Does a dormant company with no income still have to file a tax return in Malaysia?
Yes. LHDN says companies that are dormant or have not started business must still register a tax file and file returns. A nil return tells LHDN there is no taxable income, and failing to file can be an offence even when no tax is due.
Having no income does not remove the filing duty. LHDN's company registration page states that dormant companies, and companies that have not yet commenced business, must register a tax file and furnish their returns.
The return for a dormant company is simple: it shows nil or minimal business income, any other income such as bank interest, and any deductible expenses. A company with expenses but no income produces a tax loss, and filing is how that loss is recorded for later use.
Points to know:
- Not filing a return carries a fine of RM200 to RM20,000, imprisonment of up to six months, or both under s.112(1), according to LHDN's penalties table. In practice LHDN usually starts with penalty or compound notices.
- If the company has really stopped trading, the proper route is to wind it up or deregister it with SSM and close the tax file, not to stop filing.
- Unused business losses can be carried forward for up to 10 years, but for a dormant company a substantial change of shareholders (more than 50%) can wipe them out.
- Company law may still require accounts to be prepared. That is covered by the bookkeeping and audit sections of this knowledge base.
Legal basis
- Income Tax Act 1967, s.77A
- Income Tax Act 1967, s.112(1)
Sources
Applies to YA 2026 · 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
- What is the corporate tax rate for a small company in Malaysia?A Malaysian resident company normally pays 24% income tax. A company that meets the SME conditions pays 15% on the first RM150,000 of chargeable income, 17% on the next RM450,000 (up to RM600,000), and 24% on anything above that.
- What conditions must my company meet to get the SME tax rates in Malaysia?To use the lower 15%/17% rates, the company must be resident, have ordinary paid-up capital of RM2.5 million or less, and gross business income of RM50 million or less. It must also pass the related-company test and, from YA 2024, a foreign-ownership test.
- What is the Year of Assessment and how does it relate to my financial year?The Year of Assessment (YA) is the calendar year in which your company's accounting year (the basis period) ends. A company with a financial year ending 30 June 2025 reports that income in YA 2025.
- How do I file Form C through MyTax e-Filing?Form C is filed online through LHDN's MyTax portal using the company's tax number and login. You complete the company return, attach no paper, submit, and keep the confirmation. Manual paper submission is no longer accepted for companies.
- What is CP204 and why does my company have to pay tax in instalments?CP204 is the estimate of the tax a company expects to owe for the year, submitted before the year starts. The estimated tax is paid in equal monthly instalments, due on the 15th of each month from the second month, instead of one lump sum after Form C.