When a customer pays before the job is done or the goods are delivered, many business owners are not sure what to do with the e-invoice. Does it go out immediately when the money comes in, or only when the full transaction is concluded?

The confusion is understandable. In practice, some suppliers issue a proforma invoice when collecting an advance, then follow up with the actual invoice later. Others treat all upfront payments the same way regardless of whether the amount can be refunded. Neither approach is necessarily wrong, but the e-invoice obligation depends on one specific question: is the deposit refundable or not?

Under LHDN's e-invoice framework, a refundable deposit does not require an e-invoice at the point of collection. Because the money may be returned to the buyer, there is no completed transaction to document and no e-invoice obligation arises at that stage. Equally, when a refundable deposit is eventually returned to the buyer, no refund note e-invoice is required either.

A non-refundable deposit is treated differently. Once a customer pays a booking fee or commitment deposit that they cannot get back, an e-invoice is required. That money is income from the moment it is received, and the e-invoice must reflect that.

The proforma invoice does not change this. A proforma is not a validated e-invoice and does not satisfy the requirement. If the deposit collected under a proforma arrangement is non-refundable, the obligation to issue and submit a validated e-invoice to MyInvois arises at the point the non-refundable payment is received, not at the point the final invoice is issued.

Getting this right matters because LHDN can compare your submitted e-invoices against your actual receipts. A consistent pattern of non-refundable deposits collected without a corresponding validated e-invoice is the kind of gap that surfaces during a tax audit.

If you are unsure how this applies to your business, feel free to reach out to us on WhatsApp at 010-246 2151.

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