In Malaysia's e-Invoice ecosystem, most transactions follow the standard pattern: suppliers issue e-Invoices to buyers.
However, in certain scenarios, this flow is reversed through a mechanism known as "self-billed e-Invoicing".
Understanding when and how to use self-billed e-Invoices is crucial for businesses aiming to remain compliant with Malaysia's e-Invoice regulations, which come into full effect by 2026.
What Are Self-Billed e-Invoices?
A self-billed e-Invoice occurs when the buyer, not the supplier, creates and issues the invoice. In this scenario, the buyer assumes the role of invoice issuer, documenting the transaction for both parties.
Once validated by LHDN, this self-billed e-Invoice serves as proof of expense for the buyer and proof of income for the supplier.
This reversal of the traditional invoicing flow addresses specific business scenarios where standard invoicing would be impractical or inefficient.
When Self-Billed e-Invoices Are Required
LHDN has clearly defined specific circumstances where Malaysian businesses must issue self-billed e-Invoices:
1. Foreign Transactions
When purchasing goods or services from foreign suppliers who aren't subject to Malaysia's e-Invoice system, Malaysian buyers must issue self-billed e-Invoices to document these expenses.
Example: A Malaysian manufacturer purchases raw materials from a supplier in Thailand.
Since the Thai supplier isn't subject to Malaysia's e-Invoice regulations, the Malaysian manufacturer must issue a self-billed e-Invoice for this transaction.
2. Transactions with Individuals Not Conducting Business
When businesses purchase goods or services from individuals who aren't operating as businesses, self-billed e-Invoices are required.
Example: A company purchases a used office furniture item from an individual seller. The company must issue a self-billed e-Invoice since the individual is not conducting business and isn't required to issue an e-invoice.
3. Payments to Agents, Dealers, or Distributors
For payments (monetary or non-monetary) made to agents, dealers, or distributors arising from sales or transactions they've facilitated.
Example: An automotive company pays commission to its sales agents.
To document these commission payments, the company must issue self-billed e-Invoices.
4. E-Commerce Transactions
Local e-commerce platform providers must issue self-billed e-Invoices to merchants and service providers (like delivery riders) for transactions concluded on their platforms.
Example: An online marketplace platform issues self-billed e-Invoices to sellers when distributing payments for products sold through the platform.
5. Interest Payments
Interest payments generally require self-billed e-Invoices, with exceptions for financial institutions, employer-employee loans, and foreign payers.
Example: A company paying interest on a loan from a non-financial institution must issue a self-billed e-Invoice for the interest payment. For instance, Inter-company loan.
6. Other Specific Scenarios
Additional scenarios requiring self-billed e-Invoices include:
• Pay-outs to betting and gaming winners
• Insurance claim, compensation, or benefit payments
• Capital reductions, share redemptions, or liquidation proceeds
• Dividend distributions (with specific exceptions)
How to Issue Self-Billed e-Invoices
Step 1: Gather Required Information
For self-billed e-Invoices, you'll need comprehensive information about your supplier, including:
• Supplier's Name
• Supplier's TIN (Tax Identification Number)
• Supplier's Registration/Identification Number
• Supplier's Address
• Supplier's Contact Number
• Supplier's SST Registration Number (if applicable)
• Supplier's MSIC Code (if available; put “00000” if not available)
• Supplier's Business Activity Description (if available; put “NA” if not available)
This information should be readily available for Malaysian suppliers. If the TIN is unavailable for foreign suppliers, use the general TIN "EI00000000030" as prescribed by LHDN.
Step 2: Select the Appropriate Classification Code
Self-billed e-Invoices have specific classification codes based on the transaction type:
• Self-billed – e-Invoice from local e-commerce platform to seller, logistics, etc.
• Self-billed – Betting and gaming (Code 033)
• Self-billed – Importation of goods (Code 034)
• Self-billed – Importation of services (Code 035)
• Self-billed – Others (Code 036)
• Self-billed – Monetary payment to agents, dealers or distributors (Code 037)
• Self-billed – Non-monetary payment to agents, dealers or distributors (Code 045)
Selecting the correct code ensures proper categorisation within the tax system.
Step 3: Create and Submit the Self-Billed e-Invoice
You can create self-billed e-Invoices through either:
• MyInvois Portal: The free platform provided by LHDN
• API integration: Direct connection between your systems and LHDN's platform
Include all required fields per Appendices 1 and 2 of the e-Invoice Guideline, ensuring accuracy and completeness.
Step 4: Share the Validated e-Invoice with the Supplier
After LHDN validates your self-billed e-Invoice, you're obligated to share the validated document with your supplier. This can be the actual e-invoice (XML/JSON file) or a visual representation with an embedded QR code.
Timing Requirements for Self-Billed e-Invoices
Different types of self-billed e-Invoices have specific timing requirements:
• Importation of goods: Issue by the end of the second month following the month when customs clearance was obtained
• Importation of services: Issue by the end of the month following the month either payment or receipt of the foreign supplier's invoice, whichever is earlier
• Foreign income: Issue by the end of the month following receipt of the income
For other general transactions, it's advisable to issue self-billed e-Invoices as close to the transaction date as possible.
Consolidated Self-Billed e-Invoices
In certain scenarios, businesses can issue consolidated self-billed e-Invoices for multiple transactions, including:
• Transactions with individuals not conducting business
• Interest payments to the public
• Insurance-related payments to individuals, the government, or authorities
• Transactions involving overseas branches or offices
These must be submitted within seven calendar days after the month-end, similar to standard consolidated e-Invoices.
Common Challenges and Solutions
Challenge 1: Obtaining Complete Supplier Information
Some suppliers, especially individuals or foreign entities, may not readily provide all required information.
Solution: Develop standardised onboarding processes for new suppliers that collect all necessary information upfront. For existing suppliers, conduct a data enrichment exercise to fill information gaps.
Challenge 2: Timing for Import Transactions
Aligning customs clearance dates with self-billed e-Invoice issuance can be challenging.
Solution: Implement a system to track customs clearance dates and set automated reminders for self-billed e-Invoice issuance deadlines.
Challenge 3: System Integration
Many accounting systems aren't designed to handle reverse-flow invoicing.
Solution: Evaluate your current accounting system's capabilities and consider add-ons or custom configurations to support self-billed e-Invoicing.
Best Practices for Managing Self-Billed e-Invoices
1. Document your processes: Create clear standard operating procedures for self-billed e-Invoice scenarios.
2. Maintain supplier master data: Keep comprehensive records of all supplier information required for self-billed e-Invoices.
3. Train relevant staff: Ensure your team understands when and how to issue self-billed e-Invoices.
4. Conduct regular reconciliations: Compare self-billed e-Invoices with actual expenses to document all transactions properly.
5. Leverage technology: Where possible, automate self-billed e-Invoice generation through API integration.
Self-billed e-Invoices represent an important component of Malaysia's e-Invoice framework.
They address specific transaction types where traditional invoicing would be impractical. By understanding when self-billed e-Invoices are required and implementing systematic processes for creating and managing them, businesses can ensure compliance while maintaining efficient operations.
As Malaysia moves toward e-Invoice implementation in 2025-2026, establishing robust self-billed e-Invoice procedures now will help prevent compliance issues and potential penalties when the system becomes mandatory for your business.
About the Author
Mr. Chin Chee Seng is the Independent Non-Executive Director of AutoCount and the Founder of CCS Group.
This e-Invoice News series is a collaboration with AutoCount.
