In Malaysia, businesses are required to pay taxes based on their taxable income. This article will guide you through the process of properly recording taxes in your company's books.

Scenario:

Let's say the company has a tax liability of RM10,000.

First create two accounts as per below:
1 - Income Tax Expense (Taxation under Expenses)

2 - Income Tax Payables (Liability)

Follow the steps below to record an entry in Bukku:

1. Go to Accounting > Journal Entries > +New

2. Key in the journal as per below:
​ Credit: Income Tax Payables

Debit: Income Tax Expense

3. Click on Save.

4. Next, when the company pays the tax, record the payment using Money Out.

Navigate to Bank > Money Out > +New.

5. Enter the account as per below:
​Account - Income Tax Payables

Amount - RM10,000.00

Payment Made

Pay From - Bank / Cash Account

Amount - RM10,000.00

6. Click on Save, and you are done. The Income Tax Payables Account should be zeroized every time you are done paying the company tax.