E-Invoicing for Property Agents: Streamlining Your Commission and Reimbursements

I. Introduction: A New Era of Transparency in Malaysian Real Estate

II. Understanding the Basics of E-Invoicing: What You Need to Know

• Phase 1 (August 1, 2024): Businesses with an annual turnover of RM100 million or more will be the first to make the switch.

• Phase 2 (January 1, 2025): Businesses with an annual turnover between RM25 million and RM100 million annually will join the e-invoicing system.

• Phase 3 (July 1, 2025): Businesses with an annual turnover between RM500,000 and RM25 million annually will join the e-invoicing system.

• Phase 4 (January 1, 2026): E-invoicing becomes mandatory for all businesses with their annual revenue of up to RM500,000 (with exclusion for businesses with annual revenue less than RM150,000).

III. E-Invoicing for Property Valuers: Getting it Right

1. Gather Your Info: Before you even start, make sure you have all the necessary details handy: your client's full name and their Tax Identification Number (TIN), the complete property address, the date the valuation was completed, the assessed value of the property, the specific purpose of the valuation (e.g., "for loan application"), and of course, your own business details.

2. Log into MyInvois: The MyInvois Portal is your new best friend. You'll need your digital certificate to access it securely.

3. Creating the E-invoice: Once logged in, find the "New Document" section. It's designed to be user-friendly.

4. Filling in the Details:
• Invoice Number: Give your invoice a unique number – this helps you keep track of things. Else, the MyInvois Portal will automatically help to populate the invoice number
• Invoice Date: The date you're issuing the invoice.
• Buyer Details: Enter your client's full name, TIN, and contact information. Double-check the TIN for accuracy!
• Item Details: This is where you describe your service:
• Description: Be clear and specific. For example, "Valuation of Residential Property for Loan Application."
• MSIC/Product Code: This might seem technical, but it's just a code that classifies your service. You'll need to select the one that best fits property valuation services. The IRBM provides resources to help you find the right one.
• Unit Price: Your valuation fee.
• Quantity: This will usually be "1" for a single valuation service.
• Tax: If you're registered for the Sales and Service Tax (SST), you'll need to select the tax type and enter the rate (currently 8% for most services). The system will then calculate the tax amount for you.
• Total Amount: The system will automatically add up the fee and any applicable taxes.
• Property Particulars: Enter the full address and relevant details of the property that was valued.
• Valuation Particulars: Include the valuation date, assessed value and the purpose of valuation.

5. Review and Submit: Take a moment to carefully review everything you've entered. Once you're sure it's all correct, submit the e-invoice.

6. Validation: The MyInvois system will then do its magic, verifying the information in near real-time. If everything checks out, your e-invoice will be officially validated and given a unique identification number.

7. Notification: You and your client will both receive a notification confirming the validated e-invoice.

• Client's Name on the Receipt: If your client is billed directly by the supplier (and the receipt is in their name), you can simply claim the exact amount you paid from your client through a consolidated e-invoice at the end of each month (or a standard e-invoice if you prefer). You'll need to upload a copy of that receipt to the MyInvois Portal to support your claim. The good news for your client is that they can claim this expense as a deduction since the original invoice is in their name.

• Your Name on the Receipt: If the receipt is in your name, things are a bit different. You might first need to create a "self-billed e-invoice" if the supplier from whom you incurred the expense isn't issuing e-invoices (there are specific rules around this, which you can find in IRBM's guidelines). Then, you can claim the reimbursement from your client through a consolidated e-invoice. However, because the original receipt wasn't in your client's name, they won't be able to claim this as a deduction.

• Using the Wrong Codes: Double-check that you're using the correct MSIC/Product codes for your valuation services.

• Missing Information: Don't forget to include all the required details, like your client's TIN and the property address.

• Late Submissions: Submit your e-invoices promptly. You generally have 72 hours to validate them through the system.

• Incorrect Reimbursement Handling: Make sure you understand the rules for reimbursements, especially regarding whose name is on the original receipt.

1. Scenario: You're hired to value a client's home for a mortgage application.
• E-invoicing Treatment: You'd issue a standard e-invoice for your valuation fee, following the step-by-step process outlined earlier. Include all the required details, and you're good to go!

2. Scenario: You offer a special discount to a loyal client who needs valuations for multiple properties.
• E-invoicing Treatment: Issue an e-invoice that clearly shows the discount applied to the total fee before taxes are calculated.

3. Scenario: You need to travel to another town to perform a valuation, and your client agrees to cover your travel expenses. The receipts for your flight and hotel are in your client's name.
• E-invoicing Treatment: Since the receipts are in your client's name, you can claim the reimbursement from them using a consolidated e-invoice. Remember to upload copies of those receipts to the MyInvois Portal.
 

IV. E-Invoicing for Property Agents: Streamlining Your Transactions

• Residential and Commercial: Whether you've helped sell a cozy bungalow or a bustling office space, you'll need to issue an e-invoice for your commission. However, if you are under an agency, then the agency will issue the self-billed e invoice to you in recording the commission you’re receiving. The agency will then issue the commission to the buyer / tenant so that the buyer / tenant can recognise the expense in their books.

1. Gather Your Information: You'll need your client's name and TIN, the property address, the sale price (optional), your agreed-upon commission rate, and the total commission amount.

2. Log into MyInvois: Access the portal securely with your digital certificate.

3. Create a New Invoice: Find the option to create a new invoice.

4. Fill in the Details:
• Invoice Number: Create a unique invoice number for your records.
• Invoice Date: The date you're issuing the e-invoice.
• Buyer Details: Enter your client's (usually the seller's) full name, TIN, and contact information.
• Item Details:
• Description: Be specific, like "Commission on Sale of Residential Condominium."
• MSIC/Product Code: Use the code that corresponds to real estate agency services.
• Unit Price: Enter your commission rate (for example, 2%).
• Quantity: You can put the sales price or simply "1" for the entire commission.
• Tax: If applicable, select the tax type (like Service Tax) and enter the rate. The system will calculate the tax amount.
• Total Amount: The system will calculate the total commission, including any taxes.
• Property Details: Enter the full address of the property that was sold.

5. Review and Submit: Double-check all the information, and then submit the e-invoice for validation.

6. Validation: The MyInvois system will quickly validate the e-invoice.

7. Notification: You and your client will receive a notification confirming the e-invoice.

• Residential and Commercial: When you successfully find a tenant for a property, you'll need to issue an e-invoice to the landlord for your commission (if you’re an agency). Otherwise, the landlord may want to issue a self-billed e invoice to you to recognise the commission paid as a tax deductible expense.

• Details: For best practices, make sure to include the property address, the agreed-upon monthly rental, your commission rate, the total commission amount, and the landlord's TIN.

• If your services include helping landlords and tenants renew existing tenancy agreements, and you earn a commission for this, you'll need to issue an e-invoice to the landlord (or whoever is paying you). Alternatively, if you don’t issue e-invoice, the landlord (or whoever is paying you) will need your TIN and issue a self billed e invoice.

• Clearly state "Commission on Renewal of Tenancy" on the e-invoice, along with the property address and other relevant details.

• As an agent, you might incur costs for marketing, advertising, or other activities to help sell or rent a property.

• Keep Records: No matter what, documentations are key and for all your expenses, as a best practice, do request your supplier to issue with an e invoice. In the event if it is payment to a non Malaysia businesses, then you’re required to issue a self billed e invoice to record the expense.

• Sometimes, a client might pay you in advance to cover upcoming marketing or advertising costs.

• When this happens, issue an e-invoice at the time you receive the advance. Clearly mark it as an "Advance Payment" and briefly describe what the funds will be used for.

• If you receive a fee from another agent for referring a client to them, you need to issue an e-invoice to that agent. Alternatively, if you don’t issue an e invoice to him, he will then need to collect your TIN and IC number and he will be able to issue you with self billed e invoice.

• Clearly state "Introduction Fee" on the e-invoice.

• If you charge clients for consultation or advisory services (like advising on property investment strategies), you need to issue an e-invoice for these fees.

• Describe the nature of the consultation on the e-invoice.

• Wrong Client Details: Always double-check your client's TIN to avoid e-invoice rejections.

• Forgetting Any Income: All your income, including commissions, introduction fees, and consultation fees, must be properly documented with e-invoices.

1. Scenario: You help a client sell their apartment for RM500,000, and your commission is 2%.
• E-invoicing Treatment: Issue a standard e-invoice to your client (the seller) for RM10,000 (plus any applicable taxes), following the step-by-step example provided earlier.

2. Scenario: A landlord gives you RM1,500 upfront to cover the costs of advertising their rental property.
• E-invoicing Treatment: Issue an e-invoice clearly stating "Advance Payment for Marketing Costs," including the property address and a brief description of the services.

3. Scenario: You receive RM500 from another agent as an introduction fee.
• E-invoicing Treatment: Issue a standard e-invoice to the other agent for RM500, clearly stating "Introduction Fee."

V. E-Invoicing for Property Managers: Keeping Things Running Smoothly

• Residential and Commercial: Whether you manage a condominium complex, an office building, or a mixed-use development, you'll need to issue e-invoices for your monthly management fees.

• What to Include: Your e-invoice should clearly state the name and address of the property you manage, the period the fees cover (e.g., "Management Fees for January 2025"), a description of the services provided, and the client's TIN (this will usually be the Joint Management Body (JMB) or Management Corporation (MC) if you're managing a strata property, or the property owner's TIN for individual properties).

1. Gather Information: Collect the necessary details: the property address, the management period, a description of your services, and the client's TIN (JMB/MC or property owner).

2. Log into MyInvois: Access the portal using your digital certificate.

3. Create Invoice: Select the option to create a new invoice.

4. Enter Invoice Details:
• Invoice Number: Generate a unique invoice number.
• Invoice Date: The date you are issuing the e-invoice.
• Buyer Details: Enter the client's full name (JMB/MC or property owner), TIN, and contact information.
• Item Details:
• Description: "Property Management Fees for [Month, Year]" (e.g., "Property Management Fees for January 2025").
• MSIC/Product Code: Use the appropriate code for property management services.
• Unit Price: Enter your monthly management fee.
• Quantity: Usually "1" for monthly management.
• Tax Type: Select the applicable tax type (e.g., Service Tax, if you are SST registered).
• Tax Rate: Enter the tax rate (e.g., 8%).
• Tax Amount: The system will automatically calculate the tax amount.
• Total Amount: The system will calculate the total amount, including tax.
• Property Details: Enter the full address of the property you are managing.
 

5. Review and Submit: Carefully review all details, and then submit the e-invoice for validation.

6. Validation: The MyInvois system will validate the e-invoice.

7. Notification: Both you and your client will be notified of the validated e-invoice.

• Property managers often incur expenses for repairs, maintenance, utilities, and other services on behalf of the property owners or JMB/MCs.

• Best practices: Best to always arrange the suppliers to issue invoices directly to the JMB/MCs and you can claim back from JMB / MCs via disbursement and no need to issue any e invoice for such recouping of expenses. However, if the suppliers issue the invoices to you instead, then you will need to include all these expenses into your invoices to JMB / MCs and these amount shall be included in your invoices.

• Documentation: Always keep detailed records of all expenses and upload supporting documents (invoices, receipts) to the MyInvois Portal. Ensure that the invoices provided contain itemized descriptions of each item.

• It's important to understand that if you're collecting service charges from tenants on behalf of a JMB or MC, you are acting as a collection agent.

• The JMB/MC, not you, is responsible for issuing the e-invoices for service charges to the individual tenants or unit owners. You should not issue e-invoices for service charges collected on their behalf.

• If your management agreement allows you to charge interest on late payments of management fees, you need to issue a separate e-invoice for any interest charged.

• The e-invoice should clearly state that it is for "Late Payment Interest" and include relevant details like the period the interest covers.

• If your service includes assisting in setting up a new JMB/MC account, you need to issue an e-invoice to the client for this service.

• Similarly, if you are taking over management from a previous agent or developer, an e-invoice is required to be issued to the client for this service.

• Incorrect Client Details: Using the wrong TIN for the JMB/MC or property owner can cause problems.

• Confusing Service Charges: Remember that you don't issue e-invoices for service charges collected on behalf of a JMB/MC.

• Improper Reimbursement Handling: Not following the correct procedures for reimbursements, especially regarding whose name is on the original invoice, can affect your client's ability to claim deductions.

1. Scenario: You manage a condominium complex, and your monthly management fee is RM5,000.
• E-invoicing Treatment: Issue a standard e-invoice to the JMB each month for RM5,000 (plus any applicable taxes), following the step-by-step example.

2. Scenario: You pay for জরুরি repairs to the building's elevator, and the invoice from the repair company is in the JMB's name. The repair cost is RM3,000.
• E-invoicing Treatment: Since the invoice is in the JMB's name, you can claim reimbursement from them using a consolidated e-invoice for the exact amount (RM3,000). Upload a copy of the repair invoice to the MyInvois Portal. The JMB can claim this as a deduction.

3. Scenario: You collect service charges from the tenants of a commercial building and then transfer the funds to the building's MC.
• E-invoicing Treatment: You do not issue e-invoices for the service charges. The MC is responsible for issuing e-invoices directly to the tenants.

4. Scenario: You incur utility expenses on behalf of the client and the utility bill is in your company's name.
• E-invoicing Treatment: You need to be reimbursed from your client using an e-invoice.
 

VI. Key Considerations and Best Practices for E-Invoicing in Real Estate

• Submitting your e-invoice through the MyInvois Portal or API is just the first step. The system then needs to validate it, which happens in near real-time.

• Once validated, the e-invoice gets a unique identification number, making it an official record.

• You generally have 72 hours from the time of submitting to cancel it if needed.

• E-invoicing doesn't mean you can forget about keeping records. In fact, it's more important than ever.

• You need to maintain digital records of all your e-invoices, supporting documents (like receipts and invoices for reimbursements), and any other relevant information for at least seven years.

• Think of it as building a secure, digital archive that's readily available if the IRBM ever needs to conduct an audit.

• If your business is registered for the Sales and Service Tax (SST), you need to make sure it's correctly reflected on your e-invoices.

• The current SST rate for most services is 8%. Make sure to select "Service Tax" and input 8% accordingly.

• Always double-check the latest SST guidelines to ensure you're using the correct rate.

• These codes might seem like a technicality, but they're important for classifying your services accurately.

• Using the right code helps the IRBM understand the nature of your business and ensures that your transactions are categorized correctly.

• The IRBM provides resources to help you find the appropriate MSIC/Product codes for your specific services. Take the time to find the right ones.

• E-invoicing involves handling sensitive client data, including their TINs and financial information.

• Make sure you have robust security measures in place to protect this data from unauthorized access or breaches.

• Use strong passwords, enable two-factor authentication where possible, and be cautious about clicking on suspicious links.

• You have two main options for submitting e-invoices: directly through the MyInvois Portal or via API integration with your accounting software.

• MyInvois Portal: This is a good option for smaller businesses with a low volume of transactions. It's a free service provided by the IRBM.

• API Integration: If you have a high volume of transactions or want to automate the process, integrating your accounting software with the MyInvois system via API is the way to go. You may need to work with a service provider for this, which might involve some costs.

• Consider your needs: Think about your transaction volume, budget, and technical capabilities when making your decision.

• E-invoicing is a new system, and it's essential to stay informed about the latest guidelines and updates.

• The IRBM website is your primary resource for official information. They provide FAQs, guidelines, and other helpful materials.

• Consider attending training sessions or webinars on e-invoicing.

• Don't hesitate to seek professional advice from a tax consultant or accountant if you have any doubts or complex scenarios to deal with.

VII. Conclusion: Embracing the Future of Real Estate Transactions