A tax audit is HASiL's examination of a taxpayer's business records and financial affairs to check that the correct income has been reported and the correct tax calculated and paid. HASiL publishes the frameworks it follows on its audit framework page.
The current framework
For income tax and employer audits, HASiL's Income Tax and Employer Audit Framework (Rangka Kerja Audit Cukai Pendapatan dan Majikan) took effect on 15 March 2025. It states that the main objective of a tax audit is to encourage voluntary compliance with tax laws under the self-assessment system. Its scope includes income tax audits, withholding tax audits (checking that withholding tax has been deducted and remitted to HASiL), capital gains tax audits and employer audits. HASiL publishes separate frameworks for other areas, including transfer pricing.
Years covered
The framework states that an income tax audit may generally cover up to three years of assessment, within the time limit in the Income Tax Act 1967, and that these limits do not apply to cases involving fraud, wilful default or negligence. On receiving an audit notice, check the periods, taxes and records requested, appoint a response contact and diarise the stated deadlines. Prepare a reconciliation from the accounts to the return, supporting schedules and documents for material tax adjustments. Keep a record of submissions and unresolved questions, and obtain advice promptly on disputed findings.
Withholding tax is one area an audit may examine; see our article on withholding tax on payments to non-residents.
This article is general information only. Requirements depend on each taxpayer's circumstances; please refer to HASiL's official frameworks, and see Saifudin & Co's tax advisory and compliance services if you would like assistance with preparing records for a Malaysian tax audit.