Bills in a Related Company's Name, Can Your Company Still Claim the Deduction?

In many business groups, one company signs the tenancy, opens the utility account or employs the staff, while another company uses them and bears the cost.

So, can the company that bears the cost claim the tax deduction?

This was the issue for M12SB, a ready-mixed concrete subcontractor in the MDC Group, in a case summarised in LHDN's Revenews on 29 October 2026. After auditing YA 2016 to 2018, LHDN disallowed deductions for, among others, site rental, utilities and staff costs.

Why did LHDN reject them?

The tenancy, utility and employment records were mainly in the names of related companies or other parties. There were also no cost-sharing or back-charge agreements made at the time to show how the costs passed to M12SB.

LHDN said internal accounting records alone were not enough, and using the premises did not prove M12SB itself incurred the cost.

M12SB said the group was run centrally and the costs were back-charged to it. It showed its accounting records, debit notes, payment vouchers and bank records.

What was the outcome?

On 29 October 2026, the Special Commissioners of Income Tax (the tribunal that hears income tax appeals) found M12SB had proven its case and set aside the assessments for all three years. LHDN may still appeal within 21 days.

In simple terms, the evidence was enough to show the company really bore these costs. But the summary does not say which documents were relied on.

From a business perspective, "this expense is for my business" and "my company paid for it" are two different questions. When bills carry another company's name, both need to be shown.

If your company shares premises, utilities or staff with related companies, our team can help review the supporting records and tax treatment of these costs. Feel free to WhatsApp us at 010-246 2151.