Malaysia e-Invoicing Basics
An e-Invoice is a structured tax document validated by LHDN in near real time, issued through the MyInvois Portal or via API integration. It replaces traditional invoices, receipts, debit notes, and credit notes and includes a validation link/QR for verification by buyers.
Whether you’re a startup owner, SME manager, or finance executive in Malaysia, grasping the distinction between bookkeeping vs. accounting can help you choose the right tools, like AutoCount, to support your operations and improve your financial management.
MyInvois Portal vs API
- Portal: Best for SMEs issuing manually.
- API: Ideal for higher volumes; integrates POS/ERP for automation.
Why Deposit Handling Matters
Classifying deposits correctly prevents double taxation, avoids audit flags, and ensures clean month-end reconciliation.
Key Principles for Deposits (Refundable vs Non-Refundable)
Refundable Deposits
- No e-Invoice on collection (not income on receipt).
- No e-Invoice on return of deposit; use a receipt/payment voucher.
- Issue an e-Invoice only when the deposit is forfeited (becomes income) or applied to a sale.
Non-Refundable Deposits
- Issue an e-Invoice immediately on collection (income recognized).
- On final billing, reference the earlier deposit e-Invoice and show the deduction.
Partially Refundable Deposits
- Split the deposit into non-refundable and refundable parts.
- Issue an e-Invoice for the non-refundable portion when collected.
- Issue an e-Invoice for the refundable portion only if forfeited or applied to the sale.
When Refundable Becomes Non-Refundable
If the contract provides that a refundable deposit becomes non-refundable when certain conditions are met (e.g., cancellation within 48 hours), you must issue an e-Invoice at the moment of forfeiture.
| Type | On Collection | On Refund | On Forfeiture | On Final Sale |
|---|---|---|---|---|
| Refundable | No e-Invoice (issue receipt) | No e-Invoice (voucher/receipt) | Issue e-Invoice for forfeited amount | Deduct deposit in final e-Invoice |
| Non-Refundable | Issue e-Invoice immediately | Refund Note e-Invoice (if any goodwill refund) | Already treated as income | Reference deposit; bill balance |
| Partially Refundable | Invoice non-refundable part; receipt for refundable part | No e-Invoice for refundable part | Invoice only the portion forfeited | Show both deductions clearly |
Identifying Deposit Types in Practice
Usually Refundable
- Security/damage/key deposits (rental, hotel, equipment)
- Container deposits
- Performance/security retentions (by agreement)
Usually Non-Refundable
- Booking/Reservation fees (to secure capacity)
- Advance payments/Down payments
- Deposits clearly labelled “non-refundable” in the contract
Tip: Put the deposit status in the contract, receipt, and e-Invoice description. Ambiguity leads to disputes and reporting errors.
Step-by-Step e-Invoice Treatment
1. Collecting a Deposit
- Check contract: refundable, non-refundable, or split.
- If refundable → No e-Invoice. Issue a normal receipt.
- If non-refundable → Issue e-Invoice immediately.
- If partially refundable → e-Invoice only the non-refundable portion; receipt the refundable portion.
2. Applying the Deposit to a Sale
- Include a line in the final e-Invoice: Less: Deposit Received (Ref: INV-XXXX).
- For refundable deposits applied, the application is taxable if the underlying supply is taxable.
3. Refunding a Deposit
- Refundable deposits: issue payment voucher/receipt; no e-Invoice.
- If you refund a non-refundable deposit (goodwill), raise a Refund Note e-Invoice for the refunded portion.
4. Forfeiture
- When conditions trigger forfeiture, the amount becomes income.
- Issue an e-Invoice for the forfeited amount on that date.
Industry Examples (Malaysia)
1. Rental Property Security Deposit (RM3,000)
- Collection: No e-Invoice; issue receipt.
- Full refund: No e-Invoice; issue payment voucher/receipt.
- Partial deduction (RM500): Issue e-Invoice for RM500 only; refund the balance.
2. Event Venue Booking Fee (Non-Refundable RM1,000; Total RM10,000)
- Collection: Issue e-Invoice for RM1,000 immediately; label clearly “non-refundable booking fee.”
- Final billing: Issue e-Invoice for RM9,000; reference the deposit e-Invoice; show deduction lines.
3. Custom Furniture Order (Deposit RM5,000: RM1,000 Non-Refundable Design Fee + RM4,000 Refundable)
- Collection: e-Invoice for RM1,000 only; receipt for RM4,000.
- Cancellation before production: Refund RM4,000 (no e-Invoice).
- Completion: Final e-Invoice shows both deductions (design fee and applied refundable deposit).
4. Hotel Deposit with Cancellation Policy (RM500 Refundable → Forfeited if <48 hours)
- Collection: No e-Invoice; issue receipt.
- Late cancellation: Issue e-Invoice for RM500 on forfeiture date.
- Stay completed: Deduct RM500 in the final e-Invoice for room charges.
Consolidated e-Invoices for Non-Refundable Deposits
If your business collects many small non-refundable deposits and buyers do not request individual e-Invoices, you may issue a Consolidated e-Invoice.
| Item | What To Do |
|---|---|
| Eligibility | Non-refundable deposits where individual invoices were not requested; ensure your industry isn’t mandated for per-transaction e-Invoices. |
| Timing | Submit within 7 calendar days after month-end(e.g.,by 7th of the next month) |
| Data | Aggregate by buyer (if applicable) or as permitted; keep internal receipt trail to support conolidation. |
| Exceptions | Some sectors may still need individual e-Invoices; check latest LHDN notes |
Always confirm customers’ preferences. If a buyer asks for an individual e-Invoice, issue it even if you typically consolidate.
Compliance Toolkit for SMEs
Contracts & Documentation
- State deposit status (refundable/non-refundable/conditional) and triggers (e.g., forfeiture).
- Align receipts and e-Invoices with that status to avoid mixed messages.
- Retain proof: signed T&Cs, emails, booking confirmations.
Accounting & SST Pointers
- Refundable deposit: liability on collection; move to income only when forfeited/applied.
- Non-refundable deposit: income on receipt; use Refund Note e-Invoice to reverse if refunded.
- SST: only when applied to a taxable sale or forfeited related to a taxable supply.
Audit Trail Must-Haves
- Clear cross-references: deposit receipt ↔ deposit e-Invoice (if any) ↔ final e-Invoice.
- Date-sensitive actions (e.g., forfeiture date) should match e-Invoice issue dates.
- For cross-border: self-billed e-Invoices may apply if supplier is foreign.
Official resources: LHDN e-Invoice Guidelines.
FAQs
No. Issue an e-Invoice only if the deposit is forfeited or applied to a sale.
Issue a Refund Note e-Invoice for the refunded portion to reverse revenue and update IRBM records.
Yes, for small non-refundable deposits where buyers didn’t request individual e-Invoices. Submit within 7 days after month-end.
Rules are similar, but if the supplier is foreign, a self-billed e-Invoice by the Malaysian buyer may be required as proof of expense.
They can request documentation, but an e-Invoice is typically not issued until application/forfeiture. Provide a receipt or pro-forma.
Learn E-Invoicing with Our Expert-Led Classes
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