1.0 Introduction
An e-Invoice serves to support the spending on business expense and acted as evidence for revenue recognition. Self-billed e-Invoice on the other hand supplement and complement the e-Invoice on certain important segment particularly relating to business expense paid to individuals, importing goods or services from overseas.
The IRB would expand the scope on e-Invoice from time to time.
2.0 Scope
For every issuance of self-billed e-Invoice, the recipient of the stock in trade and the services assumed the role of the supplier in issuing an e-Invoice to themselves in the course of carrying on of the business. The initiation of invoice issued acted on self-billing purposes for own business use is known as self-billed e-Invoice.
The applications relates mainly to payment of expenses with individual. The issuance of self-billed e-Invoice is to facilitate and justify the expenses paid are authentic and genuine in nature for business deduction.
It also opens up avenue for IRB to identify, analyse and trace the recipient on the source of income, income received, if needed.
2.1 Imported goods
Goods purchased from overseas suppliers and imported into Malaysia would be added with custom duty, excise duty and the sales tax whenever applicable. It forms part of stock in trade cost. The designated contents of self-billed e-Invoice must incorporate the particulars of the overseas supplier as contained in the supplier invoice; together with the payments on indirect tax, including custom duty.
2.2 Payment for services
The payment on services provided by non-resident companies outside Malaysia to Malaysia company need to be supplemented by self-billed e-Invoice. It amounts to an imported taxable service. The nature and particulars of the service provided, information on overseas service provider and digital service tax need to be included in the self-billed invoice for completeness. Service tax need to be accounted to RMC accordingly.
Where these self-billed e-Invoices are in relation to the provision of services on royalty, interest, special classes of income, other income, construction services, the withholding tax sum needs to be included in the self-billed invoice. Withholding tax sum needs to be accounted to IRB accordingly.
The timeline to issue e-Invoice is now extended by the IRB concession to be the end of the month following the month where
(a) payment by Malaysian customer or
(b) received invoice from the foreign supplier,
whichever is the earlier.
2.3 Commission payment to agent, dealer and distributor
The payment of commission or in kind incentives to individuals by MLM companies, insurance companies, estate agent firms or other service providers are required to be accompanied by self-billed e-Invoice. The particulars of these agents, dealers and distributors need to be compiled, verified as to its accuracy and changes, so to formulate the data pool for the purpose of issuing self-billed e-Invoice and CP58.
2.4 Services provided by individual
The payment of rental expense, interest expense to individual not carrying on business have to be accompanied by self-billed e-Invoice to facilitate the deduction of rental expense or interest expense as business expense.
The particulars of the landlord, such as the full name, address, contact number, email address, including the TIN number are essential particulars for the issuance of self-billed e-Invoice. This would facilitate IRB to identify and cross check on the rental income, interest reported by such individual landlord or lender.
2.5 Freelance
Influencer on social media, freelancer in providing services are encouraged to register the business with SSM being business person. Thereafter, they can register with IRB and access into MyInvois portal to issue e-Invoice on the service provided.
3.0 Contents of self-billed e-Invoice
The contents of the self-billed e-Invoice with the relevant data fields must be included with details of particulars and parameter. It has to be sufficient in its purposes to accommodate e-Invoice mechanism and business analysis of the trade especially MLM involving with the various vast diversified of agents, dealers and distributors.
4.0 Distinctions
The distinctions between e-Invoice and self-billed e-Invoice are analysed as follows:
5.0 Correlations between e-Invoice and self-billed e-Invoice
E-invoices are used and to be issued by the supplier to customers on the purchase of goods or services rendered.
The objective of self-billed e-Invoice is to justify and support the legitimate of the business deduction.
6.0 IRB
The IRB may impose condition on the contents and prescribe the situations or scenario for the issuance on self-billed e-Invoice. The self-billed e-Invoice shall be treated as an e-Invoice. [s 82C(6)]
This takes effect from 1.1.2024.
7.0 Conclusion
Self-billed e-Invoice complement the e-Invoice to provide a full spectrum of the accountability of the various payment of inventories cost and business expense making it legal and providing evidential proof of the expenses.
Self-billed e-Invoice is an important mechanism in e-Invoice system to circumvent tax leakages, ensure every revenue is timely, accurately and completely accounted, while expenses on the other hand are authentic, legitimately incurred and eligible as business deduction.
