General Record-Keeping Requirements for Businesses in Malaysia

General Record-Keeping Requirements for Businesses in Malaysia

Why Record-Keeping Matters ?
Record-keeping is not merely an administrative exercise. In Malaysia, it is both a legal obligation and an important part of good business governance. Proper records support accurate tax reporting, reliable financial statements, audit readiness, internal control, dispute resolution and informed management decision-making. Weak record-keeping, on the other hand, can lead to tax exposure, compliance failures, audit delays, unsupported claims and avoidable penalties. Businesses should therefore ensure that their records are complete, up to date, organised and readily accessible.

Income Tax Act 1967, General Tax Record-Keeping Requirement
From a direct tax perspective, section 82 of the Income Tax Act 1967 requires every person carrying on a business to keep and retain in safe custody suLicient records for seven years from the end of the year to which the business income relates. These records must be suLicient to enable the Director General of Inland Revenue or an authorised officer to readily ascertain the income or adjusted loss of the business.
This provision also requires businesses to maintain proper supporting documentation and, where applicable, to issue serially numbered receipts and retain duplicates. Importantly, the law further requires that entries relating to transactions be made within sixty days. This means that record-keeping must be timely and systematic, rather than reconstructed long after the event.

Companies Act 2016, Accounting Records and Corporate Governance
For companies, the Companies Act 2016 imposes a broader obligation beyond tax compliance alone. Section 245 requires the company, its directors and managers to keep accounting and other records that suLiciently explain the company’s transactions and financial position. These records must be adequate to enable true and fair financial statements to be prepared and to allow those statements to be conveniently and properly audited.
The Companies Act also requires such accounting records to be entered within sixty days of the completion of the relevant transactions. These records are generally required to be retained for seven years after the completion of the transactions or operations to which they relate. This reinforces the principle that companies must maintain both accuracy and timeliness in their accounting records.

Companies Act 2016, Statutory Records and Company Documents
In addition to accounting records, the Companies Act 2016 also requires companies to maintain statutory and governance-related documents. These include, among others, registers, minutes of members’ meetings, resolutions, minutes of board and board committee meetings, financial statements and other statutory records required under the Act.
This is significant because proper corporate record-keeping extends beyond financial transactions. A company should also be able to demonstrate how decisions were authorised, what resolutions were passed, and whether governance processes were properly followed. Good corporate documentation is therefore an important part of compliance, accountability and director responsibility.

Sales Tax Act 2018 and Service Tax Act 2018, SST Record Retention
For businesses registered under SST, there are separate statutory obligations under the Sales Tax Act 2018 and the Service Tax Act 2018. These laws require taxable persons to keep complete and true records of all transactions aLecting their tax liability. This includes invoices, receipts, debit notes, credit notes and any other supporting documents relevant to sales tax or service tax reporting.
Such records must generally be retained for seven years, kept in either Bahasa Malaysia or English, and maintained in Malaysia unless otherwise approved by the Director General. The records must also be kept in a manner that enables verification of the business’s SST position.

Electronic Records and Digital Storage
Modern business practice often involves storing records electronically. Malaysian law generally recognises electronic record-keeping, provided that the records remain accessible, readable and capable of being reproduced in writing when required by the authorities.
In practice, businesses that digitise records should ensure that scanned documents are properly indexed, securely stored and backed up. Electronic records should not simply be kept in an ad hoc manner across emails, messaging platforms or disconnected folders. A digital record-keeping system should still allow the business to retrieve documents eLiciently by transaction date, customer, supplier, amount or document type.

What Records Should Businesses Keep
As a matter of practical compliance, businesses should maintain a full trail of source documents and supporting records. This would normally include sales invoices, purchase invoices, receipts, payment vouchers, delivery orders, goods received notes, bank statements, contracts, payroll records, tax workings, inventory records, fixed asset registers, debit and credit notes, and correspondence relevant to material transactions.
For companies, this should also include statutory registers, directors’ resolutions, board papers, meeting minutes and documents supporting major decisions. The legal expectation is not satisfied merely because some records exist. Rather, the records should be adequate to explain each transaction, support the tax treatment adopted and substantiate the figures reported in the financial statements and tax returns.

Good Governance and Internal Control Practices
From a governance perspective, proper record-keeping supports transparency, accountability and internal control. Records should be prepared promptly, reviewed where appropriate, approved at the correct level and stored in an orderly manner. Responsibilities for maintaining finance, payroll, tax and statutory records should also be clearly assigned.
Businesses should regularly perform reconciliations such as bank reconciliations, receivables ageing, payables listings, stock counts and fixed asset schedule reviews. These practices reduce the risk of omitted income, duplicate payments, unsupported deductions, fraud and management disputes. They also make year-end closing, audit processes, due diligence exercises and tax investigations significantly more manageable.

Retention Periods and Practical Risk Management
Although the general statutory retention period is seven years, businesses should not assume that records may always be destroyed immediately after the seven-year period. In cases involving tax audits, litigation, contractual disputes, employment claims or unresolved matters, it may be prudent to retain records for a longer period based on the business’s risk exposure.
Accordingly, businesses should adopt a practical document retention policy, train staff on the records that must be kept, and periodically review whether their document management practices remain fit for purpose. In many cases, compliance issues arise not because records never existed, but because they were incomplete, badly organised or could not be produced promptly when requested.

Conclusion
In summary, Malaysian businesses should view record-keeping as a fundamental compliance and governance responsibility. The law requires records to be sufficient, timely, accessible and retained for the required period. Good record-keeping also supports management oversight, strengthens audit and tax readiness, and protects the business in the event of regulatory review or dispute.
Businesses that invest in proper record retention systems, clear approval processes and organised supporting documentation are generally better positioned to operate efficiently, meet their legal obligations and maintain stakeholder confidence.

Key Legal References
Income Tax Act 1967, section 82
Companies Act 2016, sections 47 and 245
Sales Tax Act 2018, section 24
Service Tax Act 2018, section 24