Starting August 1, 2024, Malaysian businesses must comply with e-invoicing requirements for nearly all transactions, serving as proof for business expense claims.
While salaries remain exempt, employee benefits and perquisites are subject to e-invoicing regulations and must be properly documented for tax reporting.
This article highlights the impact of e-invoicing on employee benefits, the compliance steps involved, the challenges businesses may face, and the concessions offered by the IRBM.
Understanding Employee Benefits and Perquisites
Employee benefits and perquisites (perks) refer to additional compensation provided to employees beyond their base salary. These can be financial or non-financial in nature and are designed to enhance employee well-being, job satisfaction, and productivity. In Malaysia, many of these benefits have tax implications.
Common Types of Benefits & Perks
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Pecuniary Liabilities – Employer-covered personal expenses, such as:
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Club or gym memberships
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Professional association fees
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Allowances – Reimbursements for work-related expenses incurred by employees.
E-Invoicing Requirements for Employee Benefits
Under Malaysia’s new e-invoicing mandate, companies must issue digital invoices in real time via the MyInvois portal or through an API-integrated system.
This introduces new complexities, especially for employee expense claims, where employees typically pay upfront and later seek reimbursement. Now, employees must ensure vendors issue e-invoices—ideally in the employer’s name.
If that’s not possible, e-invoices under the employee’s name are still acceptable, provided compliance guidelines are followed.
Step-by-Step Compliance Process
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Check with the Supplier
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Before making a purchase, employees should confirm if the vendor can issue an e-invoice under the employer’s name.
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Make the Payment
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Once a valid e-invoice (either in the employer’s or employee’s name) is obtained, the employee proceeds with payment.
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Submit a Claim
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Employees must provide:
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The validated e-invoice
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Any supporting documents
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To receive reimbursement from the employer.
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IRBM’s Transitional Support Measures
To ease adoption, the Inland Revenue Board of Malaysia (IRBM) has introduced temporary concessions:
✅ Employee-Named E-Invoices Allowed – If suppliers cannot issue invoices under the employer’s name, employee-named e-invoices or traditional receipts remain valid for claims.
✅ Exemption for Foreign Suppliers – For overseas transactions (e.g., international subscriptions), standard foreign receipts or invoices are sufficient—no self-billed e-invoice is required.
⚠ Important Note: These concessions apply only if the company has a clearly defined benefits and claims policy.
Key Challenges in Implementation
Despite flexibility, businesses may face hurdles such as:
🔹 Limited Supplier Readiness – Smaller vendors or foreign suppliers may not support e-invoicing.
🔹 Increased Administrative Burden – Employees must verify e-invoice details before purchasing, potentially slowing reimbursements.
🔹 System Upgrades Needed – Companies may need to integrate their accounting software with MyInvois.
🔹 Training Requirements – Both employees and finance teams need guidance on the new procedures.
Final Thoughts
Malaysia’s e-invoicing mandate for employee benefits represents a significant shift toward a more transparent and efficient tax system.
While initial adjustments may be challenging, the long-term advantages—better compliance, streamlined claims, and accurate tax reporting—make it a worthwhile transition.
With proper training, updated policies, and the right tools, businesses and employees can smoothly adapt to this digital transformation.
