Imported Service Tax in 2024 and Self-Billed E-Invoice

Imported Service Tax in 2024 onwards with Self-Billed E-Invoice

1. Malaysia service tax will revise from 6% to 8% in 2024. Any imported taxable service before the effective date is subject to 6% and the tax rate will revise to 8% after effective date.
2. Imported service tax in Malaysia is based on the payment date and invoice received date, whichever is earlier.
3. Imported service tax is an expense to the recipient

Recipient of imported taxable service must prepare self-billed e-invoice after the payment of imported service tax.

The condition for the self-billed e-invoice as above:

1. It is a cross-border transaction
2. The recipient is acting as local buyer while foreign seller provides the taxable service, consumable in Malaysia
3. To complete Self-Billed E-Invoice, the local buyer will now act as supplier as foreign seller. 
4. Local buyer as supplier will issue self-billed E-Invoice after the payment of imported service tax.
5. There shall be no accounting impact for this self-billed e-invoice for imported taxable service.

The flow of the self-billed e-invoice as below:

1. Local buyer acquires taxable service from overseas service provider and completes payment for imported service tax
2. Local buyer will act as supplier to issue self-billed e-invoice
3. Local buyer will create self-billed e-invoice
4. Local buyer can check with foreign seller for the details to be entered into self-billed e-invoice or enter NA if information is not available
5. Local buyer will enter EI0000000030 as TIN - Tax Identification Number in self-billed e-invoice
6. Once the e-invoice is created, it will send to IRBM for validation by API or access point
7. IRBM will send notification to the local buyer only
8. The self-billed e-invoice is viewed as proof of expense for tax purpose
9. Local buyer will update or synchronize with ERP or accounting system