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Importance of Bank Reconciliation

Importance of Bank Reconciliation

Bank reconciliation is often viewed as a tedious accounting chore. In reality, it is the “financial pulse check” of any business. It involves comparing your internal records (general ledger cash balance) with the bank statement balance to ensure both records agree.

In the context of Malaysia’s shift toward digital transparency and e-Invoicing compliance, maintaining accurate bank reconciliation is no longer optional—it is a critical component of strong internal control and statutory compliance.

What is Bank Reconciliation?

Bank reconciliation is the process of explaining the differences between the cash balance recorded in a company’s accounting system and the cash balance shown on the bank statement. Due to timing differences and occasional errors, these balances rarely match at first glance.

Common “Mind the Gap” Items:

Deposits in Transit
Cash received and recorded in your books but not yet processed by the bank.
Outstanding Cheques
Payments issued by your company that have not yet been cleared by the bank.
Bank Charges / Interest
Fees deducted or interest credited by the bank that have not yet been recorded in your books.
Errors
Data entry mistakes such as duplicate entries, incorrect amounts, or posting to the wrong account—by either the bookkeeper or the bank.

Why Is It Important?

✅ Detection of Errors and Omissions
Even with automated accounting systems, human error is unavoidable. Bank reconciliation helps identify:

Transposition Errors
Recording RM540 as RM450.
Missing Entries
Failing to record direct debits, standing instructions, or bank charges.

✅ Fraud Prevention & Financial Security
Regular reconciliation is one of the most effective controls against unauthorized transactions.

Internal Fraud
Detecting irregularities before funds are misappropriated.
External Fraud
Identifying unauthorized withdrawals or altered cheques in time to dispute them with the bank.

✅ Accurate Cash Flow Management
You cannot manage what you do not measure accurately. Relying solely on your bank app balance can be misleading because it does not reflect outstanding payments.

Avoid Overdrafts
Prevents spending funds that are already committed.
Reliable Financial Reporting
Provides a true and fair view of liquidity for payroll, supplier payments, and operational planning.

The Fundamental Formula

The objective of bank reconciliation is to satisfy the following equation:
Bank Balance+Deposits in Transit−Outstanding Checks=Adjusted Cash Balance
When the adjusted Cash Balance matches the adjusted Book Balance, the reconciliation is complete.

Conclusion

Bank reconciliation serves as the bridge between internal accounting records and external financial reality. For businesses in Malaysia—where compliance with LHDN requirements and audit standards demands high precision—regular reconciliation ensures financial statements remain credible and cash flow remains protected.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Director Fee vs Director Remuneration in Malaysia

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Director Fee vs Director Remuneration in Malaysia.

In Sdn Bhd, directors may receive payment from the company. However, payments to directors are generally separated into two categories: director fees and director remuneration. Although both are paid to a director, they are not the same in purpose, approval process, and payroll treatment.

1) Director Fee

Director's fee refers to payment made to a person for acting as a director, meaning for their duties as part of the Board of Directors.

This includes:

· Attending board meetings
· Reviewing company matters and giving approvals
· Providing oversight on management decisions, and participating in strategic planning

Key characteristics of director fees
· Usually paid to non-executive directors (directors who are not employed by the company)
· Normally paid monthly, quarterly, or annually
· Required shareholders' approval at the general meeting

Payroll & statutory contribution
Director fees are usually:
· Taxable to the director
· Subject to PCB (monthly tax deduction) where applicable
· Not subject to EPF/SOCSO/EIS, because it is not an employment salary

2) Director Remuneration

Director remuneration is a broader term and usually refers to payments made to a director for working in the company, similar to a normal employee. This is common when the director is also a manager or runs the business daily.

This includes:
· Monthly salary
· Bonus / incentive
· Allowances (e.g., petrol, mobile, entertainment)
· Benefits-in-kind (e.g., company car, accommodation)

Key characteristics of director remuneration
· Usually paid to executive directors
· Paid based on an employment contract or management agreement
· Treated like normal payroll because the director is performing operational duties

Payroll & statutory contribution
Director remuneration is usually:
· Taxable as employment income
· Subject to PCB
· Usually subject to EPF + SOCSO + EIS, because it is treated as salary/wages

Conclusion

In summary, director's fee is for serving as a director on the board, while director remuneration is for directors who also work in the company as executives or employees. For an Sdn Bhd, both can be paid, but they should be clearly separated and properly documented for compliance and payroll purposes.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

KTP 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Common Accounting Mistakes

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COMMON ACCOUNTING MISTAKES

Many small businesses focus heavily on sales and operations but often overlook proper accounting practices. These mistakes may seem small at first, but they can lead to serious financial problems, cash flow issues, and tax penalties in the long run. Below are some of the most common accounting mistakes small businesses make—and why they should be avoided.

1. Mixing Personal and Business Expenses

One of the biggest mistakes is using the same bank account for both personal and business expenses. This makes it difficult to track actual business costs and can confuse audits or tax filing. Separating personal and business finances helps maintain accurate records and protects the business owner legally and financially.

Example: Paying personal groceries or family expenses using the company bank account, making it hard to identify actual business costs during audit or tax filing.

2. Poor Record Keeping

Failing to keep proper receipts, invoices, and payment records can lead to missing expenses and inaccurate financial statements. Without clear documentation, businesses may also lose the ability to claim tax deductions. Good record-keeping ensures transparency and simplifies accounting and auditing processes.

Example: Losing supplier invoices or not keeping receipts, resulting in expenses not being recorded and tax deductions being missed.

3. Not Tracking Cash Flow Properly

Many small businesses focus only on profit and ignore cash flow. A business can be profitable on paper but still face cash shortages if inflows and outflows are not monitored. Regular cash flow tracking helps businesses meet obligations such as salaries, rent, and supplier payments.

Example: Showing profit in the accounts but not having enough cash to pay salaries or rent because customer payments are delayed.

4. Incorrect Expense Classification

Classifying expenses incorrectly—such as recording capital expenditure as revenue expenditure—can distort financial results. This leads to inaccurate profit figures and may cause tax reporting issues. Proper classification ensures financial statements reflect the true financial position of the business.

Example: Recording the purchase of office equipment as a normal expense instead of capitalizing it, causing profit to appear lower than it should be.

5. Missing Tax Deadlines

Late tax submissions or payments can result in penalties and interest charges. Small businesses often overlook deadlines for income tax, withholding tax, or other statutory payments. Staying organized and setting reminders can help avoid unnecessary costs.

Example: Late submission of income tax or withholding tax leading to penalties and interest charges.

6. Not Reconciling Bank Statements

Ignoring bank reconciliations may result in undetected errors, duplicate payments, or fraud. Regular reconciliation ensures that accounting records match bank records and helps identify discrepancies early.

Example: Duplicate payments to suppliers or bank charges not recorded because bank statements are never reconciled.

7. Trying to Do Everything Without Professional Help

Some small business owners attempt to manage accounting without sufficient knowledge. While this may save money initially, mistakes can be costly later. Seeking advice from an accountant ensures compliance and provides valuable financial insights.

Example: Preparing accounts without proper accounting knowledge, resulting in errors that need costly corrections later.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

KTP 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Directors' Obligationsd After Company Incorporation

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Directors’ Obligations After Company Incorporation
1. Registered Office and Business Address
📌 Registered Office

The company must establish and maintain a registered office to receive notices and official documents from SSM.
Any change of the registered office address must be notified to SSM within 14 days.
The company name and company registration number must be displayed at the registered office and on all official documents.

📌 Business Address

The business address is the place where the company conducts its actual business activities.
Any change to the business address must be updated and notified to SSM in a timely manner.

2. Appointment of Auditor

The directors must appoint the Auditor after the company is incorporated.
The auditor is responsible for examining the company’s financial statements and expressing an opinion on whether they give a true and fair view of the company’s financial position.
Unless the company qualifies for and is granted a specific exemption, a private limited company is generally required to appoint an auditor.

3. Opening of Company Bank Account

After incorporation, the company should open a company bank account to conduct business transactions and meet tax obligations.
Documents usually required to open a bank account include:
- Company incorporation documents
- Directors’ resolution
- Directors’ IC / passport

4. Financial Statements and Annual Compliance
📌Preparation of Financial Statements

The company must prepare its first set of financial statements within 18 months from the date of incorporation.
For subsequent financial years, financial statements must be prepared within 6 months after the end of each financial year.

📌Submission to SSM

The company secretary shall submit the following to SSM:
- Audited financial statements
- Annual Return
The Annual Return must be submitted within 30 days from the anniversary date of the company’s incorporation.

5. Business Licences and Permits (If Applicable)

If the company operates in regulated industries (e.g. food and beverage, education, manufacturing, financial services), the directors must apply for and obtain the relevant business licences, permits, or regulatory approvals before commencing operations.

6. Ongoing Compliance Responsibilities of Directors
📌Notification of Changes to SSM

Any changes to the following must be notified to SSM within the prescribed time:
- Directors or company secretary
- Registered office address
- Share capital or shareholding structure
- Update of BO information if any changes

📝Compliance with the Companies Act and SSM Requirements

Directors are responsible for ensuring that the company operates in compliance with the Companies Act 2016 and related regulations, and for maintaining good corporate governance.

From E-Stamping to MyTax: Challenges for Company Secretary Firms

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From E-Stamping to MyTax: Challenges for Company Secretary Firms

Starting from 1 January 2026, Malaysia’s stamp duty process will move from the e-Stamping system to the MyTax platform. As part of this transition, the existing e-stamping system will be closed. While this change is meant to improve tax administration, it also brings several challenges for company secretary firms.

1. Increased administrative workload and operating costs

Under MyTax, secretarial firms will likely need approval from each client to act on their behalf. This means more forms, more documents, and more follow-ups with directors and shareholders. This can be challenging, especially for clients unfamiliar with online systems. More time will be spent on coordinating with clients, solving system issues, and performing additional checks. This reduces efficiency and may increase operating costs.

2. Longer processing time

At the beginning, staff will need time to learn the new system, and technical problems or system congestion may also happen. This can delay the stamping of documents such as share transfer forms, agreements, and etc, which may slow down company matters.

3. Higher compliance and professional risk

MyTax is directly linked to LHDN’s tax records; any errors or late submission may result in penalties. Even if caused by system issues or client delays, this issue will indirectly increase the firm’s risk and responsibility.

4. Dependence on clients’ MyTax accounts

Secretarial firms rely on clients to access their MyTax accounts. If clients forget their passwords, do not receive TAC codes, or respond late, the firm cannot proceed. This may cause delays beyond the firm’s control.

5. Clients’ refusal to grant MyTax access

Some clients may refuse to share access to their MyTax accounts due to confidentiality or security concerns. In such cases, secretarial firms may have to use their own MyTax accounts to perform submissions on behalf of clients. This increases compliance risks, potential liability, and administrative burden for the firm, as any issues or penalties may still be attributed to them.

Conclusion

Although MyTax may bring long-term benefits to the tax system, it creates short- to medium-term challenges for company secretary firms. These include more administrative work, slower processing, higher risks, and increased costs. Firms should prepare early by training staff, improving internal processes, and clearly informing clients about what to expect during this change.

Importance of Supporting Documents in Malaysia

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Importance of Supporting Documents for Companies in Malaysia

As businesses in Malaysia move towards stricter compliance, digitalisation, and e-Invoicing, supporting documents play a critical role in ensuring transparency, accuracy, and compliance with statutory and tax requirements. Proper documentation is not only essential for audits and tax deductions, but also protects companies from penalties and disputes.

Overview: What Are Supporting Documents?

Supporting documents are official records that substantiate business transactions recorded in the accounting system. These documents provide evidence that a transaction has genuinely occurred and is recorded accurately.

Common supporting documents include:
- Tax invoices and receipts
- Contracts and agreements
- Payment vouchers and bank statements
- Delivery orders and goods received notes
- Payroll records, EPF, SOCSO, and EIS submissions

Why Are Supporting Documents Important?

✅ Tax Deductibility

Under Malaysian tax laws, expenses are only tax-deductible if they are supported by valid documents such as tax invoices. Without proper documentation, expenses may be disallowed by LHDN, resulting in higher tax payable.

✅ Audit & Compliance Purposes

Auditors rely on supporting documents to verify the accuracy and validity of financial statements. Inadequate documentation may lead to audit qualifications or additional audit findings.

✅ LHDN & Regulatory Requirements

LHDN, EPF, SOCSO, and other authorities may request supporting documents during audits or reviews. Failure to produce these documents can result in penalties, fines, or additional assessments.

✅ Fraud Prevention & Internal Control

Supporting documents help companies detect errors, prevent fraud, and strengthen internal controls by ensuring all transactions are properly authorised and traceable.

📄 Key Supporting Documents Required in Malaysia

For Accounting & Tax:
- Tax invoice (instead of quotation or proforma invoice)
- Credit notes and debit notes
- Self-billed e-Invoices (where applicable)

For Payroll & Statutory:
- Employment contracts
- Payslips
- EPF, SOCSO, and EIS contribution records

For Assets & Expenses:
- Asset purchase invoices
- Maintenance and repair invoices
- Insurance and loan agreements

Supporting Documents

With the implementation of e-Invoicing in Malaysia, supporting documents must align with e-Invoice records submitted to LHDN. Any mismatch between invoices, payments, or descriptions may trigger queries or compliance issues.

Conclusion

Supporting documents are the backbone of a company’s financial and tax compliance in Malaysia. As enforcement and digital reporting increase, businesses must ensure that all transactions are properly documented, accurate, and readily available. Maintaining good documentation practices not only ensures compliance but also strengthens financial management and business credibility.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

ENTERTAINMENT EXPENSES IN MALAYSIA

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ENTERTAINMENT EXPENSES IN MALAYSIA (DETAILED GUIDE)

In Malaysia, the tax treatment of business entertainment expenses is strictly regulated under the Income Tax Act 1967 (ITA). Businesses must correctly classify and document these expenses, as deductibility can be either 100%, 50%, or completely non-deductible, depending on the nature of the expense and the recipient.

The primary governing principle is that an expense must be wholly and exclusively incurred in the production of gross income (Section 33(1) of the ITA). Even if this test is met, entertainment expenses are generally restricted, with the exceptions explicitly outlined in Section 39(1)(l) of the ITA.

Entertainment expenses are defined under Section 18 of the Income Tax Act 1967 as:

Any outgoings incurred in connection with entertainment, whether for clients, customers, suppliers, or employees.

LHDN divides entertainment into 3 key categories:

Fully deductible (100%)
Partially deductible (50%)
Non-deductible

Below is the full breakdown:

🟩 1. 100% TAX-DEDUCTIBLE ENTERTAINMENT

These expenses are fully deductible because they directly support business operations or employee welfare.

A. Entertainment for Employees

Allowed 100% because it relates to staff welfare and productivity.

Examples:

Annual dinner / festival celebrations
Staff recognition events
Farewell parties
Internal team-building activities
In-office refreshments (coffee, tea, snacks)

Important: It must be for staff only. If clients attend, the expense becomes 50% deductible (partly entertainment).

B. Promotional / Publicity Entertainment for the Public

These are 100% deductible because they directly promote sales.

Examples:

Free product samples
Product launch events open to public
Roadshows with free food/drinks
“Buy one free one” promotions
Corporate open houses for the public
Free gifts with company logo (branding & marketing)

C. Free Services/Food/Drinks Provided in the Normal Course of Business

If entertainment is part of business activity, it is fully deductible.

Examples:

A hotel offering complimentary drinks to guests
A café offering free cookies to customers
A showroom offering refreshments to walk-in customers

🟧 2. 50% TAX-DEDUCTIBLE ENTERTAINMENT

This is the most common category, and applies whenever the entertainment is for clients, suppliers, potential customers, or business associates.

Examples of 50% deductible expenses:

Client meals in restaurants or hotels
Business entertainment at golf clubs
Gifts to clients (not promotional items)
Company paying for client’s event tickets (concerts, sports events, etc.)
Refreshments during business discussions with external parties
Meeting clients at cafés

General Rule:

If the entertainment is intended to maintain relationships with business partners, it is 50% deductible unless it qualifies for 100% treatment.

🟥 3. NON-DEDUCTIBLE ENTERTAINMENT

These expenses are NOT allowed as deductions because they are personal, unrelated to business, or excessive.

Examples:

Private family events
Personal celebrations (birthdays, weddings)
Lavish entertainment without business purpose
Expenses with no receipts or documentation
Alcohol for internal staff (unless business-related occasions)

⌂ Conclusion: Entertainment Expenses in Malaysia

The tax treatment of entertainment expenses in Malaysia is highly specific and restrictive, moving away from a general full deduction. Businesses must apply a three-step test to determine deductibility:

√ Is the expense considered 'Entertainment'? (Under Section 18, which is a broad definition and includes promotional expenses.)

√ Is it 'Wholly and Exclusively' incurred for income production? (Under Section 33(1).)

√ If YES to both, which category does it fall into?

🧾 CHECKLIST: IS AN EXPENSE ENTERTAINMENT & HOW MUCH IS DEDUCTIBLE?

Expense Type	Is it Entertainment?	Deductible
Staff-only event	Yes	100%
Client lunch	Yes	50%
Product launch for public	Yes	100%
Gifts with company branding	Yes	100%
Gifts without branding	Yes	50%
Alcohol at client dinner	Yes	50%
Personal celebration	No	0%

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬

Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients

Website www.thks.com.my

Facebook https://bit.ly/42XKWsk

Instagram https://bit.ly/42Uqf0e

Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

Website www.ktp.com.my

Instagram https://bit.ly/3Rko5kN

Linkedin https://bit.ly/3sapf4l

Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞

An internal community for our colleagues on work and leisure.

Tiktok http://bit.ly/3u9LR6Q

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𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫

An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.

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Winding Up vs Striking Off in Malaysia

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What is the differences between winding up and striking off in Malaysia

The key differences between winding up and striking off in Malaysia.

Strike Off:

Governed under Section 550 of the Companies Act 2016.
Suitable for dormant or inactive companies with no assets or liabilities.
Process starts with a board resolution (shareholder consent advisable), submission of strike-off application to SSM, and publication in the SSM Gazette with a 60-day objection period.
Faster and simpler procedure typically taking 6-12 months.
Lower cost
Final dissolution occurs upon SSM gazette strike-off notice.
Risk of false declaration in the application is an offense.
Company can potentially be reinstated within 7 years.
Does not involve liquidators.

Winding Up:

Governed under Section 439(1)(b) of the Companies Act 2016.
Suitable for solvent companies or where assets, liabilities, and creditor claims must be properly handled.
Requires a special resolution, Declaration of Solvency, and appointment of a liquidator.
Involves liquidator managing asset disposal, settling creditors, and distributing remaining assets.
Longer process taking 12-24 months.
Higher overall costs
Public notice in both SSM Gazette and local newspapers.
Final dissolution confirmed by liquidator’s final return to SSM.
False declaration of solvency is an offense.
It is an irreversible and formal closure procedure

Particular	Strike Off	Winding Up
Legal Provision	Section 550 CA 2016	Section 439 CA 2016
Eligibility	Dormant, no assets/liabilities	Solvent, assets and liabilities handled
Process	Application, Gazette notice	Liquidator appointed, multiple notices
Public Notice	SSM Gazette only (60 days)	SSM Gazette + local newspaper
Timeframe	6-12 months	12-24 months
Final Result	SSM strike-off notice dissolution	Liquidator's final return dissolution
Legal Risk	False declaration offense	False solvency declaration offense
Reversibility	Can be reinstated within 7 years	Irreversible

In conclusion, striking off is suitable for companies that are inactive, have no creditors or assets, and want a straightforward, cost-effective closure. Winding up is a more formal, comprehensive process required for companies with assets, liabilities, or creditors that need proper settlement before dissolution.

Summary & Topic :

Strike Off is suited for dormant companies with no assets or liabilities. It requires a board resolution, submission of strike-off application to SSM, and publication in the SSM Gazette with a 60-day objection period. The process is faster (6-12 months), simpler, and less costly (~RM 5,600+). It results in company dissolution upon SSM strike-off notice and can be reversed within 7 years. It does not involve liquidators. False declarations in the application are offenses.

Winding Up applies to solvent companies where assets, liabilities, and creditor claims must be properly handled. It requires a special resolution, a Declaration of Solvency, and the appointment of a liquidator who manages asset disposal, creditor settlements, and asset distribution. It takes longer (12-24 months) and costs more. Public notices are published in both the SSM Gazette and local newspapers. Dissolution is finalized upon the liquidator’s final return. False declarations of solvency are offenses. The process is irreversible

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
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Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
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#ktpcareer
#24years

Declaration of Dividends in a Sdn Bhd (Private Limited Company)

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Declaration of Dividends in a Sdn. Bhd. (Private Limited Company)

1. Introduction

In Malaysia, a Sdn. Bhd. (Sendirian Berhad) company may distribute part of its profits to its shareholders in the form of dividends. Dividend declaration is an important aspect of corporate governance, as it reflects the company’s profitability and management’s decision to reward its investors/shareholders. However, the dividend distribution must comply with the requirements of the Companies Act 2016 and the Company’s Constitution.

2. What is a Dividend?

A dividend is a portion of a company’s profits that is distributed to its shareholders as a reward for investing in the company.

It can be in the form of:

Cash Dividend – payment made in cash to shareholders.
Share Dividend – Issuance of additional shares of the Company instead of cash.
Any form of dividend or reward that the company deems appropriate and beneficial to both the company and its shareholders

Cash dividends are the most common form of dividend declared by Sdn. Bhd. companies.

3. Conditions and Criteria for Dividend Declaration

A Sdn. Bhd. needs to meet the following requirements before declaring a dividend:

Solvency Test – The company must remain solvent after the distribution. This means the company is able to pay its debts as and when they fall due within 12 months after the dividend is paid.

Cash Flow Statement – The company’s directors or accountants have to ensure that a cash flow statement is prepared to confirm the company’s ability to remain solvent for the next 12 months.

Profits Availability – Dividends can only be paid out of profits available for distribution (i.e. retained earnings) and not from share capital.

4. Why Do Companies Declare Dividends?

Declaring dividends serves several purposes:

Rewarding Shareholders – Demonstrates appreciation for investors’ support and provides them with a tangible return on investment.

Enhancing Company Reputation – A consistent dividend policy reflects good financial health.

Building Investor Confidence – Regular dividend payments attract investors and signal that the company is stable and well-managed.

5. Steps to Declare a Dividend in a Sdn. Bhd.:

Conduct a Solvency Test
Ensure the company is solvent — meaning it can pay all its debts within 12 months after the dividend is paid by conducting the Solvency Test and Cash Flow Statement.

Inform the Company Secretary

Notify the secretary to prepare the necessary documents, such as the board resolution, dividend voucher for directors’ approval.

Approve and Declare the Dividend
The board of directors must approve the dividend amount and declaration date through a resolution.

Issue Dividend to Shareholders

Pay the dividend to shareholders on the specific date stated in the resolution, and issue dividend vouchers as proof of payment.

7. Conclusion

Declaring dividends in a Sdn. Bhd. is a strategic decision that reflects the balance between rewarding shareholders and maintaining the company’s financial stability. Compliance with the Companies Act 2016, accurate financial reporting, and ensuring solvency are crucial to make the dividend declaration valid and legally compliant.

Important Note

A 2% tax imposed by the Malaysian government on annual dividend income exceeding RM100,000 received by individual shareholders, effective from the Year of Assessment 2025 (beginning 1 January 2025).

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
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#ktpcareer
#24years

Director Fees, Salaries and Remuneration

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A GUIDELINE TO DIRECTOR FEES, SALARIES, AND REMUNERATION

Director compensation is a complex area of financial reporting and corporate governance. Accounting standards applicable to private entities require companies to properly account for and disclose director fees, director salaries, and director remuneration in their financial statements. Understanding the precise distinction between these components is vital for accurate reporting.

1. Director Fees

Recognition: Director fees are recognized as an expense in the period the services are rendered, regardless of when payment is made
Disclosure: Fees paid to directors must be disclosed in the financial statements. Different fee amounts received by directors should be clearly itemized.

2. Director Salaries

Recognition: Director salaries are paid for employment duties and are considered employee benefits, distinct from director fees. These are recognized as expenses in the period the services are rendered.
Disclosure: Salaries must be disclosed separately from director fees in the financial statements

3. Director Remuneration

Definition: Director remuneration includes all forms of compensation provided to directors—fees, salaries, bonuses, other benefits, and incentives.
Recognition: Remuneration is recognized when incurred (earned by the director), irrespective of the payment date. Disclosure: The total remuneration paid to each director must be disclosed, itemized by components such as fees, salaries, bonuses, and benefits
Disclosure: The total remuneration paid to each director must be disclosed, broken down into components like fees, salaries, bonuses, and benefits.

4. Tax Implications

Director Fees: Fees are typically subject to income tax (and reported in the director's personal tax returns). Companies must withhold tax at the applicable rate and remit it to tax authorities.
Director Salaries: Salaries paid under an employment contract are subject to income tax and EPF (Employees Provident Fund) contributions. Employers must comply by deducting tax and making EPF contributions on the director's behalf
Director Remuneration: The entire package, including bonuses and non-cash benefits (e.g., cars, housing) , may be subject to tax. All such benefits must be evaluated and disclosed in accordance with Malaysian tax laws.

5. Governance & Transparency

Governance: Director remuneration must be approved in line with good corporate governance practices, typically by shareholders in the Annual General Meeting (AGM) or the board.
Disclosure: Companies are required to fully disclose the breakdown of director compensation in their financial statements for transparency.

In conclusion, companies are required to accurately report director fees, salaries, and other forms of remuneration in their financial statements, based on the period during which the services are rendered, rather than when the payments are made. Companies must disclose the total compensation, including any bonuses or non-cash benefits, such as housing or vehicles. Additionally, they must comply with tax regulations by withholding the appropriate tax on director fees and salaries, and ensuring the necessary statutory contributions, such as the Employees Provident Fund (EPF), are made. Following these guidelines ensures proper financial reporting and compliance with both accounting standards and tax laws.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Audited vs Unaudited Financial Reports in Malaysia

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Audited vs Unaudited Financial Reports in Malaysia

📌Definition & Key Differences

Aspect	Audited Financial Report	Unaudited Financial Report
Prepared by	Company, reviewed and certified by licensed external auditor	Prepared internally by management; no external audit
Legal status	Mandatory for companies that do not qualify for audit exemption under Companies Act 2016	Allowed only for private companies that meet audit exemption criteria under SSM Practice Directive 10/2024
Audit opinion	Yes — auditor provides opinion on fairness and compliance	No audit opinion — statements not independently verified
Level of assurance	High — provides confidence to stakeholders (investors, banks, regulators)	Low — only internal verification, limited external use
Submission method	MBRS (XBRL format) to SSM within 30 days of circulation	MBRS (XBRL) submission with audit exemption documents
Key documents	Audited FS, auditor’s report, directors’ report, statement by directors, statutory declaration	Unaudited FS, directors’ report, audit exemption certificate, statutory declaration

📝 Submission Requirements
🔹Audited Report:

Appoint a License auditor
Prepare complete audited financial statements
Include:

Auditor’s report
Directors’ report
Statement by directors
Statutory declaration

Circulate to shareholders within 6 months of financial year end
Lodge with SSM via MBRS within 30 days after circulation

🔹 Unaudited Report (Audit Exempt):
Only applicable if company meets audit exemption criteria under SSM PD 10/2024

Ensure company qualifies (revenue, assets, and employee thresholds)
Prepare unaudited financial statements (internally)
Include:

Directors’ report
Audit Exemption Certificate
Statement by directors
Statutory declaration

Circulate to shareholders within 6 months of financial year end
Lodge with SSM via MBRS within 30 days after circulation

🎯 Purpose of Audited vs Unaudited Reports

Purpose	Audited Report	Unaudited Report
Legal Compliance	Required by law unless exempt	Valid only if company qualifies under SSM exemption rules
Assurance for Stakeholders	Provides verified information; builds trust	Limited to internal use or simple ownership structures
Bank Loans / Financing	Usually required by banks and investors	Often not accepted for financing
Internal Accountability	Enhances governance and accountability	Sufficient for closely held or dormant companies
Investment / IPO Readiness	Essential for due diligence, valuation, and compliance	Not suitable for companies preparing for listing or M&A
Cost Consideration	Higher cost (audit fees, time)	Lower cost, easier process
Tax Submission Support	Supports accurate and defensible tax reporting	Acceptable for small entities if records are proper
Avoiding Penalties	Ensures full compliance with Companies Act	Requires careful adherence to exemption criteria

🧾 Documents Typically Required

Document	Audited	Unaudited (Audit Exempt)
Financial Statements	✔	✔
Auditor’s Report	✔	✘
Directors’ Report	✔	✔
Statement by Directors	✔	✔
Statutory Declaration (Sumpah)	✔	✔
Audit Exemption Certificate	✘	✔

Summary
If doing Audited Report:

Engage a licensed auditor and perform the audit
Prepare audited financial statements + auditor’s report + directors’ report etc.
Prepare & do the statutory declaration
Circulate to shareholders within 6 months of year end
Lodge with SSM (via MBRS / in XBRL) within required deadline
Ensure all accompanying statutory declarations etc. are signed
Submit digitally via MBRS (XBRL) once applicable

If doing Unaudited Report (for exempt company):

Confirm that company meets audit exemption criteria under PD 10/2024
Prepare financial statements (unaudited) under applicable accounting standards
Prepare Audit Exemption Certificate and do the statutory declaration (confirming eligibility)
Prepare directors’ report, statement by directors, statutory declaration
Circulate to shareholders within 6 months of year end
Lodge / submit all required documents (unaudited FS + reports + exemption certificate + declaration) to SSM within 30 days from distribution
Submit digitally via MBRS (XBRL) once applicable

Remark: What is Statutory Declaration
In Malaysian context, under the Companies Act 2016, both audited and unaudited statements must be accompanied by a statutory declaration by a director (or authorized person) verifying that the statements are true and correct, and in compliance with the law. This is required under Section 251 / 252.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Understanding Realized and Unrealized Foreign Exchange

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Understanding Realized and Unrealized Foreign Exchange

As businesses engage in international trade, they encounter fluctuations in foreign currency exchange rates. These fluctuations give rise to two accounting concepts: realized and unrealized foreign exchange (FX) differences.

What is Realized FX?

Realized FX arises when a foreign currency transaction is completed which is the payment made or received, and the transaction is settled. The difference between the exchange rate at the transaction date and the rate at the settlement date results in a gain or loss.

Example:

Invoice issued to a US customer at US$1 = RM4.50.
Customer pays later when US$1 = RM4.60.
The 10cent difference per US$ is a realized gain.

Realized FX impacts both profit & loss and cash flow because money actually changes hands.

Let’s assume:

Invoice Amount: US$10,000
At invoice time (RM4.50):

RM Amount = 10,000 × 4.50 = RM45,000

At payment time (RM4.60):

RM Received = 10,000 × 4.60 = RM46,000

Forex Gain = RM1,000 (Realised)

What is Unrealized FX?

Unrealized FX occurs when a foreign currency transaction remains outstanding at the reporting date. Companies must revalue these open balances (e.g., trade receivables, payables, loans) using the closing exchange rate. The resulting difference is an unrealized gain or loss.

Example:

At month end, a US$ 10,000 receivable is revalued at the new exchange rate.
If the rate changes from RM4.50 to RM4.55, a paper gain of RM500 is recognized.

Unrealized FX affects profit & loss but not cash flow, since the transaction is not yet settled.

Why It’s Important

Provides a true and fair view of financial performance.
Helps management and stakeholders understand how currency fluctuations impact profitability.
Important for risk management in businesses with large foreign currency exposure.

Conclusion

Realized FX reflects the actual impact of currency movements once transactions are settled, while unrealized FX shows potential exposure at reporting dates. Recognizing both ensures accurate reporting, stronger risk management, and clearer financial insights.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

What are the Differences Between Memorandum & Articles of Association and the Constitution?

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What Are The Differences Between Memorandum & Articles of Association and the Constitution?

The Memorandum and Articles of Association (M&A) and the Constitution are governing documents used to regulate the formation and internal governance of companies in Malaysia.
Before the implementation of the Companies Act 2016 (CA 2016), companies were required to adopt two separate documents—the Memorandum of Association, which set out the company’s external powers and objectives, and the Articles of Association, which regulated its internal management.
With the enforcement of the Companies Act 2016 on 31 January 2017, the requirement for two separate documents was replaced by a single consolidated document known as the Constitution.
This reform aimed to simplify company incorporation and governance, enhance flexibility, and better align corporate practices with modern business needs.

Nature

The Memorandum of Association served to define the company’s relationship with the external parties. It outlined key matters such as:

* The company’s name and registered office
* The company’s objects (purpose)
* The liability of members
* The share capital
* and others

The Articles of Association set out the internal rules of the company, including:

* Conduct of meetings
* Appointment and duties of directors
* Rights of shareholders
* Distribution of dividends

In contrast, the Constitution under CA 2016 performs the functions of both documents in a single, unified document, offering more flexibility by:

* Allowing companies to have a single director, whereas for M&A, there is a minimum of 2 directors.
* Removing the need for calling a real meeting by replacing member circulation and retirement of directors.
* Allowing the company to have a clearly defined nature of business.
* To embrace the new era of corporate compliance in line with the requirements of the Companies Act 2016, including the BO authorization requirement.
* and others

Key Differences

Aspect	Memorandum & Articles of Association (M&A)	Constitution (CA 2016)
Document Format	Two separate documents	One integrated document
Governing Law	Companies Act 1965 (Repealed)	Companies Act 2016
Mandatory?	Yes, for all companies	No, unless voluntarily adopted or required by law
Applicability	Companies incorporated before 31 Jan 2017	Companies incorporated on or after 31 Jan 2017 (or by adoption)

Benefits of Sdn. Bhd. Having a Constitution

Customisation of Governance

Enables the company to structure its internal rules according to its specific business model and management preferences.
Allows the adoption of customized procedures for board meetings, appointment of directors, and transfer of shares.

Clarity and Certainty

Clearly sets out the rights and obligations of shareholders, directors, and officers.
Minimizes confusion by providing more precise rules than those offered by the default provisions of the Companies Act, 2016.

Protection of Shareholder Interests

Can include provisions to protect minority shareholders’ rights.
Can restrict share transfers to prevent unwanted parties from becoming shareholders.

Flexibility in Operations

Can modify or replace default rules in Companies Act, 2016 for efficiency (e.g., shorter notice for meetings, specific quorum requirements).

Continuity and Stability

Provides a fixed governance framework that remains in place even if laws change, unless amended by members.
Useful for family-owned or closely held companies.

Enhanced Investor Confidence

Investors often prefer companies with a clear Constitution as it demonstrates well-structured governance.

Conclusion

The transition from the Memorandum and Articles of Association to the Constitution marks a significant shift in Malaysian corporate governance.
The M&A regime under the old Companies Act was often viewed as outdated and rigid, while the Constitution under the current Act allows companies greater freedom to structure their internal rules based on their specific needs.
Understanding the differences between these documents is essential for company officers, shareholders, and professionals involved in corporate compliance.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬

Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Intangible and Tangible Assets

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MALAYSIAN PRIVATE ENTITIES REPORTING STANDARD (MPERS): TANGIBLE VS. INTANGIBLE ASSETS

1. TANGIBLE ASSETS

Under MPERS, tangible assets are referred to as Property, Plant, and Equipment (PP&E). These are physical, long-term assets used in a company's operations, not for immediate sale.

Recognition and Measurement: A tangible asset is recognized when it's probable that future economic benefits will flow to the entity and its cost can be measured reliably. It is initially measured at cost, which includes the purchase price, directly attributable costs, and an estimate for dismantling and site restoration.
Measurement After Initial Recognition: After the initial recognition, MPERS allows for a choice between two models for a class of assets:
- Cost Model: The asset is carried at its cost less any accumulated depreciation and impairment losses.
- Revaluation Model: The asset is carried at its fair value at the date of revaluation, less subsequent accumulated depreciation and impairment losses.
Depreciation: The asset's cost is depreciated over its useful life, except for land. The depreciation method should reflect how the entity expects to consume the asset's economic benefits.

EXAMPLES OF ASSETS

Land and Buildings: The physical location of a business, including office buildings, factories, warehouses, and the land they are built on.
Furniture and Fittings: Physical assets such as desks, chairs, shelves, and cabinets used to furnish an office or commercial space.
Office Equipment: This includes items like printers, scanners, and telephones that are used for daily business operations.

2. INTANGIBLE ASSETS

Intangible assets are non-monetary assets without physical substance, such as patents, copyrights, and software.

Recognition: An intangible asset must be identifiable, controllable by the entity, and expected to generate future economic benefits. Internally generated intangible assets (like a brand) are generally not recognized.
Measurement: MPERS requires that all intangible assets (other than goodwill) must be measured using the cost model only. Unlike tangible assets, the revaluation model is not permitted for intangible assets.
Amortization: All intangible assets under MPERS are considered to have a finite useful life and must be amortized. The useful life of an intangible asset, including goodwill, is capped at a maximum of 10 years if it cannot be reliably estimated. This differs from other standards that may allow for indefinite useful life for certain intangible assets.
Goodwill: Under MPERS, goodwill is amortized over its useful life. If the useful life cannot be reliably estimated, it must be amortized over a maximum of 10 years.

EXAMPLES OF ASSETS

Patents: Legal rights granted to an inventor that provide exclusive rights to an invention for a set period, preventing others from making or selling it.
Trademarks: A legally protected symbol, logo, or name that identifies a company's products or services and distinguishes them from competitors.
Copyrights: A legal right that gives the creator of original works (e.g., books, music, or software) exclusive rights to its use and distribution.
Goodwill: The value of a company's reputation and brand name, often recognized during the acquisition of another business

3. Key Differences Between MPERS and Other Frameworks

MPERS is a simplified version of the Malaysian Financial Reporting Standards (MFRS), based on the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs). A key difference is in the accounting for intangible assets. MPERS requires all intangible assets to be amortized, whereas MFRS allows for some intangible assets to have an indefinite useful life and not be amortized. Additionally, MPERS requires all borrowing costs to be expensed, unlike MFRS which may allow for capitalization of borrowing costs.

KEY DIFFERENCES

Feature	Intangible Assets	Tangible Assets (PP&E)
Definition	Non-physical resources that lack a physical form but still hold significant value, often derived from legal rights or a competitive advantage.	Physical, long-term assets that a business owns, can touch, and are used to generate income
Physical Substance	No	Yes
Main MPERS Section	Section 18	Section 17
Measurement After Initial Recognition	Only the Cost Model is allowed.	Both the Cost Model and the Revaluation Model are allowed.
Useful Life	All intangible assets are considered to have a finite useful life.	May have a finite or infinite useful life (e.g., land).
Expense Allocation	Amortization is used.	Depreciation is used

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Self-Billed e-Invoice

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Understanding Self-Billed e-Invoice in Malaysia: What the General Public Needs to Know for 2025

As Malaysia moves into the e-Invoice era, more businesses — including freelancers, small vendors, and gig workers — will encounter a concept called self-billed e-Invoice. This format is part of the Inland Revenue Board’s (LHDN) broader e-Invoicing framework, which will soon become mandatory for all businesses.

If you’re unsure whether you need to issue an invoice or your customer creates one on your behalf, this article breaks it down clearly.

📊 Overview: What is a Self-Billed e-Invoice?

A self-billed e-Invoice is an e-Invoice generated by the buyer (not the seller) and then submitted to LHDN. This happens in cases where:

The supplier (seller) is not equipped to issue an e-Invoice
The business arrangement allows the buyer to prepare the invoice instead

For example, large companies dealing with small vendors or independent contractors often use this method to speed up payments and meet compliance.
Scenarios Requiring Self-Billed E-Invoices in Malaysia:

Payments to Agents, Dealers, and Distributors (ADDs):
- Required when a buyer pays commissions or compensation to ADDs.
Purchases from Foreign Sellers:
Required if the Malaysian buyer buys goods/services from a foreign seller who does not issue an e-invoice.
Required when profits are distributed by entities that are:
- Not publicly listed, and
- Not single-tier companies.
Required for platforms (e.g., Shopee, Lazada) to issue on behalf of sellers who do not issue their own e-invoices.
Required for any winnings paid out.
Required when goods/services are acquired from individuals not conducting business.
Required unless:
- Interest is charged by financial institutions to the public.
- An employee pays interest to their employer.
- A foreign entity pays interest to a Malaysian taxpayer.
Required if the insurer does not issue an e-invoice for claim or benefit payments.
Profit Distribution:
E-Commerce Transactions:
Payouts to Betting and Gaming Winners:
Acquisition from Individual Taxpayers (Non-Business):
Interest Payments:
Claims, Compensation, or Benefit Payments from Insurers:

✅ Requirements for Self-Billing

According to LHDN, self-billed e-Invoices are allowed if both parties agree in writing. The buyer must:

Inform the supplier in advance
Generate and validate the e-Invoice through MyInvois portal or API
Provide a copy to the seller after submission

📄 Key Information in a Self-Billed e-Invoice

Even though the buyer prepares the invoice, it still includes:

Supplier’s name and tax identification number (TIN)
Description of goods/services
Amount, tax breakdown, and total
Date and payment details

📌 What Should You Do Next?

If you’re a small business owner or independent contractor:
✅ Check if your clients are transitioning to e-Invoice
✅ Ask if they’ll self-bill on your behalf
✅ Provide your full details (name, TIN, contact info)
✅ Request a copy of each e-Invoice generated under your name
If you’re a business buying from small vendors:
✅ Get written consent from suppliers
✅ Ensure your system can issue and submit self-billed e-Invoices
✅ Keep proper records for tax and audit purposes

🔍 Conclusion

Self-billed e-Invoices are now an essential part of Malaysia’s e-Invoicing framework, especially for businesses dealing with freelancers or small vendors. Understanding how and when to use them helps ensure compliance, reduce delays, and simplify day-to-day operations. Make sure your processes are aligned with current LHDN requirements.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Why is Sdn. Bhd. the better choice for your business?

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Why is Sdn. Bhd. the better choice for your business?
- Legal Liability? Tax Benefits? and Incorporation Procedures?

Introduction

When deciding on the most suitable business structure in Malaysia, understanding the benefits and requirements of incorporating a Private Limited Company (Sdn. Bhd.) compared to operating as a Sole Proprietorship (Enterprise) is crucial. This comparison highlights why many entrepreneurs prefer Sdn. Bhd. for its legal protection, tax advantages, and growth potential.

Topic	Sdn Bhd (Private Limited Company)	Enterprise (Sole Proprietorship)
Limited Liability Protection	Shareholders’ liability is limited to their share capital, protecting personal assets from company debts and liabilities.	Owner has unlimited liability; personal assets can be used to settle business debts.
Separate Legal Entity	The company is a distinct legal entity, capable of owning property, entering into contracts, suing, and being sued independently of its shareholders.	No separate legal entity; business and owner are the same.
Perpetual Succession	Company continues to exist regardless of changes in shareholders or directors, ensuring business continuity.	Business ends if the owner dies or withdraws.
Lower Tax Rates and Tax Benefits	Corporate tax rates are generally lower, start from 17% to 24% with eligibility for tax incentives and exemptions.	Income is taxed as personal income, with rates up to 30%, generally higher tax burden.
Stronger Financing Ability	Easier to obtain bank loans and attract investors; can raise capital through share issuance.	Financing mainly depends on personal funds or loans, harder to secure external funding.
Professional Business Image	Higher credibility with customers, suppliers, and investors, enhancing business opportunities.	Lower market credibility.
Flexible Share Transfer	Shares can be transferred to new investors or heirs, allowing flexible ownership changes.	Ownership cannot be transferred.
Hiring Foreign Employees	Can apply for work permits to hire foreign talent.	No such facility is available.
Incorporation Requirements	- Minimum 1 director (aged 18+, resident or non-resident) - Minimum 1 shareholder (individual or corporate, foreigners allowed 100% ownership) - Must appoint a licensed company secretary within 30 days	No director or secretary required; owner manages business directly.
Capital Requirements	No minimum paid-up capital; can start with as low as RM1, with the option to increase later.	No capital requirements.
Incorporation Process	1. Name reservation with SSM 2. Prepare and sign incorporation documents 3. Submit to SSM 4. Appoint a company secretary 5. Open a bank account and obtain licenses Typically completed within 3–10 working days	No formal registration process; a business can start immediately after registration with SSM as a sole proprietorship.
Legal Entity and Liability	Company assets are liable for debts; shareholders’ personal assets are protected.	Owner is personally liable for all business debts and obligations.
Annual Compliance	Mandatory submission of annual returns, audited financial statements, and tax filings to SSM.	Minimal compliance; no audited reports required.
For E-Invocing	Company TIN	Personal TIN

Key Benefits of Incorporating an Sdn Bhd

Limited liability protection safeguards personal assets from business risks.

Separate legal entity and perpetual succession ensure business stability and continuity。

Lower corporate tax rates and available tax incentives improve profitability.

Better access to financing and investment opportunities supports business growth and expansion.

Enhanced professional image and credibility attract more customers and partners.

Flexible share transferability facilitates investment and succession planning.

Relatively simple and fast incorporation process with low minimum capital requirements.

As a comparison, we can know that the Sdn. Bhd. is the preferred business structure for entrepreneurs seeking growth, legal protection, and credibility in Malaysia, compared to Enterprise, which suits smaller, lower-risk, and simpler operations.

Conclusion

In summary, establishing an Sdn. Bhd. offers significant advantages, including limited liability, separate legal status, favorable tax treatment, and stronger financing opportunities, making it an ideal choice for businesses aiming for sustainable growth and credibility. While Enterprises may suit smaller or simpler operations, the benefits of Sdn. Bhd. provide a solid foundation for long-term success and expansion in Malaysia’s competitive market.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
#ktplifestyle
#ktpcareer
#24years

Strategic Opportunity for Companies and Directors to Settle Outstanding Compounds

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SSM 2025 Compound Reduction Incentive: Strategic Opportunity for Companies and Directors to Settle Outstanding Compounds

In 2025, Companies Commission of Malaysia (SSM) introduced new initiative offering a 95% compound reduction incentive to help companies and their directors to settle outstanding compounds. This move is in line with the government's effort to promote corporate compliance, ease the financial burden on businesses, and facilitate the closure of inactive companies through a streamlined process.

Compound Reduction and Striking Off Initiative
This incentive is part of a campaign introduced under the Moratorium Period from 16 April 2025 to 30 September 2025. Companies that are no longer in operation and wish to strike off their names with SSM under Section 550 of the Companies Act 2016 can now do so with up to 95% reduction in compound fines. This initiative is designed to encourage corporate responsibility while enabling companies to formalize closure without being hindered by high compound amounts that may have accumulated over time.

Who can Apply for the incentive?
To qualify for the incentive, companies must meet the following conditions:
* Have ceased business operations and do not intend to operate business.
* No assets, liabilities, or outstanding charges.
* No outstanding tax or other liabilities with any Government Department or Agency.
* Must not be a holding company.
* Is not a housing developer.
* Is not a Guarantor Corporation

Applications must be submitted with a fee of RM100, along with supporting documents such as the latest management accounts, directors’ resolution, and consent letters from shareholders where required.

Appeal for Compound Reduction
Companies with outstanding compound fines must submit a formal written appeal to SSM.

Encouragement to Directors
SSM strongly encourages company directors to take advantage of this limited-time to settle outstanding compounds and ensure full regulatory compliance. This will help them to avoid potential legal consequences and make it easier to close down companies that are no longer in use with SSM. It’s important to act quickly, as the moratorium period ends on 30 September 2025.

Conclusion
SSM compound reduction initiative offers a valuable opportunity for companies and their directors to resolve past non-compliance regulation at a significant lower cost. This initiative reflects SSM’s commitment to supporting businesses and maintaining high standards of corporate governance.Directors are encouraged to act promptly to take advantage of this incentive before the deadline.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

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Expanding SST Horizons: Malaysia’s 2025 Service Tax Updates Across Key Sectors

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As part of Malaysia's effort to enhance revenue collection and align with current economic developments, the Royal Malaysian Customs Department (RMCD) has announced new guidelines for Service Tax (SST) affecting five major sectors: Construction Work, Rental/Leasing Services, Education Services, Private Health-related Services, and Financial Services. These changes will come into effect starting 1 July 2025. Here's a comprehensive overview for businesses and individuals impacted by the updated tax regime.

📅 Effective Dates

1 July 2025: Construction, Rental, Education, Financial (Phase 1), and Health-related services become subject to SST.
1 August 2025: Health-related services – transitional period begins.
1 September 2025: Financial Services Phase 2 expansion.

📊 Key SST Rates and Registration Thresholds

Sector	SST Rate	Registration Threshold
Construction	6%	RM1.5 million/year
Rental/Leasing	8%	RM500,000/year
Education	6%	RM60,000 per student/year
Private Health Services	6%	RM1.5 million/year
Financial Services	8%	RM500,000/year (except card fees)

🔹 Construction Services
Taxable:

Commercial buildings, infrastructure, ports, mixed-use developments
Facility management during construction

Not Taxable:

Pure residential construction
Federal/State government and local authority projects

Other Notes:

Retention sums: taxable when released
Liquidated damages (LAD): not taxable
B2B exemption if subcontractor and contractor are registered
Transitional rules for ongoing projects

🔹 Rental and Leasing Services
Taxable:

Commercial property rental, machinery, vehicles
Import of lease services

Not Taxable:

Residential property
Financial leases, hire-purchase
Offshore leasing

Exemptions:

B2B exemption (subleasing use)
Fixed-term or low-value contracts (< RM500k/year)

🔹 Education Services
Taxable:

Private institutions charging > RM60,000/year per student
Higher education and language centres serving non-Malaysians

Not Taxable:

Malaysian citizens, OKU holders
Preschool and special needs education
Short courses (under 3 months/20 hours)

Note: Imported education services are taxable; scholarships do not exempt the institution from tax if fees exceed the threshold.

🔹 Private Health-Related Services
Taxable:

Services to non-Malaysians in:
- Private hospitals and clinics (medical, dental, ambulance, etc.)
- Traditional/complementary medicine (e.g., Malay, Chinese, Indian, chiropractic)
- Allied health (e.g., physiotherapy, radiography, psychology)

Not Taxable:

Services to Malaysian citizens
Services by public hospitals and exempt university medical centres

Other Notes:

Service tax applies where service is rendered to foreigners
Location rules: services within/between Designated or Special Areas may be exempt
Transitional guidance applies for services crossing 1 August 2025

🔹 Financial Services
Taxable (Phase 1 - 1 July 2025):

Loan/credit facilities, Islamic financing
Insurance and takaful (certain policies)
Investment advice, fund management, brokerage, underwriting

Expanded Scope (Phase 2 - 1 Sept 2025):

Fee-based financial services not explicitly listed

Not Taxable:

Interest/profit from loans
Late payment charges
Basic banking (ATM, account maintenance)
Services linked to exports, offshore assets
Intra-group transactions
Services to the Government

Imported Services:

Malaysian businesses receiving services from overseas must self-account for tax

📣 What Businesses Should Do

Review all services provided against SST thresholds
Register via MySST if thresholds are exceeded
Issue tax invoices with correct tax codes
Apply for exemptions (B2B, government, residential, special areas)
Comply with transitional rules and maintain proper accounting

📖 Final Thoughts
The new SST measures reflect a significant evolution in Malaysia's tax framework, impacting a wide range of industries. Whether you're in construction, education, leasing, finance, or healthcare, understanding your obligations is crucial. Timely registration and record-keeping will be essential to ensure compliance and avoid penalties when these changes come into force starting 1 July 2025.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
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𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
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𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
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𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
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Exemptions from Dividend Tax

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📘 Understanding Malaysia’s Dividend Tax: What You Need to Know for 2025
As Malaysia modernizes its tax framework, a new rule has been introduced that will impact investors and shareholders across the board. Starting from the Year of Assessment (YA) 2025, a 2% tax will be imposed on chargeable dividend income that exceeds RM100,000 per individual annually.
While this change represents a shift in tax policy, it’s important to note that not all dividend income will be taxed. In fact, the Inland Revenue Board of Malaysia (IRBM) has outlined a range of exemptions that could significantly reduce — or even eliminate — your liability.
In this article, we break down the new rules, the exemptions, and what you should do to prepare.

📊 Overview: The New Dividend Tax
Effective from YA 2025, individuals (residents and non-residents alike) will be taxed at 2% on dividend income above RM100,000 annually, after deductions and allowances.
This tax is part of Malaysia’s efforts to broaden its revenue base while still encouraging investment through targeted exemptions.

✅ Exemptions from Dividend Tax
The IRBM has made it clear that the following types of dividend income are not subject to the 2% tax:
1. Foreign-Sourced Dividends
Dividends received from foreign sources are exempt, as long as:

The income has been taxed in the foreign jurisdiction; or
The receiving entity in Malaysia meets certain economic substance requirements.

This aligns with the latest IRBM guideline titled “Tax Treatment in Relation to Income Received from Abroad” (Amendment, Dec 2022).
2. Pioneer Status or Reinvestment Allowance Companies
Dividends paid out from companies that enjoy pioneer status or are granted reinvestment allowances under the Investment Incentives Act are tax-exempt.
This encourages ongoing investment and industrial development in key sectors.
3. Tax-Exempt Shipping Companies
Dividends from profits of shipping companies that are exempted from income tax will not attract the 2% dividend tax.
4. Cooperative Societies
Dividends distributed by registered cooperatives are fully exempt, consistent with Malaysia’s policy to support cooperative movements.
5. Closed-End Funds
Income declared in the form of dividends by closed-end funds falls outside the scope of the dividend tax.
6. Labuan Entities
Dividends received by Malaysian residents from Labuan entities — governed under the Labuan Business Activity Tax Act — are not taxed.
7. Exemptions at Shareholder Level
Where any specific exemption is granted to a shareholder by the IRBM, that exemption will prevail.

🏦 Institutions Not Subject to Dividend Tax
In addition to the above, dividend tax does not apply to distributions made to contributors and depositors of:

Kumpulan Wang Simpanan Pekerja (KWSP) – Employees Provident Fund
Lembaga Tabung Angkatan Tentera (LTAT) – Armed Forces Fund
Amanah Saham Nasional Bumiputera (ASNB)
Any approved Unit Trust Fund

This ensures that retirement and savings-focused institutions continue to enjoy tax efficiency.

🕒 When Does This Take Effect?
These changes are effective from the Year of Assessment 2025. If you're an investor or managing dividends, it’s vital to review your investment portfolio and tax planning strategy ahead of time.

📌 What Should You Do Next?
Tax rules are becoming more nuanced — and the difference between being taxed and being exempt could lie in how your income is structured or where it originates from.
Here’s how you can prepare:

✅ Identify which dividend sources fall under the exempt categories.
✅ Review your investments in shipping, cooperatives, and Labuan-based entities.
✅ If you receive foreign dividends, ensure proper documentation and compliance with economic substance rules.

🔍 Conclusion
As the 2025 assessment year approaches, it is crucial for individuals and investors to proactively assess the impact of the new dividend tax. While the 2% levy may seem modest, the cumulative effect could be significant for high-income dividend earners — especially those unaware of potential exemptions.
The good news? With proper planning and a clear understanding of the available exemptions, you can minimize your tax exposure and ensure compliance with confidence.
Whether you're receiving dividends locally or from abroad, taking action now can help preserve your returns and avoid unexpected liabilities.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
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𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
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Audit Exemption for Private Companies (Effective 01 Jan 2025)

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AUDIT EXEMPTION

Effective from 01^st January 2025 to the Companies Commission of Malaysia (SSM) allows certain private companies to be exempted from the mandatory requirement to have their financial statements audited annually under the Companies Act 2016. This exemption aims to reduce the regulatory burden and compliance costs, especially for small and medium-sized enterprises (SMEs) that may find audits costly and time-consuming relative to their size.

What is Audit Exemption?
Audit exemption means eligible private companies do not have to appoint an auditor or conduct an audit of their financial statements for a financial year.

However, these companies still need to prepare and lodge their unaudited financial statements with SSM, along with other required documents such as directors’ reports and audit exemption certificates confirming compliance with accounting standards and legal requirements.

Eligibility Criteria for Audit Exemption in 2025.
To qualify for audit exemption starting from financial years beginning on or after 01^st January 2025, a private company must meet any two of the following three conditions for the current and preceding two financial years:

Criteria	Threshold for Audit Exemption
Annual Turnover	≤ RM3,000,000
Total Assets	≤ RM3,000,000
Number of Employees	Number of Employees ≤ 30
Dormant Status	Dormant since incorporation or current + prior year

Additionally, companies that are dormant since incorporation or dormant throughout the current and preceding financial year also qualify for exemption.

Phased Implementation to Facilitate Transition

To facilitate the revised framework, SSM has adopted a phased implementation approach over a period of three years, thus allowing companies to adapt gradually to the new requirements.

Phase 1 will apply to financial periods commencing on or after 1 January 2025, with submissions starting from 1 January 2026. During this phase, the thresholds are set at annual revenue of RM1,000,000, total assets of RM1,000,000, and a maximum of 10 employees.

Phase 2 will follow for financial periods commencing on or after 1 January 2026, with submissions starting from 1 January 2027. In this phase, the thresholds are increased to an annual revenue of RM2,000,000, total assets of RM2,000,000, and a maximum of 20 employees.

Finally, Phase 3 will be fully implemented for financial periods commencing on or after 1 January 2027, with submissions starting from 1 January 2028, where the thresholds are fully implemented at a turnover of RM3,000,000, total assets of RM3,000,000, with a maximum of 30 employees.

The annual revenue, total assets, and number of employees for the immediate past two financial years must not exceed the maximum threshold specified for the respective corresponding phase.

In conclusion, the Audit exemption reduces compliance costs and administrative burden, enabling SMEs to focus resources on growth while maintaining financial accountability through submission of unaudited but compliant financial statements.

𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
Facebook https://bit.ly/42XKWsk
Instagram https://bit.ly/42Uqf0e
Linkedin https://bit.ly/3EH885M

𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
Instagram https://bit.ly/3Rko5kN
Linkedin https://bit.ly/3sapf4l
Telegram http://bit.ly/3ptmlpn

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞
An internal community for our colleagues on work and leisure.
Tiktok http://bit.ly/3u9LR6Q
Youtube http://bit.ly/3ppmjyE
Facebook http://bit.ly/3ateoMz
Instagram https://bit.ly/3jZpKLo

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.
Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#KTP #Thk
#Myktp
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#24years

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Importance of Bank Reconciliation

Director Fee vs Director Remuneration in Malaysia

Common Accounting Mistakes

Directors' Obligationsd After Company Incorporation

From E-Stamping to MyTax: Challenges for Company Secretary Firms

Importance of Supporting Documents in Malaysia

Importance of Supporting Documents for Companies in Malaysia

Overview: What Are Supporting Documents?

Why Are Supporting Documents Important?

📄 Key Supporting Documents Required in Malaysia

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Conclusion

ENTERTAINMENT EXPENSES IN MALAYSIA

Winding Up vs Striking Off in Malaysia

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Director Fees, Salaries and Remuneration

A GUIDELINE TO DIRECTOR FEES, SALARIES, AND REMUNERATION

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2. Director Salaries

3. Director Remuneration

4. Tax Implications

5. Governance & Transparency

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Understanding Realized and Unrealized Foreign Exchange

What are the Differences Between Memorandum & Articles of Association and the Constitution?

Intangible and Tangible Assets

Self-Billed e-Invoice

Why is Sdn. Bhd. the better choice for your business?

Strategic Opportunity for Companies and Directors to Settle Outstanding Compounds

Expanding SST Horizons: Malaysia’s 2025 Service Tax Updates Across Key Sectors

Exemptions from Dividend Tax

Audit Exemption for Private Companies (Effective 01 Jan 2025)

THK Group of Companies THK Management Advisory Sdn Bhd 200401000220 (638723X) THK Secretarial PLT 202304003367 (LLP0037327-LGN)

QUICK LINK

PDPA Form

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Importance of Supporting Documents for Companies in Malaysia

Overview: What Are Supporting Documents?

Why Are Supporting Documents Important?

📄 Key Supporting Documents Required in Malaysia

Supporting Documents

Conclusion

A GUIDELINE TO DIRECTOR FEES, SALARIES, AND REMUNERATION

1. Director Fees

2. Director Salaries

3. Director Remuneration

4. Tax Implications

5. Governance & Transparency

THK Group of Companies THK Management Advisory Sdn Bhd 200401000220 (638723­X) THK Secretarial PLT 202304003367 (LLP0037327-LGN)

QUICK LINK

PDPA Form

THK Group of Companies THK Management Advisory Sdn Bhd 200401000220 (638723X) THK Secretarial PLT 202304003367 (LLP0037327-LGN)