Executive Summary
A tax audit by the Inland Revenue Board of Malaysia (LHDN) can be a stressful experience for any business. This guide provides a step-by-step approach to help you prepare for, navigate, and resolve a tax audit with confidence.
Step 1: Understand the Tax Audit Notice
When you receive a tax audit notice from the LHDN, the first step is to carefully review it. The notice will specify the scope of the audit, the years of assessment being covered, and the documents you are required to produce.
Step 2: Prepare the Required Documents
Gather all the documents requested by the LHDN. This may include financial statements, tax computations, general ledgers, invoices, receipts, and other supporting documents. Ensure that your records are complete and well-organized.
Step 3: Conduct an Internal Review
Before the audit begins, it is advisable to conduct an internal review of your tax position. This will help you to identify any potential areas of risk or non-compliance and to prepare your explanations in advance.
Step 4: During the Audit
During the audit, be cooperative and professional with the LHDN officers. Answer their questions truthfully and provide them with the documents they request in a timely manner. It is advisable to have your tax agent present during the audit.
Step 5: Responding to the Audit Findings
At the end of the audit, the LHDN will issue a letter of findings. If you disagree with the findings, you have the right to object. Your objection should be supported by clear explanations and documentary evidence.
Step 6: Settlement and Resolution
If you are unable to resolve the dispute with the LHDN through the objection process, you can appeal to the Special Commissioners of Income Tax. It is often possible to reach a settlement with the LHDN at any stage of the process.
Related Services
Our Tax Advisory & Compliance team has extensive experience in handling LHDN tax audits. We can assist you with every stage of the audit process, from preparation to resolution.
Last updated: 15 October 2025