LHDN Audits: What to Expect and How to Prepare

A practical guide for SMEs in Malaysia to stay audit-ready, minimize risks, and ensure smooth compliance with tax regulations.
October 5, 2025 by
LHDN Audits: What to Expect and How to Prepare
CONZLAB BERHAD 202301040401 (1534320P), Jeffrey Eh

Introduction to LHDN Audit.

For many SMEs, receiving a notice of audit from LHDN (Lembaga Hasil Dalam Negeri) can be stressful. An audit doesn’t always mean you’ve done something wrong, it’s often part of LHDN’s routine compliance checks. However, being unprepared can lead to unnecessary penalties, delays, and even reputational damage.

Understanding what an audit involves and how to prepare for it is crucial for every business owner. By keeping proper records and ensuring tax compliance from the start, you can approach audits with confidence instead of fear.

Benefits of Being Audit-Ready

  • Peace of Mind – Confidence knowing your records can withstand checks.
  • Avoidance of Penalties – Proper compliance reduces the chance of fines.
  • Better Business Reputation – Transparency builds trust with partners and stakeholders.
  • Improved Financial Health – Keeping clean books helps in securing loans and investments.

What to Expect During an LHDN Audit ​

LHDN audits generally focus on verifying whether a company has declared its income and expenses correctly. Auditors may request access to financial statements, invoices, receipts, payroll records, and bank statements.

There are two main types of audits:

  • Desk Audit – LHDN requests documents for review at their office.
  • Field Audit – LHDN officers visit your business premises to check financial records.

In both cases, transparency and proper documentation are key. If records are incomplete, inconsistent, or misleading, businesses risk fines or additional tax assessments.


How to Prepare for an LHDN Audit

Advisor

Penny Lim , Legal Consulting 

Ms. Penny is responsible for identifying possible legal issues and implementing solutions in the areas of government regulation, customer protection, and fair employment. Legal Counsel. Ms. Penny can advise on legal issues such as  government and business permits, review legal documents before signing them, and complete legal research as needed by the company

LHDN Audits: What to Expect and How to Prepare
CONZLAB BERHAD 202301040401 (1534320P), Jeffrey Eh October 5, 2025
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