Question 1

What do I need to register a Sdn Bhd in Malaysia, and how much does it cost?

Accepted Answer

You need at least one director who is ordinarily resident in Malaysia, a minimum of one shareholder, a registered business address, and a licensed company secretary appointed within 30 days of incorporation. Registration is done through SSM's MyCoID system. Government registration fees are relatively low, but total setup cost (including company secretary onboarding, name search, and constitution) typically runs into a few hundred to a few thousand ringgit depending on the service provider.

Question 2

Sdn Bhd vs Enterprise (sole proprietor/partnership) — which should I choose?

Accepted Answer

A Sdn Bhd is a separate legal entity with limited liability, which protects your personal assets and is generally preferred by banks, investors, and larger clients. An Enterprise is cheaper and faster to set up but has unlimited personal liability and is taxed at individual income tax rates rather than corporate rates. Businesses planning to scale, hire, or seek financing usually outgrow Enterprise structure quickly.

Question 3

When does a newly registered company need to start filing taxes?

Accepted Answer

A company must determine its financial year end upon incorporation and submit its first estimate of tax payable (Form CP204) within 3 months of starting operations, unless exempted as a new SME. The actual tax return (Form C) is generally due within 7 months after the financial year end.

Question 4

Why do I need to appoint a Company Secretary, and what do they do?

Accepted Answer

Under the Companies Act 2016, every Sdn Bhd must appoint a licensed company secretary within 30 days of incorporation. They are responsible for statutory compliance — lodging annual returns, maintaining statutory registers, recording board resolutions, and advising directors on governance obligations. Operating without one, or missing filings, can expose the company and its directors to penalties.

Question 5

What happens if I miss the SSM Annual Return filing deadline?

Accepted Answer

Companies must lodge their Annual Return with SSM within 30 days of the anniversary of incorporation each year. Late lodgment attracts compound penalties from SSM, and persistent non-compliance can lead to the company being struck off the register or directors being disqualified. Keeping this filing current is also required to keep the company in good standing for banking and tender purposes.

Question 6

What is the corporate tax rate for SMEs in Malaysia?

Accepted Answer

For a resident SME (paid-up ordinary share capital of RM2.5 million or less, and annual gross business income not exceeding RM50 million), the tiered rate is 15% on the first RM150,000 of chargeable income, 17% on the next RM150,001–RM600,000, and 24% on chargeable income above RM600,000. Non-SME companies are taxed at a flat 24%.

Question 7

When is the personal income tax filing deadline in Malaysia?

Accepted Answer

For individuals without business income (Form BE), the deadline is generally 30 April of the following year. For individuals with business income (Form B), the deadline is generally 30 June. E-filing usually gets a 15-day grace period, but this should always be confirmed against the current year's LHDN announcement.

Question 8

What is CP204, and does a new company need to submit it?

Accepted Answer

CP204 is the estimated tax payable form that companies must submit to LHDN and pay in monthly instalments throughout the year. New SMEs are generally exempted from submitting CP204 and paying instalments for the first 2 years of operation, but this exemption has specific qualifying conditions and should be verified against your company's incorporation date and SME status.

Question 9

What happens if my CP204 instalments underestimate my actual tax payable?

Accepted Answer

If the total tax paid via CP204 instalments falls below 85% of the actual tax charged for the year, LHDN may impose a penalty (commonly cited around 10%) on the shortfall. Businesses with fast-growing profits should revise their CP204 estimate — typically allowed in the 6th and/or 9th month of the basis period — to avoid this penalty.

Question 10

Is e-Invoicing mandatory for my business, and when?

Accepted Answer

e-Invoicing under LHDN's MyInvois system has been rolled out in phases by annual turnover: businesses above RM100 million since August 2024, RM25 million–RM100 million and RM5 million–RM25 million in earlier 2025 phases, and businesses with turnover between RM1 million and RM5 million from 1 January 2026. Businesses with annual turnover below RM1 million are currently exempt from mandatory e-Invoicing (this exemption threshold was raised from RM500,000). From 1 January 2026, any single transaction above RM10,000 must be issued as an individual e-Invoice — consolidated e-Invoices are no longer allowed for those transactions. Because thresholds and relaxation periods have been revised more than once, businesses should confirm their exact phase and relaxation-period end date against the latest LHDN announcement.

Question 11

At what revenue does my business need to register for SST?

Accepted Answer

The general registration threshold is RM500,000 in taxable turnover over the preceding 12 months, for both manufacturers of taxable goods and providers of most taxable services (including accounting, legal, engineering, and consultancy services). Certain expanded categories introduced from July 2025 — such as commercial rental/leasing and some financial services — use a RM1,000,000 threshold instead, and private healthcare for non-Malaysians uses RM1,500,000. Always check which category your service falls under, as thresholds are not uniform across sectors.

Question 12

Which services are subject to SST, and at what rate?

Accepted Answer

Most taxable services (including professional services like accounting and consultancy) are charged at 8% service tax. A 6% rate is retained for specific categories such as food & beverage, telecommunications, parking, logistics, and private healthcare for non-Malaysians. Sales tax on goods is charged at 5% or 10% depending on the item's classification, with some goods exempt entirely.

Question 13

How often do I need to file SST returns?

Accepted Answer

Domestic SST-registered businesses file bi-monthly using Form SST-02, with the return and payment due by the last day of the month following each 2-month taxable period. Foreign Registered Persons under the digital services regime file quarterly instead.

Question 14

Is accounting/consultancy service taxable under SST?

Accepted Answer

Yes. Professional services including accounting, tax advisory, legal, and engineering consultancy fall under the taxable services categories and are subject to 8% service tax once the provider's taxable turnover exceeds RM500,000 in the preceding 12 months. Note that for professional service firms, only the actual fee component is generally taxable — reimbursed out-of-pocket disbursements are typically excluded, though this should be confirmed case by case.

Question 15

What's the penalty for registering late or not registering for SST?

Accepted Answer

Businesses that fail to register once they cross the applicable threshold are liable for compound penalties and, in serious cases, prosecution under the Service Tax Act 2018, with maximum fines that can run into hundreds of thousands of ringgit. RMCD has periodically offered temporary penalty waivers during transition periods for the 2025 SST expansion, but standard enforcement (including prosecution risk) applies once any grace period ends.

Question 16

Does my Sdn Bhd need to be audited every year?

Accepted Answer

Most private companies in Malaysia are required to have their financial statements audited annually under the Companies Act 2016. However, "dormant" companies and certain qualifying small companies (based on criteria such as revenue, total assets, and number of employees thresholds set by SSM) may qualify for audit exemption. Eligibility should be reassessed each financial year, as crossing any one threshold can remove the exemption.

Question 17

What's the difference between an audit and tax filing?

Accepted Answer

An audit is an independent examination of your company's financial statements to confirm they present a true and fair view, required under the Companies Act for most companies. Tax filing (Form C submission to LHDN) is a separate obligation to declare and pay corporate income tax based on your accounts. Audited accounts are often used as the basis for tax computation, but the two are distinct compliance requirements administered by different bodies (SSM/auditors vs LHDN).

Question 18

How much does hiring an accounting firm typically cost in Malaysia?

Accepted Answer

Fees vary widely based on company size, transaction volume, and scope (bookkeeping only vs bookkeeping + audit + tax + secretarial). Small dormant or low-activity Sdn Bhd companies may pay a modest monthly or annual retainer, while active SMEs with higher transaction volumes, payroll, and SST obligations pay proportionally more. It's best to request a scoped quote based on your actual monthly transaction count and whether audit/tax/secretarial services are bundled.

Question 19

How long do I need to keep my company's accounting records?

Accepted Answer

Under both the Companies Act 2016 and Income Tax Act 1967, companies must retain accounting records and supporting documents for a minimum of 7 years from the end of the financial year (or year of assessment) to which they relate. This applies to invoices, receipts, bank statements, and other source documents, not just the final financial statements.

Question 20

What accounting software or systems should a Malaysian SME use?

Accepted Answer

The right choice depends on transaction volume, industry, and whether you're within scope for e-Invoicing. At minimum, your system should support SST-compliant invoicing, integrate or be adaptable to LHDN's MyInvois e-Invoicing requirements if your turnover exceeds RM1 million, and produce records in a format your appointed auditor and tax agent can work with directly.

Question 21

What are the EPF contribution rates for employers and employees?

Accepted Answer

Malaysian employees under 60 generally contribute 11% of monthly wages. Employers contribute 13% for employees earning RM5,000 or below per month, and 12% for those earning above RM5,000. There is no upper wage cap for EPF — contributions apply to total monthly wages. Note: since October 2025, EPF contributions became mandatory for foreign workers as well, starting at a lower rate (around 2% each side) and phasing upward — confirm the current schedule before running foreign-worker payroll.

Question 22

What are the SOCSO and EIS contribution rates?

Accepted Answer

SOCSO (for the Employment Injury and Invalidity Schemes) uses wage-band tables rather than a flat percentage, with combined employer and employee contributions averaging roughly 1.75%–2% of insured wages, split with the employer bearing the larger share. EIS (Employment Insurance System) is split equally at approximately 0.2% each for employer and employee. Both SOCSO and EIS apply up to a wage ceiling of RM6,000/month (raised from RM4,000 in October 2024).

Question 23

How is PCB (Potongan Cukai Bulanan / Monthly Tax Deduction) calculated?

Accepted Answer

PCB is calculated based on the employee's monthly remuneration, applicable tax reliefs (personal relief, EPF relief up to a statutory cap, spouse/child relief, etc.), and the current progressive individual tax rate schedule, using LHDN's official PCB calculation method or the e-PCB/e-Data PCB system. Employers are required to deduct and remit PCB monthly by the 15th of the following month, and incorrect PCB calculation is a common source of penalties during LHDN audits.

Question 24

What are my obligations when hiring foreign workers or expatriates?

Accepted Answer

Employers must ensure the correct work pass/employment pass is in place, withhold PCB on the foreign employee's Malaysian-sourced income, and — as of the October 2025 rule change — also make EPF contributions for eligible foreign workers (a shift from the previous EPF-exempt treatment). SOCSO's Employment Injury Scheme also applies to foreign workers. Non-compliance on any of these fronts can affect both the employer's compliance standing and the employee's pass renewal.

Question 25

Is HRDF (HRD Corp levy) compulsory for my company?

Accepted Answer

HRDF/HRD Corp levy is mandatory for employers in specified sectors with 10 or more Malaysian employees (and optional registration is available for smaller employers in some sectors). The levy is generally 1% of monthly wages, paid solely by the employer, and funds employee training claimable back through HRD Corp programmes.

Question 26

How do I close down a Sdn Bhd in Malaysia?

Accepted Answer

There are two main routes: Striking Off (via SSM Section 550, suitable for dormant companies with no assets/liabilities and no ongoing business) or Winding Up (a more formal liquidation process, often used when there are outstanding debts, assets to distribute, or disputes among shareholders). Striking off is faster and cheaper but is only appropriate if the company genuinely has no operations, debts, or pending tax matters — LHDN clearance is typically required before SSM approves the strike-off.

Question 27

Does a dormant company still need to file tax returns?

Accepted Answer

Yes. Even a dormant company with no income or transactions is generally still required to submit its annual Form C to LHDN and its Annual Return to SSM, unless and until it is formally struck off or dissolved. "Dormant" affects audit exemption eligibility, not the filing obligation itself.

Question 28

Can a foreigner register and own 100% of a company in Malaysia?

Accepted Answer

Yes, in most sectors a foreigner can own 100% of a Malaysian Sdn Bhd, subject to minimum paid-up capital requirements that can be higher for foreign-owned entities and any sector-specific foreign equity restrictions (e.g., certain licensed or regulated industries). At least one director must still be ordinarily resident in Malaysia.

Question 29

What happens if I don't file my company's taxes or Annual Return at all?

Accepted Answer

Prolonged non-compliance can lead to compound penalties from both LHDN and SSM, director disqualification, and eventually SSM striking the company off the register involuntarily — which can create complications if the company later needs to reactivate, apply for financing, or if directors want to incorporate new entities. It's generally far cheaper to formally close a company you no longer need than to let it lapse into non-compliance.

Question 30

My company hasn't started operating yet — do I still have compliance obligations?

Accepted Answer

Yes. From the date of incorporation, the company must appoint a company secretary, maintain statutory registers, and file Annual Returns with SSM regardless of trading activity. Tax filing obligations to LHDN also apply from the point the company is required to determine its financial year end, even before revenue is generated — pre-operational/dormant status affects some exemptions (like CP204 and possibly audit) but does not remove the basic filing duty.

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