For many small and medium enterprises (SMEs) in Malaysia, annual audits can be costly and time-consuming. Fortunately, under the Companies Act 2016, certain companies qualify for audit exemption, allowing them to skip mandatory financial audits while still complying with Malaysia corporate compliance regulations.

If you’re a business owner or looking to start a business in Malaysia for foreigners, understanding audit exemption rules can help you save costs and streamline financial reporting.

This guide covers:
✅ Who qualifies for audit exemption in Malaysia
✅ Benefits of audit exemption
✅ Steps to apply for audit exemption in 2025

Audit Exemption

What is Audit Exemption in Malaysia?

An audit exemption allows eligible companies to submit unaudited financial statements instead of undergoing a statutory audit. This reduces compliance costs while ensuring that businesses still meet SSM (Companies Commission of Malaysia) requirements.

📌 Introduced by SSM, audit exemption applies to private limited companies (Sdn. Bhd.) that meet specific criteria.

💡 Important: Certain industries, such as financial institutions and public-listed companies, are not eligible for audit exemption.

Mitchel Krytok – Quote

Who Qualifies for Audit Exemption currently?

1. Dormant Companies

A dormant company is exempted from audits if:
✔ It has no business transactions since incorporation or during the financial year.
✔ It has no revenue or expenses, except for regulatory filings.

2. Zero-Revenue Companies

A company qualifies if:
✔ It has no revenue in the current and past two financial years.
✔ Its total assets are RM300,000 or less for the same period.

3. Small Companies

A small company is eligible if:
✔ Its revenue is less than RM100 million.
✔ Its total assets are RM300,000 or below in the past two years.
✔ It is not part of a group of companies that requires audits.

Who Qualifies for Audit Exemption in 2025?

A private company qualifies for audit exemption if it meets at least two of the following criteria:

1. Annual Revenue

The company’s annual revenue for the current financial year, as well as for the two preceding financial years, must not exceed RM3,000,000.

2. Total Assets

The total assets reported in the current statement of financial position, along with those from the two preceding financial years, must not exceed RM3,000,000.

3. Number of Employees

The number of employees at the end of the current financial year, as well as for the two preceding financial years, must not exceed 30.

Benefits of Audit Exemption

✅ Cost Savings – Reduces expenses related to hiring external auditors.
✅ Simplified Compliance – Lowers administrative burden for small businesses.
✅ Faster Financial Reporting – Speeds up the preparation of annual reports and filings.

📌 Even if exempted, companies must still submit unaudited financial statements to SSM and comply with tax reporting obligations.

How to Apply for Audit Exemption in Malaysia (2025 Guide)

✅ Step 1: Check Eligibility Criteria
  • Verify if your company qualifies under dormant, zero-revenue, or small company status.
✅ Step 2: Prepare Unaudited Financial Statements
  • Even without an audit, you must still prepare and submit financial statements.
✅ Step 3: Obtain Director & Shareholder Approval
  • Directors and shareholders must agree to apply for audit exemption.
✅ Step 4: File with SSM & LHDN
  • Submit your unaudited financial statements and tax filings as per Malaysia corporate compliance regulations.

Final Thoughts: Should Your Business Apply for Audit Exemption?

If your company qualifies, applying for audit exemption in Malaysia can reduce compliance costs while ensuring you meet SSM regulations. However, businesses must still maintain proper financial records and submit annual returns to avoid penalties.

🚀 Thinking of applying for audit exemption? Consult a corporate advisor to ensure full compliance today!