How to Issue e-Invoices for Profit Distribution & Foreign Income?
Understanding Profit Distribution and E-Invoicing in Malaysia
Profit distribution, such as dividend payments, is a key aspect of corporate finance. In Malaysia, the process for distributing profits and related e-invoicing requirements have specific guidelines to follow. This blog will simplify these concepts and explain how e-invoicing affects both domestic and foreign profit distributions.
Domestic Profit Distribution
In Malaysia, companies distributing profits to shareholders traditionally use dividend vouchers or dividend warrants. With the introduction of e-invoicing, there are updates to these processes:
- Exemptions for Certain Taxpayers: Companies listed on Bursa Malaysia and those not eligible for tax deductions under Section 108 of the Income Tax Act 1967 are exempt from issuing self-billed e-invoices for dividend distributions. This means they can continue using their existing processes, like issuing dividend vouchers or warrants.
- Requirements for Other Taxpayers: Taxpayers not covered by the exemption must issue self-billed e-invoices to document the dividend distribution. The self-billed e-invoice serves as proof of income for the recipient.
For more information on how this process works, check out our detailed e-invoice guidelines.
Steps for Issuing a Self-Billed E-Invoice
- Issuing Dividend Voucher: When a profit, such as a dividend, is paid or credited, the taxpayer making the distribution will issue a dividend voucher to the recipient.
- Self-Billed E-Invoice: The distributor must then act as the Supplier and issue a self-billed e-invoice to the recipient.
- Completing the E-Invoice: Fill out the required fields in the e-invoice as specified in the e-Invoice Guideline, following the process detailed in the MyInvois Portal or via API.
| No |
Data Field |
Details to be included by taxpayer that makes the distribution in self-billed e-Invoice |
| 1 |
Supplier’s Name |
Name of Recipient |
For business: Name of business
For Malaysian individuals: Full name as per MyKad / MyTentera
For non-Malaysian individuals: Full name as per passport / MyPR / MyKAS
|
| 2 |
Supplier’s TIN |
TIN of Recipient |
For Malaysian Businesses: Taxpayer that makes the distribution to input Recipient’s TIN and business registration number. Note that it is mandatory for Malaysian Businesses to provide TIN and business registration number.
For Foreign Businesses: Taxpayer that makes the distribution to input Recipient’s TIN and business registration number, where available
|
| 3 |
Supplier’s Registration / Identification Number / Passport Number |
Details of registration / identification number / passport number |
Where TIN is not available or not provided, taxpayer that makes the distribution to input “EI00000000030” for Foreign Recipient
Where business registration number is not available or not provided, taxpayer that makes the distribution to input “NA” for Foreign Recipient
For Malaysian individuals:
i. Option 1: TIN only
ii. Option 2: MyKad / MyTentera identification number only
iii. Option 3: Both TIN and MyKad / MyTentera identification number
For non-Malaysian individuals:
i. Option 1: TIN only
ii. Option 2: Both TIN and passport number / MyPR / MyKAS identification number
For clarity, (i) refers to the TIN assigned by IRBM. In the event that the non-Malaysian individual does not have a TIN, Supplier may use the general TIN (as listed in Appendix 1 of this e-Invoice Specific Guideline), along with the passport number / MyPR / MyKAS identification number of the said individual
|
| 4 |
Supplier’s Address |
Address of Recipient |
Taxpayer that makes the distribution to input business address (for business) / residential address (for individual) of the Recipient |
| 5 |
Supplier’s Contact Number |
Telephone number of Recipient |
Taxpayer that makes the distribution to input the contact number of Recipient |
| 6 |
Supplier’s SST Registration Number |
SST registration number of Recipient |
Where applicable, taxpayer that makes the distribution to input Recipient’s SST registration number
Taxpayer that makes the distribution to input “NA” if such information is not applicable, not available or not provided
|
| 7 |
Classification |
Classification of products or services |
Taxpayer that makes the distribution to input a 3-digit integer (e.g., “000” to “999”), in accordance with the catalogue set by IRBM |
| 8 |
e-Invoice Code / Number |
Document reference number used by the taxpayer that makes the distribution for internal tracking purposes |
Reference number of the dividend voucher issued by the taxpayer that makes the distribution |
Foreign Profit Distribution
For foreign profits or dividends received in Malaysia:
- E-Invoice Requirement: The recipient must issue an e-invoice to document the income for tax purposes.
- Roles in E-Invoicing: In this scenario, the recipient of the profit or dividend is the Supplier, and the foreign distributor is the Buyer.
- E-Invoicing Process: Follow the detailed e-invoice workflow as outlined in the e-Invoice Guideline for both the MyInvois Portal and API models.
Foreign Income
An e-Invoice is required for all foreign income received in Malaysia from outside the country as proof of income for tax purposes. Here are the steps and roles involved:
- Roles for E-Invoicing:
- Supplier: Recipient of the foreign income (referred to as "Income Recipient").
- Buyer: Person who makes payment to the Income Recipient (referred to as "Payor").
- Issuance Process:
- The process of issuing an e-Invoice for foreign income is similar to the issuance of an e-Invoice involving a Malaysian Supplier and Foreign Buyer.
- The Income Recipient should issue the e-Invoice by the end of the month following the month of receipt of the foreign income.
- Required Information:
- The information required to be included in the e-Invoice should assist the Income Recipient in issuing the e-Invoice accurately.
| No |
Data Field |
Details to be included by Income Recipient in an e-Invoice |
| 1 |
Buyer’s Name |
Name of Payor |
For Business: Name of business
For non-Malaysian individuals: Name as per passport / MyPR / MyKAS
|
| 2 |
Buyer’s TIN |
TIN of Payor |
Income Recipient to input the Payor’s TIN, where available
Where TIN is not available or not provided, Income Recipient to input “EI00000000020” for Payor
|
| 3 |
Buyer’s Registration / Identification Number / Passport Number |
Details of registration / identification number / passport number |
Where available, Income Recipient to input the registration / passport number / MyPR / MyKAS identification number of Payor
Income Recipient to input “NA” if business registration number is not available or not provided
|
| 4 |
Buyer’s Address |
Address of Payor |
Income Recipient to input the business address (for business) / residential address (for individual) of Payor
|
| 5 |
Buyer’s Contact Number |
Telephone number of Payor |
Income Recipient to input the contact number of Payor
|
| 6 |
Buyer’s SST Registration Number |
SST registration number of Payor |
Where applicable, Income Recipient to input Payor’s SST registration number
Income Recipient to input “NA” if such information is not applicable, not available or not provided
|
Conclusion
Understanding profit distribution and the associated e-invoicing requirements ensures compliance with Malaysian regulations and streamlines financial processes. Whether dealing with domestic or foreign distributions, following the correct procedures helps maintain smooth operations and proper documentation.
For more details on Malaysia's e-invoicing model, check out our in-depth guide.
Related Blogs
To gain a deeper understanding of Malaysia's e-invoicing regulations and processes, check out these related blogs:
How to Issue e-Invoices for Profit Distribution & Foreign Income?
