General Finance6 Ways Your Company Can Save in Taxes

6 Ways Your Company Can Save in Taxes


Taxes definitely dent a company’s earnings, especially if the company is still trying to break even or is newly present in the market. There are actually several things you can do to reduce the amount of taxes that your company pays:

  1. Know what’s deductible early

Many companies make the mistake of going through the list of expenses that are entitled for tax relief only when it’s time to file taxes. It is too late by then to incur these expenses for the business as the assessed year has gone by. Keep abreast of tax updates made during the yearly budget and make it a practice early in the year to go through the list of expenses, so that you can plan for the year ahead.

  • Diligently keep records

Because tax filing for the assessed year is done as far as 6 months after the year has ended, it is easy to lose track of expenses if records are not well filed. If you use an accounting system, diligently input every expense into the system as it happens, and your total expenses for the year would be readily tallied for you when needed. Taxes will be tricky if your company is still somehow using a manual method, ie. Excel for accounting; you would have to start your tax filing much earlier than the deadline to give yourself ample time to put together the records.

  • Keep records long and well

Lembaga Hasil Dalam Negeri (LHDN) or Inland Revenue Board Malaysia (IRB) can query tax filings up to 7 years after they’ve been filed, so make sure that you do not dispose your records any time before then. Regardless of how you do your accounting, ensure that your system or method holds the data sufficiently long, and also scan and save copies of receipts and invoices that could fade with time.

  • Apply for tax incentives

More homework is needed if you want to save more on taxes for your company. Refer to the Income Tax Act 1967 to find out what incentives your business may qualify to receive from the government. Some of the types of businesses that qualify for tax incentives include international procurement centres reinvestment allowance, regional distribution centres approved service projects, and biotechnology. There are also other tax incentives such as infrastructure allowance, investment tax allowance and pioneer status companies provided under the Promotion of Investment Act 1986.

  • Compare tax rates

If your personal taxable income exceeds RM250,000, it is best to tax the business income under company or limited liability partnership (LLP). This is because at that income level, you would be paying more than highest tax rate for a company or LLP, which is 24%. On the other hand, if your individual tax rate is below 24%, file the business income under individual taxes instead via payment of directors’ fees, remuneration and such.

  • File your taxes on time

Extensions to the deadline may be given sometimes, causing confusion on when the actual deadline is as various information would start to circulate online. To be safe, just adhere to the original dates announced to avoid late filing and a penalty. After all, with all these tips you have gathered on tax savings, you could possibly get a partial refund of taxes paid. The sooner the filing, the earlier the refund!

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