MITRS Readiness Review: Can Your Submission Stand on Its Own?

Based on our work on YA 2025 MITRS submissions, one practical issue has become clear.

A company may have completed its audited financial statements, tax computation and supporting schedules, but still not be ready to submit.

The auditor may have made late adjustments. The tax computation may still be based on an earlier set of accounts. The capital allowance schedule may be held by another person. Management and the tax agent may also understand a major transaction differently.

The documents are available — but is the complete file ready to be reviewed as one submission?

For Malaysian companies, a MITRS readiness review should answer that question before Form C is filed.

Having Documents Is Not the Same as Being Ready

Earlier articles in this series discussed what MITRS makes visible to LHDN, the five technical areas we review before submission, and how e-Invoice and MITRS fit together. This final article looks at a different issue: whether the company itself is ready to support what is being submitted.

In our view, the following five questions should be addressed before Form C is filed, while differences and incomplete records can still be dealt with properly.

Question 1 — Is Everyone Working from the Same Final Set of Numbers?

Our first question is usually simple: which set of numbers is the final set? In practice, the accounts staff may be working from the final management accounts, the auditor may have processed late adjustments, and the tax computation may still be based on an earlier version. Every document may look complete on its own — but they are not yet ready to be submitted as one file.

A common problem we encounter is not that the company has no final accounts. It is that the accounts staff, auditor and tax agent are each holding a different version of what they believe to be final. Late audit adjustments — provisions, impairments, reclassifications — need to flow through to the tax computation and all supporting schedules before any document goes in.

Question 2 — Have All Material Differences Been Explained Before Submission?

Differences between the financial statements, tax computation, CA schedule and incentive schedules are not always a sign of error. These can arise from late audit adjustments, timing differences or capital versus revenue treatment — and are not automatically a problem. What matters is whether they have been identified, explained, documented and reflected consistently before the submission goes in.

Question 3 — Does Every Major Tax Position Have Supporting Evidence and a Responsible Person?

Earlier in this series we reviewed the technical areas to check before submission. This question goes one level further: for each major tax position, is there someone who understands the commercial facts behind it, and is the supporting evidence already available?

Where a position appears in the tax computation but nobody in management can explain the underlying transaction, the file is not fully ready. A tax agent may understand how an amount was treated in the computation — but management must still be able to explain what the payment was for, who approved it, and where the supporting documents are kept.

Question 4 — Would Management, Accounts Staff, Auditor and Tax Agent Give the Same Answer?

Numbers can agree while the underlying explanations do not. This is where many SME files break down.

We have seen payments recorded as consultancy fees while management describes them as success fees. We have also seen repairs capitalised by the auditor without the capital allowance schedule being updated. The numbers may reconcile, but the treatment remains difficult to support when the people involved give different explanations.

Question 5 — Can the Company Respond Without Rebuilding the File?

This is the practical test: can the company respond using records already on file? A company is not fully ready if a future question would require the business to reconstruct a schedule, search through years of emails, chase an agreement that should have been signed before the transaction, or contact former staff to piece together what happened.

In our view, the file is not ready if the company would need to reconstruct its explanation only after LHDN raises a question. Some tax enquiries require proper investigation — the test is not that every answer must be immediate. The test is whether the explanation and supporting records already exist, or whether they would need to be created after the fact.

The MITRS Readiness Test: Five Questions Before You Submit

Before submission, select the three largest or most unusual positions in the tax computation. Can the relevant person explain the basis of each position within five minutes? Can the supporting records then be located promptly?

Ready, Conditionally Ready, or Not Ready?

Based on the five questions above, most companies will fall into one of three positions.

Frequently Asked Questions

What is a MITRS readiness review?

A MITRS readiness review considers whether the documents to be submitted are based on final figures, whether material differences are explained and whether the company has records to support its major tax positions.

When should the review be performed?

Preferably before Form C is filed. This allows inconsistencies affecting the tax computation, supporting schedules or return to be addressed early. This is our recommended review timing and does not change the statutory MITRS submission deadline.

Is a MITRS readiness review the same as a tax audit?

No. It is a focused pre-submission review. It does not provide assurance that LHDN will not raise questions, and does not replace a full tax audit or investigation review. In our experience, companies that treat MITRS as a document upload exercise without this review are the ones who find gaps only after LHDN writes.

Source: Section 82B and Section 120(1)(d), Income Tax Act 1967; LHDN MITRS official guidance; Finance Act (Amendment) 2024.