Treatment of e-Invoices: Top 15 Transactions that You Must be Clear On

Treatment of e-Invoices: Top 15 Transactions that You Must be Clear On

• Which types of income fall into the scope for e-Invoice, considering taxpayers may have a range of income sources of contributing to their annual turnover (e.g., interest income, investment income, gains from investment disposal)?

e-Invoice is required for all types of income and expenses, excluding certain types as outlined in the e-Invoice General Guideline and e-Invoice Specific Guideline. Kindly note that the abovementioned exemptions are subject to periodic review and updates.

• What is the e-Invoice treatment for deposits?

In cases where the deposit is refundable, the issuance of e-Invoice is not required. However, if the deposit is non-refundable, issuance of e-Invoice is required.

• Is an e-Invoice required for disbursements and reimbursements?

An e-Invoice may be required for disbursements and reimbursements, subject to the situation. Refer to Section 5 of the e-Invoice Specific Guideline for further details.

• What is the e-Invoice treatment for director fees?

Where the Director has entered into contract for service, the Director is required to issue e-Invoice to the company for any income received.

However, where the Director has entered into contract of service, the fees are considered as part of employment income. Currently, this is being exempted from issuance of e-Invoice as per the e-Invoice Guideline. Kindly note that the exemptions are subject to periodic review and updates.

• Do we need to issue e-Invoice for intercompany charges?

Yes, an e-Invoice is required to be issued for intercompany charges.

• Is e-Invoice required for inter-department / inter-division transactions within the same company?

No e-Invoice is required for inter-department / inter-division transactions with the same company. However, businesses may issue e-Invoice between inter-department / inter-division, depending on the businesses’ practices.

• Is an individual landlord required to issue e-Invoice to the tenant for rental of property?

Where the individual landlord is conducting a business, an e-Invoice is required to be issued to the tenant.

Where the individual landlord is not conducting a business, the tenant (if they are a business) would be required to issue a self-billed e-Invoice for the rental of property.

• How should the tenant substantiate its payment of utility expenses if the utility bills are issued in the landlord’s name?

If the tenant cannot request utility bills to be issued in their name, the utilities paid by the tenant should be included in:

• • The e-Invoice issued by the landlord (if the landlord is conducting a business); or
  • The self-billed e-Invoice issued by the tenant (if the landlord is not conducting a business),

as the case may be.

• In a consignment arrangement where the consignee pays the consignor for the goods consigned at their premises only when the goods are sold / consumed. In this case, when should an e-Invoice be issued?

The consignor (supplier in this case) should issue the e-Invoices to the consignee (buyer in this case) upon sale / consumption of goods by the consignee, in accordance with the current consignor’s practice in issuing invoices.

• Should self-billed e-Invoice on payment to agents, dealers and distributors be done on an accrual or paid basis?

The issuance of self-billed e-Invoices on payments to agents, dealers, and distributors can be done on either an accrual basis or paid basis, as long as this is consistently applied and in line with the documentation provided to the agents (e.g., statements).

• For certain corporate agents where the existing process includes the issuance of invoice to the company, can the current process of the corporate agent issuing the e-Invoice be maintained instead of being under self-billed e-invoice?

Buyer (i.e., taxpayer that makes payment to agents, dealers and distributors) is required to issue self-billed e-Invoice, irrespective if the agents, dealers and distributors are individual or corporate (i.e., supplier in this case). The buyer is obliged to share validated self-billed e-Invoice with the supplier upon validation.

In this regard, the agents, dealers and distributors are not required to issue an e-Invoice to the taxpayers who make payment.

• For monetary incentive payments, can self-billed e-Invoice be done based on the periodic statements provided to agents?

Yes, self-billed e-Invoices can be issued based on the periodic statements provided to agents following current practice / frequency (e.g., bi-weekly, monthly etc.). The appropriate classification code should be input in the self-billed e-Invoice.

• As the invoices / statements currently do not contain non-monetary incentive payments (e.g., incentive trips, gifts, etc.) and this information is typically only available during the preparation of the annual CP58, can the data for non-monetary incentives be transmitted upon the availability of such information (i.e., annually)?

Yes, it is acceptable to transmit the information for non-monetary incentive payments annually if such information is only available during the preparation of the annual CP58.

However, if such information is available on accrual or payment basis, or upon issuance of periodic invoices / statements provided to agents, dealers and distributors. Then, it should be transmitted to IRBM in the self-billed e-Invoice with the same frequency.

The appropriate classification code should be input in the self-billed e-Invoice.

• Can the self-billed e-Invoice be issued on a net basis (gross amount minus reversals), which matches the total amount paid as presented in the statements to agents?

Yes, a self-billing arrangement can be done on a net commission basis (gross amount minus reversals), provided the line details of the commission reversals are being included in the self-billed e-Invoice.

• Should self-billed e-Invoice on interest be done on an accrual or paid basis?

The issuance of self-billed e-Invoices on interest can be done on either an accrual basis or paid basis.

• Is there a way to better understand the mechanism, implementation and work flow for e-Invoice?

ANC Group – Your Personal Tax Advisor

Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies.

Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends.

ANC Group keep you abreast with Malaysia tax updates and any changes in the local regulations.

We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.