Malaysia E-Invoice for Employment Perquisites, Benefits and Employee Expenses Scenarios

Comprehensive Guide to Employment Perquisites, Benefits and Employee-Incurred Expenses with E-Invoicing in Malaysia

Introduction

In Malaysia's complex business environment, understanding employment perquisites, benefits, and the expenses employees incur on behalf of their employers is crucial. This guide focuses on these key areas, highlighting the role of e-Invoicing in streamlining documentation and ensuring accurate tax reporting. By implementing e-Invoicing, businesses and employees in Malaysia can achieve better compliance and efficiency in managing employment benefits and expenses. This comprehensive guide provides valuable insights into these processes, making it easier to navigate the requirements and advantages of e-Invoicing in Malaysia.

Employment Perquisites and Benefits in Malaysia

1. Definition and Examples:Employment perquisites and benefits in Malaysia refer to the various non-salary compensations provided to employees by their employers. These can be in cash or kind and are often essential for employee satisfaction and retention in Malaysia. Examples include:

• Pecuniary Liabilities: Payments such as utility bills, parking fees, and car maintenance charges.
• Memberships: Club and gym memberships.
• Professional Subscriptions: Subscriptions to industry-specific journals or organizations.
• Allowances: Travel, petrol, toll, parking, and meal allowances.

2. Current Expense Claim Process:Employees in Malaysia currently submit their expense claims to employers with supporting documents like bills, receipts, invoices, and payment slips. These claims are then recorded as the employer's expenses and reported for tax purposes in Malaysia.

3. Transition to E-Invoicing in Malaysia:With the advent of e-Invoicing in Malaysia, the process of claiming expenses is set to become more streamlined. Employees must request e-Invoices to be issued to their employers as proof of expense, whenever possible. This ensures accuracy and compliance in tax reporting in Malaysia.

4. IRBM Concessions:The Inland Revenue Board of Malaysia (IRBM) provides concessions to address challenges in obtaining e-Invoices:

• Use of Employee-Issued E-Invoices: Businesses in Malaysia can use e-Invoices issued in the employee’s name or existing supporting documents from suppliers.
• Foreign Supplier Expenses: For payments made to foreign suppliers, self-billed e-Invoices are not required. IRBM accepts foreign receipts/bills/invoices if perquisites and benefits are stated in the employer’s policy.

5. Steps to Manage E-Invoices for Perquisites and Benefits in Malaysia:

1. Seek Confirmation: Employees confirm if the e-Invoice can be issued in the employer’s name.
2. Provide Employer Details: If possible, employees provide employer details to the supplier.
3. Make Payment: Employees pay the expenses upon receiving the validated e-Invoice.
4. Submit Claims: Employees submit the e-Invoice (whether issued to the employer or employee) as supporting documentation to the employer.

Employee Expenses Incurred on Behalf of the Employer in Malaysia

1. Common Employee-Incurred Expenses:Employees in Malaysia often incur expenses such as accommodation, toll, parking, telecommunication, and foreign travel expenses on behalf of their employers.

2. Current Expense Claim Process:Similar to perquisites, employees in Malaysia must submit their claims with supporting documents like bills, receipts, and invoices for these expenses.

3. E-Invoicing Challenges and Solutions in Malaysia:Recognizing difficulties in obtaining e-Invoices in the employer’s name, IRBM allows:

• Use of Employee-Issued E-Invoices: Similar to perquisites, businesses in Malaysia can use e-Invoices in the employee’s name or other supporting documents.
• Foreign Expenses: No self-billed e-Invoice is needed for overseas expenses. Foreign bills/receipts/invoices are acceptable if the employer can prove the employee acted on their behalf.

4. Steps to Manage E-Invoices for Employee-Incurred Expenses in Malaysia:

1. Seek Confirmation: Employees confirm if the e-Invoice can be issued in the employer’s name.
2. Provide Personal Details: employees provide their details for the e-Invoice.
3. Make Payment: Employees pay the expenses upon receiving the validated e-Invoice.
4. Submit Claims: Employees submit the e-Invoice as supporting documentation to the employer.

Conclusion

Managing employment perquisites, benefits, and employee-incurred expenses in Malaysia can be complex, but the implementation of e-Invoicing streamlines this process. By understanding the required steps and leveraging the concessions provided by the IRBM, businesses and employees in Malaysia can achieve accurate and compliant expense reporting.