Service Tax Invoice Requirements in Malaysia

Under Section 21 of the Act and the Service Tax Regulations 2018, every registered person providing taxable services shall issue a service tax invoice to the customer. This obligation applies to all recipients, including individuals, businesses and government entities.

In the general guideline to service tax issued by the Customs state that invoice shall be issued within one (1) year from the date of the:

• Taxable service is provided; or
  

• Such extended period as may be approved by the Custom.
  

However, subject to certain circumstances, a registered person may apply to the custom to not issue an invoice.

Timely issuance ensures that the collection and remittance of service tax to the RMCD aligns with the actual taxable event. It also provides customers with proper documentation for their accounting and regulatory purposes.

It is important to note that invoice with service tax is not permitted to be issued for/by:

• Services that are not taxable under the Act; or
  

• Persons who are not registered for service tax.
  

Issuing invoices in these circumstances is considered an offence and may expose the business to penalties or prosecution. Compliance with this obligation is therefore essential to avoid legal and financial risks.

To be valid under the Act, a service tax invoice must include certain prescribed particulars. These requirements ensure transparency for customers and enable the RMCD to verify compliance during audits.

Failure to include any of the mandatory particulars may render the invoice non-compliant, potentially exposing the business to penalties under the Act. Businesses should regularly review their invoicing systems to ensure all statutory requirements are consistently met.

The mandatory particulars are summarised in the table below:

By ensuring all these particulars are accurately included, businesses maintain compliance and reduce the risk of dispute or penalties.

When adjustments are required to a previously issued service tax invoice, such as for discounts, overcharges, undercharges or returned services, the registered person must issue a credit note or debit note.

1. Credit Notes are issued to reduce the amount originally invoiced or the transaction is cancelled, including service tax where applicable.
   

2. Debit Notes are issued to increase the amount originally invoiced, including service tax where applicable.
   

All credit and debit notes must include following particular:

• The words “credit note” or “debit note” clearly displayed;
  

• Serial number and date of issue;
  

• The name, address and service tax registration number of the registered person;
  

• Reason for issuing the credit note or debit note;
  

• A description sufficient to identify the taxable services;
  

• Quantity and amount of each taxable service;
  

• Total amount excluding service tax;
  

• Rate and amount of service tax; and
  

• Number and date of invoice issued for the relevant taxable services.
  

Issuing credit and debit notes ensures that both the supplier and customer maintain accurate records of adjustments, while providing the RMCD with a transparent trail for verification. Proper handling of these documents is essential to maintain compliance under the Act.

Service tax registered persons are required to retain copies of all service tax invoices, credit notes, debit notes and any cancelled invoices for a minimum period of seven (7) years. This obligation applies whether the records are maintained in physical or electronic form and must be satisfied within Malaysia.

The retained records must be:

• Complete – All documents must be kept in full, without alteration or omission.
  

• Legible – Records should remain clear and readable throughout the retention period.
  

• Accessible – Documents must be readily available for inspection by the RMCD upon request.
  

Proper record retention is essential for demonstrating compliance and ensuring transparency in financial reporting. Failure to comply with these requirements may result in penalties under the Act and increase compliance risks during RMCD inspections.

Non-compliance with service tax invoicing requirements under the Act can result in financial penalties, audit scrutiny, disputes with customers and reputational damage. Common breaches include failing to issue invoices, issuing incorrect invoices or not retaining proper records. Adhering to statutory requirements and maintaining robust invoicing and record-keeping systems helps mitigate these risks and ensures smooth interaction with the RMCD.

Service tax invoices are statutory documents essential for compliance under the Act. Proper issuance, management, and retention of invoices ensure accuracy, transparency, and smooth dealings with the RMCD while mitigating risks of penalties and audits.

Note