Compliance duties of a Malaysia company

What filing requirements must my company fulfill to remain compliant in Malaysia?

Now that you’ve incorporated a private limited company, how do you stay in compliance with Malaysia’s business laws or regulations?
According to the Malaysia Companies Act, companies must comply with the annual filing requirements to the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Malaysia (IRAS). Please note that annual filings are mandatory for both active and dormant Malaysia companies.

Why a Malaysia company should stay compliant

All Malaysia private limited companies must stay in compliance with the Companies Act and other statutory requirements to maintain a good track record for brand equity as well as good corporate governance.

By complying with regulations, your company avoids not only penalties or legal repercussions, but unnecessary damages to your brand name.

Financial Year End

Each company in Malaysia has to determine its Financial Year End (FYE) or the completion of an accounting period. A company’s FYE does not necessarily need to fall on December 31. Most companies use either the end of the calendar year (December 31) or the end of any of the quarter (March 31, June 30, or September 30) as their fiscal year end date.

Did You Know?

It is best to keep the company’s FYE within 365 days in order to enjoy the Zero Tax Exemption for new start-up companies (full tax exemption on the first $100,000 of normal chargeable income for its first three consecutive YA).

Appointment of Auditors

All Malaysia companies must appoint an auditor within 3 months from the date of incorporation, unless exempted from audit requirements. To be exempted from audit requirements, a company must satisfy all of the following criteria:

• The Company does not have any corporate shareholder;
• Total number of individual shareholders must be less than 20;
• Annual turnover of the company must be less than S$5 million.

Company Registration Number Disclosure

The Companies Act requires every company to have the Company registration number, known as Unique Entity Number (UEN), on all business letters, statements of account, invoices, official notices, publications, etc.

Notification of Changes

It is the company’s responsibility to update the Registrar (ACRA) of any changes in the company pertaining to the company’s shareholders, share capital and officers within the stipulated time. Failure to do so will result in penalties.

Business Licenses and Permits

Some business activities in Malaysia are subject to regulation by government authorities. Even if your business firm has been registered you cannot begin operation unless you have the necessary approval or license from the relevant government authorities.

Registered Office Hours

All companies must have a registered office address in Malaysia and the office must be opened to public for minimum of three hours per day during normal business hours on weekdays.

Central Registration (CR) Number

If your business activities involve the import and export or trans-shipment in and out of Malaysia, your company will have to register with the Malaysia Customs and obtain a CR Number.

Malaysia Goods and Services Tax Registration

Goods and Services Tax (GST) is a tax on the supply of goods and services in Malaysia and on the import of goods into Malaysia. Goods exported from Malaysia and international services provided from Malaysia are exempt from GST. The current GST rate is 7%.

All Malaysia companies must register for GST if their annual taxable revenue is more than S$1 million, or currently making taxable supplies and the annual taxable revenue is expected to be more than S$1 million. The business must register for GST within thirty days from the time it is deemed liable.

You may also choose to register for GST voluntarily. Approval for voluntary registration is at the discretion of the Comptroller in IRAS. Once approval is given, you must remain registered for at least two years.

Registration with Malaysia Central Provident Fund (CPF) & SDF

The Central Provident Fund or CPF is a compulsory pension fund scheme in which the employer and employee contribute a percentage of the monthly salary to the fund. CPF contribution by the employer is mandatory for all local employees who are Malaysia citizens or Malaysia permanent residents earning more than S$50 a month. The maximum CPF contribution rate for employer and employee is 16% and 20% respectively and can be lower depending on certain factors such as employee age, permanent resident status, etc.

All work passes and employment pass holders are exempt from CPF contributions.

However, the employer (company) is required to contribute a fee to the skills development fund (SDF). SDF contribution is payable by employers for all employees up to the first $4,500 of gross monthly remuneration** at the rate of 0.25% or $2, whichever is higher.