Self-Billed e-Invoice Malaysia: Requirements, Process & Examples

Malaysia's e-invoicing mandate began on August 1, 2024, requiring all businesses to electronically document all revenue and expenses through e-invoices. The mandate assigns the responsibility of issuing e-invoices to suppliers.

However, in specific scenarios—such as cross-border transactions or dealings with unregistered Suppliers—the Buyer must take on this role by issuing a self-billed e-invoice. This unique requirement is crucial for maintaining compliance when the supplier cannot generate an e-invoice.

This guide explores Malaysia's latest updates, types, examples, and compliance requirements for self-billed e-invoices.

What is a Self-Billed e-Invoice?

A self-billed e-invoice is a document issued by the Buyer rather than the Supplier to document an expense. According to the IRBM e-Invoice Guideline, self-billed e-invoices are particularly important in specific circumstances such as foreign transactions. For example, when a Malaysian taxpayer acquires goods or services from a foreign supplier who doesn't use Malaysia's MyInvois System, the Malaysian taxpayer must issue a self-billed e-invoice to document the expense1.

Self-billed e-invoicing follows the same technical requirements as regular e-invoices, requiring validation by IRBM through either the MyInvois Portal or API integration, with the key difference being that the Buyer creates and submits the document rather than the Supplier. 

Why is a self-billed e-invoice required?

Self-billed e-invoices are required primarily for proof of expense. They serve as documentation of transactions between buyers and sellers, particularly in scenarios where suppliers' traditional issuance of invoices may not occur, such as transactions with individual, unregistered sellers or specific types of transactions outlined in the guidelines. By creating a self-billed e-invoice, the buyer can substantiate the expense incurred, providing evidence for tax purposes and ensuring compliance with regulatory requirements.

When is a Self-Billed e-Invoice Required?

For e-invoice purposes, the Buyer is responsible for issuing self-billed e-invoices in the following scenarios:

1. Payments to agents, dealers, distributors, etc.
2. Purchases of goods or services from foreign suppliers
3. Distribution of profits (e.g., dividends) 
4. E-commerce transactions
5. Payouts to winners in betting and gaming activities (see note)
6. Acquisitions of goods or services from individual taxpayers who are not engaged in business (applies only if other self-billed circumstances are not relevant)
7. Interest payments, excluding:
   1. Businesses (e.g., financial institutions, etc.) charging interest to the public 
   2. Interest payments from employee to employer
   3. Interest payments from foreign payors to Malaysian taxpayers

Note: Payouts to casino betting and gaming machine activity winners are currently exempt from self-billed e-invoice requirements until further notice.

The details of each self-billed e-invoicing transaction listed are provided in e-invoicing specific guidelines released by LHDN.

Steps to issue Self Billed e-invoice

Issuing a self-billed e-invoice is largely like issuing a regular e-invoice in Malaysia, with only minor differences. Here are the steps:

1. Submission of Transaction Details: When a transaction occurs that necessitates a self-billed e-invoice, the buyer uploads all required transaction details to the Inland Revenue Board of Malaysia (IRBM).
2. Validation by IRBM: The submitted details of self-billed e-invoice is then validated by IRBM and a QR code and Unique Identification Number.
3. Notification of Validation: Once the e-invoice has been validated, both the supplier and buyer receive notification. However, notification may be optional for foreign entities and businesses registered outside Malaysia or those without access to Malaysian communication channels.
4. Sharing of e-invoice: After validation, the buyer can share the self-billed e-invoice, which includes an embedded QR code, with the supplier.
5. Request and Retrieval: The buyer has the option to request and retrieve the self-billed e-invoice, which should be stored for record-keeping purposes

Example of Self-Billed Invoice

Self-billed invoices are issued by the Buyer rather than the Supplier, particularly in scenarios like cross-border transactions or payments to agents, dealers, and distributors. Below is an example of a validated self-billed e-invoice for a transaction with a foreign supplier, based on the IRBM guidelines:

Scenario: A Malaysian Purchaser (Buyer) acquires goods from a Foreign Seller (Supplier) who does not use Malaysia's MyInvois System. The Malaysian Purchaser must issue a self-billed e-invoice to document the expense.

Details Included

1. The self-billed e-invoice must contain the following information:
2. Supplier's Name: Name of the foreign Supplier.
3. Supplier's TIN: "EI0000000010" (used for foreign Suppliers without TIN).
4. Supplier's Registration/Identification Number: "NA" (if unavailable).
5. Supplier's Address: "NA" (if unavailable).
6. Supplier's Contact Number: "NA".
7. Classification: A 3-digit integer representing the type of product/service.
8. Description of Product/Service: Details of goods or services acquired.
9. Quantity and Unit Price: Number of units purchased and price per unit.
10. Tax Type and Amount: Applicable tax details.
11. Total Payable Amount: Sum of all charges, including taxes.

Visual Representation

1. The validated self-billed e-invoice includes:
2. IRBM Unique Identifier Number.
3. Date and time of validation.
4. QR code for verification.

Example

For instance, if ABC Sdn Bhd purchases machinery worth RM50,000 from XYZ Inc., a foreign supplier, ABC Sdn Bhd would issue a self-billed e-invoice detailing the transaction as described above. The invoice would then be submitted to IRBM for validation via the MyInvois Portal or API.

This example demonstrates how self-billed invoices ensure compliance with Malaysia’s e-invoicing regulations for transactions where Suppliers cannot issue invoices directly.

Format

Parties involved in self-billed e-invoice

When it comes to self-billing in transactions, multiple parties are often involved. For instance, agents, dealers, and distributors act as intermediaries between the seller and the end buyer. Likewise, in e-commerce transactions, there's typically the platform, the seller, and the buyer.

The Inland Revenue Board of Malaysia (IRBM) has clarified the roles of parties involved in self-billed e-invoicing under the latest e-Invoice Guideline (Version 4.3) and e-Invoice Specific Guideline (Version 4.1). The table below outlines the updated scenarios and the respective roles of suppliers and buyers for self-billed e-invoices:

Details to be submitted to Generate Self-Billed E-Invoice

The details required for generating a self-billed e-invoice differ from those needed for a regular e-invoice. Additionally, the specifics of what needs to be submitted for each self-billed e-invoice depend on the nature of the transaction. These details are outlined in the LHDN's specific guidelines for each type of transaction. 

However, some key information must always be provided:

1. Supplier's Name: The Buyer inputs the supplier's name, whether it is a business or an individual.
   • For non-Malaysian individuals: Full name as per passport / MyPR / MyKAS 
2. Supplier's TIN: The Buyer inputs the Taxpayer Identification Number (TIN) of the Supplier, with additional requirements for foreign businesses. 
   • For Malaysian individuals who only provide their MyKad/MyTentera identification number, the Buyer should input "EI00000000010" instead of the TIN.
   • For Foreign Businesses: Enter the foreign Supplier’s business registration number and TIN if available.  If TIN is unavailable, enter “EI00000000030”. If the business registration number is unavailable, enter “NA”.
3. Supplier's Registration/Identification Number/Passport Number: For both Malaysian , if the Supplier only provides the TIN, the Buyer should input "000000000000" in this field.
   • For Non-Malaysian Individuals: Option 1: TIN only. Option 2: TIN and passport number / MyPR / MyKAS identification number.

Note: TIN refers to the number assigned by IRBM. If a non-Malaysian individual does not have a TIN, use the general TIN from Appendix 1 of the e-Invoice Specific Guideline, along with the individual's passport number / MyPR / MyKAS identification number.

4. Supplier's Address: The Buyer inputs the business address for businesses or the residential address for individual Suppliers.
5. Supplier's Contact Number: The Buyer inputs the Supplier's telephone number.

1. Supplier's SST Registration Number: If applicable, the Buyer inputs the Sales and Services Tax (SST) registration number of the Supplier. 
   • Where Supplier is not registered for SST, Buyer to input “NA” 

4. Supplier's Malaysia Standard Industrial Classification (MSIC) Code: If applicable, the Buyer inputs the Supplier's MSIC code.
5. Supplier's Business Activity Description: The Buyer inputs a description of the Supplier's business activity.
6. Classification: The Buyer assigns a 3-digit classification code to the products or services.
7. e-Invoice Code/Number: If applicable, the Buyer includes the document reference number used by the Supplier for internal tracking purposes.

Self-Billed E-Invoice Exemption

The IRBM has recognised the challenges in issuing e-invoices for certain types of income or expenses. Self-billed e-Invoices is not required for the following types of expenses:

(a) Employment income

(b) Pension

(c) Alimony

(d) Dividend distributions for :

• Taxpayers who are not entitled to deduct tax under Section 108 of the Income Tax Act 1967
• Businesses listed on Bursa Malaysia are exempt from issuing self-billed e-invoices for dividend distributions.

(e) Zakat

Conclusion

Self-billed e-invoices are a crucial component of Malaysia's e-invoicing regulations. They serve as proof of expenses in cases where the buyer doesn’t receive a normal e-invoice. Failure to generate self-billed e-invoices can result in non-compliance with e-invoicing requirements and the disallowance of expenses.

In addition to self-billed e-Invoices, other documents such as credit notes or refund notes may also need to be self-billed. The e-invoicing specific guidelines released by LHDN provide comprehensive details on the requirements for each type of transaction.