The Procedure for the Filing of Income Tax Return Forms Based on Unaudited Accounts
As of 4 August 2017, Malaysia’s SSM (Suruhanjaya Syarikat Malaysia) has issued Practice Directive No. 3/2017. This directive was named Qualifying Criteria for Audit Exemption for Certain Categories of Private Companies. Under this directive, dormant companies, threshold-qualified companies and zero-revenue companies were deemed exempted from audit.
The Companies Act 2016 Section 267(2) stipulates that the Registrar has the power to exempt any private company from the need to appoint an auditor. The previous requirement dictated by Section 77A(4) of the Income Tax Act 1967 (ITA 1967) was that returns furnished by a company will be based upon the audited accounts. The audits must be conducted by a professional accountant, as outlined in subsections 174(1) and (2) of the Companies Act 1965.
Section 77A of the ITA1967 was then amended, in accordance with the Income Tax (Amendment) Act 2018. Subsection (4) mandates that the returns which are furnished by a company under this section shall be based on the financial statements which are made in accordance with the requirements stipulated by the Companies Act 2016.
Subsection 82(5) of the ITA 1967 was also amended. The original words “accounts audited by a professional accountant, together with a report made by that accountant which shall contain, in so far as they are relevant, the matters set out in subsections 174(1) and (2) of the Companies Act 1965” were substituted with the words “financial statements made in accordance with.”