Tax Record-Keeping Requirements in Malaysia

By Axecta Management Services, Kuala Lumpur · Last verified: 29 October 2026

The short rule, and why it matters

Most tax trouble in Malaysia does not come from clever planning that went wrong. It comes from an expense that cannot be proved. A deduction you cannot support with a document is a deduction LHDN can disallow, and an income figure you cannot reconcile to bank records invites questions. Record keeping is the boring foundation under every return, and it is covered by law in more than one place: the Income Tax Act, the Companies Act 2016 and, for registered businesses, the SST rules.

What LHDN says about keeping records

LHDN’s individual FAQ states that records must be kept for seven years, starting from the year in which the return form is submitted, and that supporting documents do not need to be submitted with the return. LHDN’s company tax page says a company return is furnished without attached documents, except dividend vouchers in repayment cases, and LHDN’s taxpayer responsibilities page lists “keeping records for audit purposes” among the company’s duties. So the system is self-assessment: you file without attachments, and LHDN may ask for the documents later.

Counting the seven years

The wording “starting from the year in which the return form is submitted” leaves room for argument about the exact end date. A cautious way to count is to treat the year of submission as year one and keep the records until at least the end of the seventh year after that. The example below uses that conservative approach.

This table is an illustration of one cautious reading, not an LHDN-stated date. If you are unsure, keep longer, and ask LHDN or your adviser about any record that relates to an asset still in use or a loss carried forward, because those records support figures in later years.

What the other laws require

Companies Act 2016

For a Sdn Bhd the Companies Act 2016.pdf) is explicit. Section 245 says a company, its directors and managers must:

• cause accounting and other records to be kept that sufficiently explain the company’s transactions and financial position, and allow true and fair profit and loss accounts and balance sheets to be prepared;
• keep them in a manner that enables them to be conveniently and properly audited;
• make appropriate entries within sixty days of completing the transaction;
• retain the records for seven years after the completion of the transactions or operations to which the entries relate; and
• keep them at the registered office or another place the directors think fit, open to inspection by the directors at all times.

Note the different trigger. The tax rule counts from the filing year, while the Companies Act counts from completion of the transaction. Where both apply, follow whichever keeps the record longer. The Act’s definition of accounting records includes invoices, receipts, orders for payment, cheques, vouchers and other documents of prime entry. Directors carry the duty personally, which is why record keeping belongs on the board’s agenda. See what to send your accountant every month.

SST records

Businesses registered for SST must keep their records as well. Royal Malaysian Customs requires records to be kept for 7 years, and the SST-02 return is bimonthly, due by the last day of the month after the taxable period, with nil returns required. Check the MySST portal for the record-keeping guidance that applies to your registration. See how to file the SST return on MySST.

E-invoice records

Where e-invoicing applies, validated e-invoices sit on the MyInvois system as well as in your own records, but the system holding a copy does not replace your duty to keep yours. The rollout ran from 1 August 2024 for businesses above RM100 million to 1 January 2026 for those up to RM5 million, with businesses below RM3,000,000 exempt. See preparing accounting records for e-invoice.

Penalties for poor records

LHDN’s offences, fines and penalties page lists section 119A for failing to keep proper records and documents, with a fine of RM300 to RM10,000 and/or imprisonment up to one year. It also lists section 113(1) for not reporting actual income or giving incorrect information: a fine of RM1,000 to RM10,000 plus 200% of the tax undercharged. Poor records are not the same as an incorrect return, but they make it hard to defend a figure. The practical penalty is usually the disallowed deduction plus the time it takes to rebuild the evidence.

What to keep

Step by step: setting up a record system

1. Decide the owner. One person is responsible for filing, even if several people supply documents.
2. Choose the format. Paper, scanned or digital-only. Whatever you pick must be complete, legible and retrievable. Confirm with LHDN or your adviser if you plan to destroy paper originals after scanning.
3. Name files consistently: date, party, amount, document type.
4. Create the folder tree: year, then category, then month.
5. Capture documents within days, not at year end. The sixty day entry rule in section 245(2) is a useful benchmark for companies.
6. Reconcile bank statements monthly so gaps show early.
7. Back up to a second location and limit access.
8. Write a retention note saying what you keep, where, and until when.
9. Review once a year when the return is filed, and archive that year’s folder.

Illustrative scenario

This is an illustration. A Sdn Bhd claims RM18,000 for a marketing campaign, supported by a bank transfer but no invoice, because the freelancer was paid by messaging app. If LHDN asks, the company has proof that money left the account but not what it was for, who received it or whether it was a business expense. The company can ask the freelancer to issue an invoice now, but the invoice should carry the real transaction date and a note that it is a later copy, not a backdated original. The better system would have a rule that nothing is paid without an invoice or a signed claim form, plus a monthly check that every bank line has a document. The cost of that discipline is a few minutes a week.

Common mistakes

• Keeping records only until the return is filed. Retention runs for years after.
• Personal and business spending in one account.
• Relying on a supplier’s portal or an accountant’s system as your only copy.
• Missing receipts for cash purchases. Write a short claim form.
• Photos of faded thermal receipts. Scan or photograph them early.
• Creating documents after the fact. Never backdate.
• Letting a departing employee or bookkeeper take the files.
• Not keeping the working papers behind the tax computation.

When records are lost

If documents are lost or damaged, rebuild them from bank statements, supplier copies, system exports and customer confirmations, and note what could not be recovered. Do not manufacture documents. Tell your accountant early so the affected items can be treated properly, and keep a short memo of what happened and what you did about it. See accounting mistakes that create tax problems.

How Axecta helps

Axecta’s accounting team sets up a document routine that fits how you actually work, whether that is a shared folder, a cloud accounting package or a monthly pack to us. We reconcile the bank each month, flag missing documents while they can still be obtained, and keep the tax computation and filed returns together. See our outsourced accounting services and outsourced accounting in Malaysia.

Next steps

1. Pick the person responsible and the storage location.
2. Set the folder structure and naming rule.
3. Reconcile the last three months and chase any missing documents.
4. Write the one-page retention note.
5. Schedule a yearly archive when you file.

Frequently asked questions