As per Malaysian laws and regulations, all businesses in Malaysia must comply with record-keeping requirements. Under Section 82 of the Income Tax Act 1967, it is essential for every person running a business in Malaysia to maintain proper documentation and provide receipts. Keeping your files in order is crucial whether you are a new entrepreneur or an experienced business owner. Businesses these days stay tax compliant with accounting software.
There are various ways to keep financial records, but choosing a system that works best for you and your business is essential. Additionally, it is crucial to keep your records up-to-date and regularly back them up.
Good bookkeeping practices allow businesses to:
- Make better business decisions.
- Be aware of their financial situation.
- Reduce the time and effort required to file corporate income tax returns.
What Documents Do I Need To Keep?
The records the reporting institution needs to keep include:
- During the Customer Due Diligence (CDD) process, documents such as identification cards, passports, and documents of incorporation are obtained.
- Any document or records related to the customer’s transactions, including business correspondences and;
- Records of any analysis the reporting institution has conducted, such as the ML/TF risk assessment on customers and any analysis of suspicious transaction reports filed internally or submitted to Bank Negara Malaysia.
What Are The Record-Keeping Requirements For Malaysian Companies?
All individuals or entities liable to pay income tax must maintain proper accounts for seven years. These accounts must be in either Malay or English, which are the official languages of Malaysia. Additionally, all the relevant documents should be retained within Malaysia unless the Director-General approves otherwise. Various documents must be preserved in line with the provisions of the Income Tax Act to ensure compliance.
What Are The Requirements Under The Income Tax Act?
Understanding the record retention guidelines and their impact on your liability under the Income Tax Act is essential. Anyone who is required to maintain records must ensure that all entries related to a transaction are accurately recorded within 60 days of the transaction. These records must be available in electronic format and convertible into written form. According to the Income Tax Act, proper record maintenance means that the information must have been initially kept in manual or written form. Additionally, all documents related to businesses in Malaysia must be maintained and retained within the country.
All required documentation could be in the form of:
- Electronic format.
- Physical and written books of accounts, paper-based source documents, and computer printouts.
- Details of the accounting system should include codes for accounts, program and system documentation, charts, instruction manuals, and specification manuals.
It is crucial to comply with the document retention requirements in Malaysia to avoid penalties and legal issues during a tax audit. However, maintaining the necessary documents for your company can take time and effort. That’s why it’s best to seek the help of a reliable and registered accounting services firm, which can assist you in complying with the requirements and reduce your hassles. You can also use user-friendly accounting software to quickly set up a system for bookkeeping and tracking your tax payments.
Important Reminder For Companies in Malaysia
Understanding the impact of record keeping on your liability under the Income Tax Act is essential. If you have manual or written records converted to electronic versions, you must retain a copy of the original form before conversion. If your records were created in electronically readable forms, they must be easily accessible and convertible to manual or written form.
Ensure Proper Bookkeeping with Info-Tech
Businesses are encouraged to use accounting software for proper bookkeeping and stay tax compliant. This software lets companies digitally manage their day-to-day operations and transactions while fulfilling their tax compliance needs.
At Info-Tech, our accounting software comes equipped with all the necessary functions to help businesses track their stocks, generate quotations, invoices, and orders with pre-built templates, and calculate mandatory contributions such as taxes. Our accounting software can also connect with local banks and integrate with our payroll software to offer a complete solution.
If you need accounting software or would like to consult with our specialists, email [email protected] or call +603 6050 0333.