Understanding the e-Invoicing Obligation in Donation and Contribution Requirements in Malaysia

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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