When a supplier hands over a handwritten bill instead of a validated e-invoice, many business owners are not sure what to do. The instinct is to self-bill the supplier to stay safe. But that instinct is not always correct, and acting on it can actually create a problem for the supplier.

The self-billed e-invoice is not a catch-all solution for any supplier who does not hand over a validated document. It applies only in specific situations defined under the e-invoice framework. One of the clearest rules is this: if your supplier is an SSM-registered sole proprietor or a person who is carrying on a business, they are not one of the categories requiring a self-billed e-invoice from you. In that case, you simply key in the expense as a normal purchase, the same way you did before e-invoice was introduced.

The 9 categories that require a self-billed e-invoice cover situations such as payments to individuals who are not conducting a business, commissions paid to agents and dealers, and payments for imported services, among others. A registered sole proprietor issuing a bill for services rendered does not fall into any of these categories.

What this means practically is that the handwritten bill from your sole proprietor supplier is still acceptable as a supporting document for your expense, provided that supplier is within their transitional period and has not yet been required to implement e-invoice. Once their implementation date arrives, the obligation to issue a validated e-invoice shifts to them, not to you.

The risk of wrongly issuing a self-billed e-invoice is that it creates a duplicate income record for the supplier in LHDN's system. That is a compliance problem for them and a reflection of incorrect practice on your part.

Getting these details right from the start saves businesses from costly corrections later. Reach out to us on WhatsApp at 010-246 2151.