How long must a Malaysian business keep its accounting records?
Seven years is the rule under the Income Tax Act, the Companies Act and the SST laws. Here is what counts as a record, where it must be kept, and whether scanned copies are enough.
Malaysian businesses should keep accounting records for at least seven years. The Income Tax Act requires seven years from the end of the year the income relates to, the Companies Act 2016 requires seven years after each transaction, and SST-registered businesses must keep SST records for seven years. Electronic records are acceptable if they are readily accessible.
A box of faded receipts in the storeroom isn't a records system, and neither is a phone full of photos with no names. Yet when LHDN (the Inland Revenue Board of Malaysia) opens a tax audit, or a buyer asks for due diligence, what matters is whether you can produce the right document quickly. This guide explains how long Malaysian businesses must keep records (penyimpanan rekod), what counts as a record, and how to store them sensibly.
How long must I keep business records in Malaysia?
Seven years. Three separate laws set the same seven-year period, though each counts it from a slightly different starting point.
| Law | Who it applies to | Retention period |
|---|---|---|
| Income Tax Act 1967, section 82 (LHDN) | Every business with business income | 7 years from the end of the year to which the income relates |
| Companies Act 2016, section 245 (SSM) | Companies (Sdn Bhd and Bhd) | 7 years after the completion of the transactions or operations |
| Sales Tax Act 2018 and Service Tax Act 2018 (RMCD) | SST-registered businesses | 7 years |
In practice, the simplest rule is to keep everything for a financial year until at least seven full years after that financial year ends, and longer for records that support assets you still own or disputes that are still open.
Example: A Klang Valley trading company with a December year end should keep its 2025 invoices, bills, bank statements and ledgers until at least the end of 2032.
What records does LHDN require a business to keep?
LHDN expects records that let it work out your income readily. Under section 82 of the Income Tax Act, these include:
- books of account recording receipts and payments, or income and expenditure;
- invoices, vouchers, receipts and other documents needed to verify the entries in those books; and
- any other records the Director General specifies.
In everyday terms, that means:
- sales invoices, credit notes and debit notes, including validated e-invoices from MyInvois;
- supplier bills and receipts;
- bank statements and payment records;
- payroll records, EPF, SOCSO and PCB records;
- contracts, leases and loan agreements;
- your general ledger, trial balance and financial statements; and
- tax computations and the workings behind your returns.
What does the Companies Act 2016 add for Sdn Bhd companies?
Section 245 of the Companies Act 2016 requires a company, and its directors and managers, to keep accounting records that explain the company's transactions and financial position well enough for true and fair financial statements to be prepared and audited.
Three details are worth knowing:
- Entries within 60 days. The appropriate entries must be made in the records within 60 days of each transaction. Doing your bookkeeping once a year doesn't meet this.
- Seven years. Records must be kept for seven years after the completion of the transactions they relate to.
- Location. Records are kept at the registered office or another place the directors decide, and must be open to inspection by the directors.
The penalty is serious. A company and every officer who breaches section 245 commits an offence, with a fine of up to RM500,000, imprisonment of up to three years, or both.
What are the SST record-keeping rules?
If your business is registered for sales tax or service tax with the Royal Malaysian Customs Department (RMCD, or Kastam), you must keep records relating to SST for seven years. They must be kept in Malaysia, unless the Director General allows otherwise, and in Bahasa Malaysia or English.
RMCD lists a fine of up to RM50,000, imprisonment of up to three years, or both, for failing to keep records. See our guide to SST in Malaysia for the registration rules.
Can I keep records digitally instead of on paper?
Yes. LHDN and RMCD both accept records kept electronically, provided they are kept in an electronically readable form and can be readily accessed and converted into writing (printed). In practice, that means:
- scans and photos must be legible, complete and easy to find;
- file names or tags should let you pull up a document by date, supplier or invoice number;
- you need a backup, so a single laptop or phone is not enough; and
- you must still be able to open the files in seven years, so avoid formats tied to a tool you might stop paying for without an export.
Records relating to a business in Malaysia should be kept in Malaysia. If you use cloud storage or software hosted elsewhere, make sure you can produce the records promptly in Malaysia when asked, and check the position with your tax agent.
Example: A Penang café owner photographs every supplier receipt the day it arrives and attaches it to the matching bill in her accounting software. At year end her tax agent can see each expense with its evidence, and if LHDN asks about a purchase from three years ago, she can find it in seconds.
Do I need to submit my records to LHDN now?
Not all of them, but companies now submit more than the tax return. From YA 2025, companies and LLPs must submit their financial statements (audited or unaudited) and income tax computation to LHDN through the Malaysian Income Tax Reporting System (MITRS) on MyTax, under section 82B of the Income Tax Act. These are due within 30 days after the return form due date.
Everything else stays with you, ready to produce if LHDN, SSM or Customs asks. LHDN's tax audits look back over past years, so incomplete records make an audit slower and more expensive, and can leave you unable to support a deduction you were entitled to.
How can a small business make record keeping easier?
- Record transactions as they happen, not at year end. It's easier, and for companies, the 60-day rule expects it.
- Attach the document to the entry. A bill with its receipt attached in your accounting system is far easier to defend than a ledger line with the paper somewhere else.
- Reconcile your bank every month. A bank reconciliation catches missing documents while you can still get a copy from the supplier.
- Use proper double-entry books. Double-entry bookkeeping gives you a ledger, trial balance and audit trail that match your documents. Software such as HumbleBear posts double-entry entries from your invoices and bills, so the books and the documents stay linked.
- Set a destruction rule. Once a year, review records older than seven years after the year end, and keep anything still relevant, such as asset purchases, long-term contracts and open disputes.
Frequently asked questions
Do sole proprietors need to keep records for seven years too?
Yes. The seven-year rule in section 82 of the Income Tax Act applies to anyone carrying on a business, not only companies. If the sole proprietor is SST-registered, the SST seven-year rule applies as well.
Are photos of receipts acceptable to LHDN?
Electronic records are acceptable if they are readable, readily accessible and can be converted into writing. A clear, complete scan or photo that you can find and print quickly generally meets this. A blurry photo, or one you can't locate, does not help you in an audit.
Can I throw away records after seven years?
Generally yes, once seven years have passed under each law that applies to you. Keep records longer if they support assets you still own, long-term contracts, or any matter still under dispute or review.
Do I need to keep validated e-invoices?
Yes. Validated e-invoices, and the credit and debit notes linked to them, are part of your sales and purchase records. Keep them for seven years with the rest of your books, alongside the visual copies you send customers.
Can my records be in Chinese?
For SST, records must be in Bahasa Malaysia or English. For income tax and company records, keeping them in Bahasa Malaysia or English is the safest choice, because the authorities may need to examine them; check with your tax agent if you keep records in another language.
