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What are employment benefits and perquisites?
An individual under a contract of service (i.e., employment) may be provided with employee benefits by his / her employer. Employee benefits may include benefits in cash or in kind that are received by an employee from the employer or third parties in respect of having or exercising the employment, such as:
(a) Employees’ pecuniary liabilities (e.g., utility bills, parking fees, and car maintenance charges)
(b) Club membership
(c) Gym membership
(d) Professional subscriptions
(e) Allowances (e.g., travelling allowance, petrol allowance or toll rate, parking rate / allowance, meal allowance)
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How do employees currently claim expenses related to these benefits?
Employees submit their claims by providing supporting documentation such as bills, receipts, or payment slips to prove the authenticity of such expenses. These claims are then recorded as the employer’s expenses for tax reporting purposes.
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What is required under the e-Invoicing system for expense claims?
With the implementation of e-Invoicing:
- Employees must request suppliers to issue e-Invoices in the employer’s name for proof of expenses.
- If this is not possible, employees can provide their own details to have e-Invoices issued in their name for submission.
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Are there any concessions provided by IRBM for e-Invoicing compliance?
Yes, the IRBM offers these concessions:
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- Businesses can accept e-Invoices issued in the name of the employee or traditional supporting documents as proof of expenses.
- For payments made to foreign suppliers, neither employers nor employees are required to issue self-billed e-Invoices. Foreign supplier receipts or similar documentation will be accepted.
- This exception applies only if the perquisites and benefits are clearly defined in the employer’s policies.
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What steps must employees follow to handle expense claims under the e-Invoicing system?
The steps inlcudes:
Step 1:
For any expense claim to be made by employees, employees should first seek confirmation with the Supplier if the e-Invoice can be issued in the name of the employer (as Buyer).
Step 2:
Where an e-Invoice can be issued to the employer, the employees should provide the details of the employer in order for the e-Invoice to be issued to the employer. Where Step 1 is not possible, the employees should provide their personal details to the Supplier for issuance of e-Invoice to the employee (as Buyer).
Step 3:
Payment will be made by the employees upon receiving the validated e-Invoice from the Supplier.
Step 4:
Employees submit their expense claim by submitting the validated e-Invoice (be it issued in the name of the employer or employee) as supporting document to the employer.
