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Many Malaysian business owners assume that once their company is inactive or “dormant,” all reporting and tax responsibilities are waived. Unfortunately, that’s not the case.
Even if your company is not actively trading or generating income, compliance obligations to the Companies Commission of Malaysia (SSM) and the Inland Revenue Board (LHDN) may still apply.
What Is a Dormant Company?
A dormant company in Malaysia typically refers to one that has had no accounting transactions during a financial year. However, definitions may differ depending on the authority involved:
- SSM defines dormancy as no transactions recorded in the accounting records.
- LHDN may view a company as dormant if it has ceased business operations and has no income.
Being labelled “dormant” does not automatically exempt a company from reporting or filing taxes. This is where many directors unknowingly slip into non-compliance.
Do Dormant Companies Need to File Tax Returns?
Yes. Under Malaysian tax law, all companies must file an annual tax return (Form C) with LHDN—even if the company is dormant.
However, the good news is that dormant companies can apply for a waiver from submitting audited financial statements, provided they meet certain conditions. These include:
- The company must be dormant throughout the financial year.
- It must not be a holding or subsidiary company.
- It must not be listed on any stock exchange.
That said, Form C must still be submitted every year without fail, declaring “NIL” income if applicable.
What Happens If You Don’t File?
Failure to submit your annual tax return may result in:
- Penalty fines up to RM20,000
- Late payment interest
- Legal action or investigation by LHDN
In short, non-filing, even if unintentional, can cost your company more than maintaining a basic level of compliance.
What About Reports to SSM?
Dormant companies are also required to submit their Annual Returns to SSM, even if they have no operations. The Annual Return confirms the company’s particulars and status, such as:
- Registered office
- Company officers (directors and shareholders)
- Business nature
Additionally, companies must prepare and lodge financial statements, unless they are exempt under the Companies Act 2016.
To qualify for audit exemption, your dormant company must:
- Be incorporated under the Companies Act 2016.
- Remain dormant from the time of incorporation or since the end of the previous financial year.
- Not a holding or subsidiary company.
Altomate can help determine if your company qualifies for such exemptions and guide you through the proper filing processes.
Why Compliance Still Matters for Dormant Companies
Even if your business isn’t operating, maintaining compliance keeps the company in good standing. Here’s why it’s important:
- Reactivation: If you plan to resume business later, having clean records makes the process easier.
- Avoid Strike-Off: Non-compliance may lead to your company being struck off the register by SSM.
- Corporate Transparency: Staying compliant signals professionalism to future investors, partners, or regulatory bodies.
- Peace of Mind: Avoid unnecessary penalties and reduce long-term risk.
How Altomate Can Help
At Altomate, we understand that managing compliance for a non-active company can feel unnecessary, but neglecting these obligations can be costly.
Our Dormant Company Compliance Services include:
- Annual Return filing to SSM
- Preparation and submission of Form C to LHDN
- Assessment for audit exemption eligibility
- Statutory document preparation and submission
We keep your dormant company compliant, without the headache of navigating government portals or legal jargon.
Book a free consultation today and get expert guidance tailored to your startup’s needs.
Staying Dormant, Staying Compliant
Just because your company is dormant doesn’t mean your compliance duties are. Filing taxes and reports remains a crucial part of staying legally protected in Malaysia.
If you’re unsure where your company stands or want to ensure everything is in order, Altomate is here to help.
