| As Malaysia accelerates its transition toward a nationwide electronic invoicing system, organisations across sectors are reviewing how the new framework applies to their specific operations—including the handling of donations and contributions. For non-profits, religious bodies, and charitable institutions, this is particularly important to ensure compliance with the evolving regulations under the Income Tax Act 1967 and the LHDN e-Invoice Guideline. One critical area to focus on is the e-invoicing obligation in donation scenarios.
In this article, we outline the key e-invoicing obligation in donation and contribution cases, based on the latest guidance issued by the Inland Revenue Board of Malaysia (LHDN).
1. Are e-Invoices Required for Donations or Contributions?
Yes, e-Invoices—whether individual or consolidated—must be issued for donations or contributions received, with the following exceptions:
Religious institutions or organisations established exclusively for the purpose of worship or advancing religion.
Other entities receiving non-tax-exempt donations or contributions under the Income Tax Act 1967.
However, this exemption does not apply if the religious organisation:
Is an approved institution or fund under subsections 44(6), 44(6B), 44(11B), 44(11C), or 44(11D); or
Manages a charity/community project approved under paragraph 34(6)(h).
Such organisations are still required to issue e-Invoices for the donations received, thereby falling under the e-invoicing obligation in donation rules.
2. Treatment of Monetary Donations
Monetary contributions—regardless of the payment method (cash, cheque, bank transfer, etc.)—require e-Invoice issuance:
If a donor requests an e-Invoice: an individual e-Invoice must be issued.
If no request is made: a consolidated e-Invoice must be issued within 7 calendar days after month-end, covering all relevant transactions.
This reinforces the e-invoicing obligation in donation transactions, even when donors do not explicitly ask for documentation.
Refer to Sections 3.5 and 3.6 of the LHDN e-Invoice Specific Guideline for technical instructions.
3. Donations-in-Kind
For donations-in-kind (i.e., non-monetary items such as goods or services), no e-Invoice is required. This is an exception to the e-invoicing obligation in donation scenarios, where monetary value is not directly involved.
4. Donor’s Obligation to Self-Issue e-Invoices
Donors are not required to issue self-billed e-Invoices for donations or contributions made to organisations that are not tax-exempt under the Income Tax Act 1967. However, understanding when e-invoicing obligation in donation applies to recipient organisations remains crucial.
5. Religious Institutions Involved in Other Activities
Religious institutions or organisations managing places of worship are not required to issue e-Invoices for donations received.
However, if they engage in commercial activities, such as the sale of goods or provision of services, they must issue e-Invoices for those transactions.
Even in hybrid operational models, knowing the boundaries of the e-invoicing obligation in donation versus business income is essential for compliance.
6. Self-Billed e-Invoices for Imports and Foreign Services
Organisations, including those not approved for tax exemption, must issue self-billed e-Invoices for:
Imported goods, or
Services acquired from foreign suppliers,
if the criteria under Section 8.3 of the e-Invoice Guideline apply.
7. Obligation to Provide Buyer Information to Suppliers
Where a transaction involves activities for which consolidated e-Invoices are not allowed—such as purchase of motor vehicles, construction services, or materials—all buyers, regardless of tax-exempt status, are required to provide their identification details to the supplier.
8. Business Registration Number (BRN) for e-Invoice and TIN Purposes
Entities registered with any of the following can use their official registration number as their BRN when registering for a Tax Identification Number (TIN) or issuing e-Invoices:
Registrar of Societies (ROS)
Companies Commission of Malaysia (SSM)
Legal Affairs Division of the Prime Minister’s Department (BHEUU)
Other recognised regulatory bodies in Malaysia
Final Remarks
As e-Invoicing becomes a cornerstone of Malaysia’s digital tax landscape, it is essential for all types of organisations—including those receiving donations—to understand their responsibilities. Proper knowledge of the e-invoicing obligation in donation will ensure transparency, accountability, and alignment with LHDN’s broader digital transformation goals.
If your organisation is impacted and you require guidance on e-Invoice implementation, feel free to reach out to our team of tax technology specialists.
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