Keeping sufficient records are mandatory required by the followings Act in Malaysia:
1. Section 82 of Income Tax Act 1967
2. Section 245 of Companies Act 2016
What are the records to be kept by company?
1. Accounting records - a cash book, a sales ledger, a purchases ledger and a general ledger
2. Supporting documents - invoices, bank statements, pay-in slips, cheque butts, receipts for payments, payroll records and copies of receipts issued should be retained.
3. Receipts issued should be serially numbered when sales of goods exceed RM150,000 or services performed exceeds RM100,000.
4. A valuation of the stock in trade or work in progress should be made at the end of each accounting period and the appropriate records maintained
5. Other documents necessary to verify entries in any books of accounts
What are the requirement under Income Tax Act 1967 and Companies Act 2016?
1. Accounting entries for each transaction should be recorded not later than 60 days after the transaction.
2. Records and books of accounts should be written in the national language or the English language.
3. The company is required to keep sufficient records for a period of 7 years.
4. All documents that relate to any income in Malaysia shall be kept and retained in Malaysia.
5. If the records and books of accounts are kept outside Malaysia, the records and books of accounts should be produced at the registered office or the business premises of the company.
What are the consequences if sufficient records are not kept?
1. Additional tax payables arise from:
i. The chargeable income of the taxpayer may be determined according to the best judgement of IRB and an assessment made accordingly.
ii. Deduction is not allowed If the taxpayer fails to provide supporting records.
2. The financial statement of the company is not reliable
i. It will affect the auditors’ opinion on financial statement and modified audit opinion will be issued according the effect of misstatement.
ii. A modified audit opinion will limit the company’s ability to borrow money from banker.
iii. The supplier might evaluate company’s creditworthiness through audited financial statement. If the company’s financial statement is not reliable, the supplier may reluctant to give longer credit terms.
3. It is an offence under the laws in Malaysia:
i. Section 119 of Income Tax Act 1967
- A fine of RM300 to RM10,000; or
- to imprisonment for a term not exceeding 12 months or to both.
ii. Section 245 (9) of Companies Act 2016
- A fine not exceeding RM500,000; or
- to imprisonment for a term not exceeding 3 years or to both.
1. Public Ruling No. 4/2000 (Revised) Keeping sufficient records (Companies & Co-operatives)
2. Public Ruling No. 5/2000 (Revised) Keeping Sufficient Records (Individuals & Partnerships)
3. Public Ruling No. 6/2000 (Revised) Keeping Sufficient Records (Persons other than Companies & Co-operatives)
4. Income Tax Act 1967
5. Companies Act 2016
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Published : 5-May-2021