How do the 2025 to 2027 phases for audit exemption work?
Practice Directive 10/2024 raises the audit exemption limits in three steps, based on when the financial period starts: 2025, 2026, and 2027 onwards. The final limits are RM3,000,000 revenue, RM3,000,000 total assets and 30 employees, reached for periods starting from 1 January 2027.
SSM chose a phased approach so companies can adjust gradually. The directive applies to financial periods commencing on or after 1 January 2025.
The three phases
- Phase 1: periods starting 1 January 2025 to 31 December 2025. Limits RM1m / RM1m / 10 employees. Accounts for these periods are lodged from 2026.
- Phase 2: periods starting in 2026. Limits RM2m / RM2m / 20 employees. Lodgement from 2027.
- Phase 3: periods starting from 1 January 2027. Limits RM3m / RM3m / 30 employees. Lodgement from 2028.
Why the start date matters, not the year-end. A company with a year ending 30 June 2026 and starting 1 July 2025 falls in Phase 1. Periods that began before 1 January 2025 stay under the old Practice Directive 3/2017.
Past years use the current phase's limit. SSM's worked examples test the current and prior two years against the limit of the phase the current year sits in. A company can therefore fail in Phase 1 because earlier years were too big, then qualify later once those years drop out of the window.
Review risk. SSM states the Phase 3 figures remain unchanged unless the Registrar reviews them. Check SSM's site for any later directive.
Legal basis
- SSM Practice Directive 10/2024, paras 7-9, 20
Sources
Applies to Financial periods commencing on or after 1 January 2025 (thresholds phased 2025-2027) · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Does every Sdn Bhd in Malaysia need to be audited?Not every one, but audit is the default. Section 267(1) of the Companies Act 2016 requires a private company to appoint an auditor for each financial year, unless it qualifies for and elects the audit exemption set by SSM's Practice Directive 10/2024.
- What is audit exemption for private companies in Malaysia?Audit exemption lets an eligible private company choose not to appoint an auditor for a financial year. It rests on section 267(2) of the Companies Act 2016 and SSM Practice Directive 10/2024. The company still prepares and lodges unaudited financial statements.
- What are the audit exemption thresholds for a Sdn Bhd in 2026?For financial periods starting 1 January to 31 December 2026 (Phase 2), a private company must meet at least two of three tests: revenue up to RM2,000,000, total assets up to RM2,000,000, and no more than 20 employees. Each test covers the current and past two years.
- How do I check if my Sdn Bhd qualifies for audit exemption?Pass at least two of three tests (revenue, total assets, employees) for the current financial year and the past two, using the limits for the phase your period falls in. Also confirm you are not an excluded company type, such as a subsidiary of a public company.
- How are revenue and total assets measured for the audit exemption test?Revenue means revenue received and receivable in the year, excluding reversals, tax entries, reversed provisions and gains on disposal of property, plant, equipment and investment property. Total assets are all current and non-current assets as defined by the applicable accounting standards.