E-Invoice Specific Guidelines: A Comprehensive Overview
The Inland Revenue Board of Malaysia (IRBM) has recently published comprehensive e-invoice guidelines to assist taxpayers in understanding and implementing electronic invoicing. These guidelines provide detailed instructions and clarifications on various aspects of e-invoicing, ensuring a smooth transition from traditional invoicing methods. This article delves into the critical aspects of these guidelines, covering key areas such as transactions with buyers, periodic statements or bills, disbursement and reimbursement, and self-billed e-invoices.
Objective of the Guidelines
The primary objective of these guidelines is to offer further guidance on the issuance of e-invoices in several specific scenarios:
Transactions with buyers
Statements or bills on a periodic basis
Disbursement and reimbursement
Employment perquisites and benefits
Certain expenses incurred by employees on behalf of employers
Self-billed e-invoices
Transactions involving payments to agents, dealers, or distributors
Cross-border transactions
Profit distribution (e.g., dividend distribution)
Foreign income
Currency exchange rate
E-commerce transactions
E-invoice treatment during the interim relaxation period
Transactions with Buyers
Currently, businesses issue hardcopy or softcopy receipts/bills/invoices to record transactions. With the implementation of e-invoicing, suppliers must issue e-invoices for all transactions. However, some buyers may not require an e-invoice as proof of expense. To address this, the IRBM allows suppliers to consolidate transactions with buyers who do not require e-invoices into a monthly consolidated e-invoice.
Scenario 1: Buyer Requires an E-Invoice
When a buyer requests an e-invoice, the supplier must obtain the necessary details from the buyer. The process involves the following steps:
Supplier confirms with the buyer if an e-invoice is needed.
If required, the buyer provides the necessary information.
The supplier completes the required fields and issues the e-invoice.
The validated e-invoice serves as the buyer's proof of expense for tax purposes.
To streamline the process for individual buyers, the IRBM has provided concessions:
Malaysian individuals can provide either their TIN, MyKad/MyTentera identification number, or both.
Non-Malaysian individuals can provide either their TIN or both their TIN and passport number/MyPR/MyKAS identification number. If a non-Malaysian individual does not have a TIN, the supplier can use a general TIN provided by the IRBM, along with the individual's passport number/MyPR/MyKAS identification number.
Details to be Provided by Individual Buyers
Individual buyers must provide the following details to the supplier:
Buyer’s name
Buyer’s TIN
Buyer’s registration/identification number/passport number
Buyer’s address
Buyer’s contact number
Buyer’s SST registration number (if applicable)
Details to be Provided by Individual Shipping Recipients
If the shipping recipient is different from the buyer, the following details must be provided:
Shipping recipient’s name
Shipping recipient’s address
Shipping recipient’s TIN
Shipping recipient’s registration/identification number/passport number
If the individual buyer or shipping recipient provides only the TIN or MyKad/MyTentera identification number, the supplier should input the provided details accordingly.
Scenario 2: Buyer Does Not Require an E-Invoice
If the buyer does not require an e-invoice, the supplier will issue a normal receipt. The supplier can then aggregate these transactions monthly and submit a consolidated e-invoice to the IRBM within seven calendar days after the month-end. The IRBM allows suppliers to adopt one or a combination of the following methods for consolidated e-invoices:
The summary of each receipt is presented as separate line items.
The list of receipts is presented as line items.
Branches or locations submit consolidated e-invoices, adopting either of the above methods for the receipts issued.
Activities Requiring E-Invoices for Each Transaction
Certain activities require e-invoices for each transaction, and consolidated e-invoices are not allowed. These include:
Sale of any motor vehicle
Sale of flight tickets and private charters
Luxury goods and jewelry sales
Construction contracts
Statements or Bills on a Periodic Basis
Some businesses issue statements or bills periodically, such as monthly or annually. Upon the implementation of e-invoicing, these businesses must issue e-invoices in statement or bill format. The issuance of e-invoices should align with the billing cycle, and all details from the statements or bills must be included in the e-invoice.
When payments are made before the issuance of the e-invoice, the supplier must issue a receipt as proof of payment. Once the e-invoice is generated, the supplier must provide it to the buyer.
Details to be Included in E-Invoices (Statement/Bill Format)
The details to be included in an e-invoice in statement/bill format are:
Supplier’s name
Supplier’s TIN
Supplier’s registration number
Supplier’s address
Supplier’s contact number
Buyer’s name
Buyer’s TIN
Buyer’s registration number
Buyer’s address
Buyer’s contact number
Statement period
Due date
Statement details
Total amount due
E-invoice code/number
For transactions where payments are made before the statement or bill is issued, the supplier must include the payment details in the e-invoice.
Consolidated E-Invoices for Statements/Bills
Suppliers can also issue consolidated e-invoices for statements or bills. The details to be included are similar to those for individual e-invoices, with additional fields for the statement period and due date.
Disbursement and Reimbursement
Disbursement refers to payments made to settle expenses on behalf of another party, while reimbursement is the repayment of those expenses. E-invoices must be issued for disbursement and reimbursement transactions to ensure proper documentation and tax compliance.
When a supplier makes a payment to a third party on behalf of a buyer, the third party issues the e-invoice directly to the buyer. The supplier then claims the payment from the buyer. The supplier should not include the payment in their e-invoice to the buyer.
Employment Perquisites and Benefits
E-invoices must be issued for employment perquisites and benefits provided to employees. This includes allowances, gifts, and other benefits. The e-invoice should include details of the employee, the perquisite or benefit provided, and its value.
Certain Expenses Incurred by Employees on Behalf of the Employer
When employees incur expenses on behalf of their employer, the employer must issue a self-billed e-invoice to the employee. This ensures that the expenses are properly documented and can be claimed for tax purposes.
Self-Billed E-Invoice
A self-billed e-invoice is an e-invoice issued by the buyer to the supplier. This is required in certain situations, such as when the supplier is an individual who is not conducting a business. The buyer assumes the role of the supplier and issues the e-invoice.
Self-billed e-invoices are also required for specific transactions, including:
Payments to agents, dealers, or distributors
Cross-border transactions
Profit distribution (e.g., dividend distribution)
Payments related to capital reduction, share redemption, or liquidation proceeds
Transactions Involving Payments to Agents, Dealers, or Distributors
In transactions involving agents, dealers, or distributors, the seller (buyer) must issue a self-billed e-invoice to the agent, dealer, or distributor. This ensures that all payments are properly documented and can be accounted for.
Cross-Border Transactions
Cross-border transactions involve dealings between a Malaysian resident and a non-resident. The guidelines provide specific rules for issuing e-invoices in these transactions.
Import of goods/services: The Malaysian purchaser must issue a self-billed e-invoice to the foreign seller.
Export of goods/services: The Malaysian seller must issue an e-invoice to the foreign purchaser.
Profit Distribution (e.g., Dividend Distribution)
When a company distributes profits to its shareholders, it must issue a self-billed e-invoice to the recipients. This ensures that the profit distribution is properly documented.
Foreign Income
The guidelines also cover the issuance of e-invoices for foreign income received by Malaysian taxpayers. The income recipient is required to issue an e-invoice to report the receipt of the income.
Currency Exchange Rate
For transactions involving foreign currency, the e-invoice must include the currency exchange rate used for the transaction. This ensures transparency and accurate record-keeping.
E-Commerce Transactions
E-commerce transactions involve the sale and purchase of goods or services online. The guidelines provide specific rules for issuing e-invoices in these transactions.
The e-commerce platform provider must issue an e-invoice to the purchaser.
In certain cases, the e-commerce platform provider may need to issue a self-billed e-invoice to the merchant or service provider.
E-Invoice Treatment During Interim Relaxation Period
The guidelines also address the treatment of e-invoices during the interim relaxation period. This period allows taxpayers time to adjust to the new e-invoicing requirements.
Conclusion
The IRBM's e-invoice specific guidelines provide comprehensive guidance for taxpayers to navigate the new e-invoicing landscape. By addressing various transaction scenarios and providing clear instructions, these guidelines aim to ensure a smooth transition to electronic invoicing, promoting efficiency and transparency in business transactions. Taxpayers are advised to familiarize themselves with these guidelines to ensure compliance and avoid any potential issues.