **by-law 3(1) of P.U.(A) 230/2016 makes planning permission a
precondition to the licence** — premises may be used for business only once planning
permission has been obtained, where required, and a business premises licence has been
issued. Two conditions, and the first is the one no later approval can rescue.

The subsidiary rules under Act 267 that touch a tenant or a developer directly include
the Zoning and Density Rules 1985, the **Development Charge Rules 2013 (P.U.(A) 246/2013)**, and three
instruments DBKL lists as made in **2025**: new Application for Planning Permission Rules
for the Federal Territory of Kuala Lumpur, revocation rules for the Classes of Use of
Land and Buildings, and fee rules for purchasing the **Kuala Lumpur Local Plan 2040**. An
adviser still quoting the old classes-of-use rules is quoting a revoked instrument.

## Hotels and entertainment are licensed by Parliament, not by by-law

In Penang a hotel is licensed under a council by-law and an entertainment outlet under a
state enactment. In Kuala Lumpur both sit in **Acts of Parliament**.

| Activity | Kuala Lumpur instrument |
| --- | --- |
| Hotels | **Hotel (Federal Territory of Kuala Lumpur) Act 2003 (Act 626)** |
| Entertainment outlets | **Entertainment (Federal Territory of Kuala Lumpur) Act 1992 (Act 493)**, with Rules 1993 and Declaration Orders 1994 and 2011 |
| Trades, businesses, industries | Licensing by-laws, P.U.(A) 230/2016 |
| Food establishments, hawkers, markets | Separate 2016 by-laws under Act 171 |
| Advertisements and signboards | **Advertisements (Federal Territory) By-Laws 1982, P.U.(A) 187/1982** |

If you are opening a hotel or a licensed entertainment venue in KL, the obligations,
penalties and appeal routes are statutory rather than by-law — a different enforcement
ceiling from the RM2,000 that s.104 of Act 171 caps by-law offences at.

## What the licence actually costs

This is the part no other city in Malaysia lets you publish. The **Schedule to
P.U.(A) 230/2016**, read with by-laws 2 and 7, sets the annual licence fee.

| Category | Annual fee |
| --- | --- |
| Managing offices, banks and financial institutions, private healthcare facilities, bookshops, private education institutions | 1 unit **RM200** · 2 units **RM400** · exceeding 3 units **RM500** · building or tower 0 to 5 floors **RM3,000** · exceeding 5 floors **RM5,000** |
| Most retail and service trade — electronics, furniture, pharmacy, jewellery, laundry, travel and employment agencies, car rental | **RM3.00 per m²** |
| Stores | **RM3.00 per m²** |
| Industries | **RM5.00 per m²** |
| Workshops — spare parts, spraying, welding, engineering works | **RM5.00 per m²** |
| Farming and breeding, including swiftlet houses | **RM3.00 per m²** |
| **Beauty and health care centre** | **RM50.00 per m²** |
| Car jockey | **RM200 per licence** |
| Any business activity not listed in the Schedule | **RM3.00 per m²** |

Two provisions cost more than the fee. **By-law 8(1)** lets the Datuk Bandar require a
deposit of up to **RM50,000**, forfeitable after a representation process — and an
unclaimed deposit is forfeited outright. **By-law 11** provides that a licence is not
renewable as of right, that a renewal application is treated as an application for a new
licence, and that it must be made **within 60 days before expiry**.

Note the RM50 per square metre row. A 100 m² beauty or wellness outlet pays RM5,000 a
year where the 100 m² retail shop next door pays RM300. That single line moves site
selection.

## The signboard rule everyone gets backwards

Kuala Lumpur is routinely described as the city that requires Bahasa Malaysia to be
larger than the other language on a signboard. **It does not.** The Advertisements
(Federal Territory) By-Laws 1982 give Bahasa Malaysia priority in colour and in a more
prominent position, and provide that the other language **shall not exceed** the size of
the Bahasa Malaysia. That is a ceiling on the other language. Equal size complies.

The 30 per cent and similar percentage rules belong to other councils. Seberang Perai's
own advertisement by-law does require Bahasa Malaysia to be *larger* — so the same
signboard artwork can be compliant in KL and non-compliant across the channel in Penang.
The mechanics and the Dewan Bahasa dan Pustaka vetting step are covered in the signboard
licence guide.

## The economic case

From DOSM's *GDP by State, 2025*, released 1 July 2026:

- **RM265.1 billion** of GDP, growing **5.2 per cent**, the second-largest contributor to
  the national economy after Selangor
- **Services are 91.7 per cent** of the territory's economy — the most service-weighted
  economy in Malaysia — growing 5.2 per cent
- Finance and insurance, real estate and business services grew **5.3 per cent**;
  wholesale and retail trade, food and beverage and accommodation grew **5.0 per cent**
- **GDP per capita RM144,898**, against a national RM59,167

Read that last figure carefully. It is output over *resident* population in a small
territory drawing its workforce from a far larger conurbation. It tells you where value
is booked in Malaysia. It is not a wage benchmark and not a cost index.

Kuala Lumpur sits in **no economic corridor** — there is no NCIA, IRDA or ECERDA
equivalent and no state investment agency, because there is no state. The one
KL-specific fiscal instrument is **Tun Razak Exchange**, and its status is widely
misreported.

The TRX Marquee status rules were made in 2013 and amended in December 2021, and most
published commentary has them expiring on 31 December 2025. They do not.
**P.U.(A) 224/2026**, gazetted 16 June 2026, amends paragraph 7(a) of the Industrial
Building Allowance Rules 2013 by substituting *31 December 2025* with
**31 December 2030**, deemed in force from year of assessment 2014. A companion
accelerated capital allowance amendment, **P.U.(A) 211/2026**, was gazetted alongside it,
extending the TRX Marquee accelerated capital allowance for renovation costs — a 20 per
cent initial allowance and 40 per cent annual allowance under the 2013 Rules — on matching
terms, to 31 December 2030 and effective from year of assessment 2014.

Separately, the TRX approved-developer income tax exemption remains in force. The
**Income Tax (Exemption) (No. 4) Order 2013, P.U.(A) 28/2013** grants a 70 per cent
exemption on a TRX approved developer's statutory income from the disposal of a building
and from the rental of a building, each for up to five consecutive years of assessment.
As amended by **P.U.(A) 477/2021**, its disposal limb has now closed (up to year of
assessment 2025) while the rental limb runs through year of assessment 2027.

## What is not different here

Almost everything else. Incorporation, the resident director requirement, the company
secretary, annual returns, corporate tax, SST registration, e-Invoice phasing, EPF, SOCSO
and EIS are federal and identical in Kuala Lumpur, Kuching and Kangar. Where a guide
dresses those up as Kuala Lumpur rules, it is padding a page.

## Common mistakes

- **Applying Act 172 planning logic in KL.** Planning permission, development charges and
  classes of use run under Act 267, and the classes-of-use rules were revoked in 2025.
- **Applying a 30 per cent Bahasa Malaysia rule.** The KL by-law caps the other language
  at the Bahasa Malaysia size and sets no percentage.
- **Budgeting the fee and forgetting the deposit.** By-law 8 permits up to RM50,000, and
  an unclaimed deposit is forfeited.
- **Leaving renewal to the last fortnight.** By-law 11 wants it within 60 days before
  expiry and treats it as a fresh application, with no right of renewal.
- **Missing the RM50 per m² band.** Beauty and health care centres are priced at more than
  sixteen times general trade. Confirm your activity's row before signing a tenancy.
- **Treating hotels or entertainment venues as by-law licensing.** They sit under Act 626
  and Act 493, with statutory consequences.
- **Quoting expired TRX incentives.** The industrial building allowance window now runs to
  31 December 2030.

## What's next

Find your activity in the Schedule to P.U.(A) 230/2016 before you sign anything — that
one row sets your annual fee and tells you whether the site is economic at all. Then
confirm the planning position of the address under Act 267, because by-law 3(1) makes it
a precondition and no licence application can repair a land-use problem afterwards.

## Sources

- Licensing of Trades, Businesses and Industries (Federal Territory of Kuala Lumpur) By-Laws 2016, P.U.(A) 230/2016 — https://www.jwp.gov.my/images/kompendium/2016/UUK%20Pelesenan%20Tred,%20Perniagaan%20dan%20Perindustrian%20WPKL%202016%20(pua_20160830_P.U.%20(A)%20230).pdf (Attorney General's Chambers)
- Legislation List — https://www.dbkl.gov.my/en/corporate-info/legislation-list (DBKL)
- Jabatan Pelesenan dan Pembangunan Perniagaan — https://www.dbkl.gov.my/jabatan/jabatan-pelesenan-dan-pembangunan-perniagaan (DBKL)
- Gross Domestic Product (GDP) by State, 2025 — https://www.dosm.gov.my/portal-main/release-content/gross-domestic-product-gdp-by-state-2025 (Department of Statistics Malaysia)
- Income Tax (Industrial Building Allowance) (Tun Razak Exchange Marquee Status Company) (Amendment) Rules 2026, P.U.(A) 224/2026 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/3560569/PUA%20224%20(2026).pdf (Attorney General's Chambers)
- eLesen DBKL — https://elesen.dbkl.gov.my/ (DBKL)
- Hannah Yeoh Is Now Minister In Prime Minister's Dept (Federal Territories) — https://bernama.com/en/general/news.php?id=2503416 (BERNAMA)
- Malaysia: Income tax treaty with Russia enters into force; other tax developments (June 2026) — https://kpmg.com/us/en/taxnewsflash/news/2026/06/malaysia-tax-developments-russia-treaty-incentives.html (KPMG)
- Monthly Tax Developments (July 2026) — https://assets.kpmg.com/content/dam/kpmgsites/my/pdf/2026/07/monthly-tax-developments-july-2026.pdf.coredownload.inline.pdf (KPMG in Malaysia)
- Tax incentives for the Tun Razak Exchange (TRX) project — https://www.ey.com/en_my/technical/tax-alerts/tax-incentives-for-the-tun-razak-exchange-project (EY Malaysia)

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