August Advisory Sdn. Bhd., No. 12-1, Jalan Astaka 1C/KU2, Bandar Bukit Raja, Klang (2026)

18/05/2026

There is a lot of confusion among business owners about what makes two companies "related" under the e-Invoice rules. Specifically, many worry that if one director sits on the boards of two separate companies, those companies automatically become related companies and both get pulled into e-Invoice obligations. The guideline is clear that this is not the case.

For e-Invoice purposes, the assessment of whether two companies are related is based on shareholding ownership and control at the shareholder level. A common director in either company does not, by his presence alone, make those companies related. This means if Rimba Sdn Bhd and Kosas Sdn Bhd each have different individual shareholders, but share the same person as a director, they are still treated as independent companies for e-Invoice exemption purposes.

The distinction that does matter is whether a corporate entity, meaning a company rather than an individual, holds at least 20% of the shares in two or more businesses, or has effective control over their operations. If that corporate shareholder exists, all companies under its control are treated as related, and if any one of them has revenue of at least RM1 million, the others lose the benefit of the exemption.

This distinction is genuinely important for entrepreneurs who have set up multiple companies, each owned personally by themselves as an individual. In such cases, as long as there is no corporate shareholder with cross-ownership, each company is assessed on its own merits for the exemption threshold. However, the moment a holding company structure is introduced, the calculation changes entirely.

Speak to our CFO advisers on WhatsApp 010-246 2151 before your structure creates an obligation you were not expecting.

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17/05/2026

This case highlights a very practical issue that many business owners overlook when entering into asset transactions, which is how stamp duty is assessed. The difference between paying RM10 and paying more than half a million ringgit in duty can come down to how an agreement is structured and interpreted. The key issue in this case was whether an asset purchase agreement had already transferred ownership, or whether it was merely an agreement to transfer assets at a later stage.

𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞
GTP Network Sdn Bhd entered into an Asset Purchase Agreement on 1 August 2023 to acquire 16 telecommunication towers and related infrastructure from MEBA Holdings Sdn Bhd for RM15 million. The assets included towers, equipment, and supporting infrastructure, all described as movable assets. However, legal ownership of these assets was not transferred immediately upon signing. The agreement provided that completion would take place later, subject to conditions being fulfilled and additional documents being executed, including licences and novation agreements. Despite this, the Stamp Office assessed the agreement to ad valorem stamp duty and imposed RM584,020, treating it as a transfer of property.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐭𝐚𝐱𝐩𝐚𝐲𝐞𝐫
The taxpayer argued that the agreement was only a contract for the future transfer of assets, not an actual transfer itself. Since the assets were movable and ownership would only pass upon completion, the agreement should either attract nominal stamp duty of RM10 or be exempt as a sale of goods. The taxpayer emphasised that further steps were required before ownership could pass, including ex*****on of additional agreements and fulfilment of contractual conditions.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐋𝐇𝐃𝐍
LHDN took the position that stamp duty is imposed on the legal effect of the document itself, not the broader transaction. They relied on a clause in the agreement stating that the “economic rights and benefits” of the assets were vested in the purchaser upon signing. Based on this wording, LHDN treated the agreement as a conveyance of property and imposed ad valorem duty under the Stamp Act, arguing that the instrument effectively transferred rights and interests in the assets.

𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐂𝐨𝐮𝐫𝐭
The High Court disagreed with LHDN. The Court carefully reviewed the entire agreement and concluded that it was only an agreement to transfer assets in the future, not an actual transfer at the time of signing. Ownership had not yet passed, and further actions were required before the transaction could be completed. As a result, the agreement could not be treated as a conveyance subject to ad valorem duty. The Court held that only nominal stamp duty of RM10 was applicable. LHDN’s assessment was set aside, and the taxpayer was entitled to a refund of RM584,020, along with interest and costs.

𝗙𝗶𝗻𝗮𝗹 𝗡𝗼𝘁𝗲
This case shows that small wording differences in agreements can lead to very large tax consequences. Simply including phrases like “vested” or “benefits pass” does not automatically mean ownership has legally transferred. What matters is whether the agreement actually completes the transfer at the point of signing.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, payroll, and tax planning matters for you. Feel free to WhatsApp us at 010-246 2151.

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17/05/2026

Many SME owners in Malaysia take on the role of director without fully understanding what the law actually demands of them. Under Section 213 of the Companies Act 2016, every director must act in good faith, for a proper purpose, and in the best interest of the company at all times. More critically, Section 213(2) requires directors to exercise reasonable care, skill, and diligence, and the standard is not just what a typical director would do, but also what this particular director, with their specific background and experience, should know.

The penalty for breaching this duty is serious: imprisonment of up to five years, or a fine of up to RM3 million, or both.

A common situation that trips directors up is signing documents without reading them, approving transactions because "the accountant said so," or allowing the company to take on debt when they already know the business cannot repay it. Section 214 does provide a "business judgment rule" as a defence, but only if the director made the decision in good faith, without personal conflict of interest, and with a reasonable level of information. In other words, you cannot simply say you did not know.

The Court made this very clear in Tengku Dato' Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Berhad. The court held that directors who failed to exercise proper oversight and allowed company funds to be misused could be held personally liable. It is not enough to say you believed you were doing the right thing. The court will also assess whether a reasonable director in your position, with your knowledge and experience, would have made the same call. Passive directors who simply go along with whatever is decided, without applying their own judgment, are not protected.

If you are a director of a company, even a small one, you owe a legal duty to that company. Understand what you are signing. Know your numbers. Do not assume your co-director or your accountant is handling everything on your behalf.

Our CFO advisory team works directly with directors to build proper decision-making frameworks and financial oversight. WhatsApp us at 010-246 2151.

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16/05/2026

There is a common assumption among business owners that if a transaction has no official invoice, it cannot be traced. A real situation that came to light recently shows exactly why that thinking is dangerous.

From what I have heard, a local business was asked by LHDN to submit all payment records for the year 2024, excluding payments to staff and loan repayments. Among those payments was a recurring amount paid to a supplier. The arrangement with that supplier was straightforward on the surface: the supplier offered a better price in exchange for cash payment with no official invoice. The local business, wanting to keep costs down, accepted the deal. With no invoice on hand, they recorded the purchases themselves using a manual receipt, bearing the supplier's name, and keyed it into their accounts accordingly.

That was where the problem began. Once LHDN received the local business's payment records, the supplier was immediately flagged. LHDN cross-checked and found that the supplier's declared sales did not include any transactions with the local business. Two sets of records, the same transaction, but only one side reporting it. That mismatch is all LHDN needs to open a full inquiry.

The lesson is straightforward. When a business makes a payment, they need to account for it. No business owner is going to willingly show inflated profits and pay more tax than necessary, so the expense will be recorded one way or another. That recording becomes evidence. The moment it is submitted to LHDN, everyone connected to that transaction is exposed, including the party who thought they were invisible because they never issued a proper invoice.

In today's environment, this risk is even greater. LHDN has access to digital payment trails, bank records, and cross-referenced data from multiple sources. The days of assuming that a cash deal with no paper trail is untraceable are over. The infrastructure to detect these gaps exists and is actively being used.

For business owners, the practical takeaway is simple. Only deal with suppliers who issue proper invoices. If a supplier cannot or will not provide one, that is a commercial and legal risk you are taking on, not just them. Ensure your accounts reflect legitimate documentation at every level, because when LHDN comes asking, they are rarely asking just one party.

If you want to ensure your business is structured correctly and your records can withstand scrutiny, our CFO advisory team works with business owners to build clean, compliant financial foundations. Reach out to us on WhatsApp at 010-246 2151 to find out how we can help you stay on the right side of the law, with confidence.

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16/05/2026

Many businesses have it backwards when it comes to agent and distributor commissions. The instinct is to wait for the agent to send an invoice, then process the payment. Under e-invoice rules, that approach no longer works. The obligation to issue the e-invoice sits with the company making the payment, not with the agent or distributor receiving it.

This covers everything from commissions and rebates to performance bonuses, non-monetary incentives such as prizes or trips, and any other form of payment flowing from your company to an agent. The agent does not need to issue anything to you. In fact, where you issue a self-billed e-invoice, the agent or distributor is no longer required to issue an e-invoice for the same transaction. Expecting one from them, or worse, having both parties issue documents for the same payment, creates a double income record for the agent that LHDN will see.

Self-billed e-invoices for commissions can be issued on either an accrual or paid basis, as long as the approach is consistent and aligns with the statements you issue to agents. For non-monetary incentives such as annual trips or gifts that are typically only known during CP58 preparation, it is acceptable to transmit that information annually when it becomes available. However, if the information is available earlier on a periodic statement basis, it must be submitted with the same frequency.

One situation that trips businesses up is the net commission arrangement where clawbacks or reversals apply. A self-billed e-invoice can be issued on a net basis, meaning gross commission minus reversals, provided the line details of each reversal are included in the document. Where a clawback in a given month exceeds the commission payable, a self-billed credit note must still be issued even if the actual payment to the agent is nil. You cannot net it off silently in your accounts and move on.

Failing to issue self-billed e-invoices for agent and distributor payments is one of the cleaner audit targets for LHDN, because the CP58 filing independently documents those payments. A mismatch between your CP58 and your MyInvois submissions will be visible and difficult to explain.

Our CFO advisory team can help you build the right self-billed workflow for your distribution network. WhatsApp us at 010-246 2151.

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14/05/2026

If you have a long-term rental or leasing contract that was signed before mid-2025 and you have been relying on the non-reviewable contract exemption to avoid charging service tax, you need to stop and check your contract again. The updated guide released by the Royal Malaysian Customs Department on 14 May 2026 has introduced four new conditions that did not exist in the earlier version of the guide. If your contract does not meet all of them, your exemption claim does not hold and service tax should have been charged from 1 July 2025 onwards.

The earlier version of this guide, released on 9 June 2025, only stated one condition for the non-reviewable contract exemption, which was that the contract must not contain any clause allowing the rental price to be reviewed or adjusted. That was it. Many businesses read that, checked their contracts for a review clause, found none, and assumed they were covered. The updated guide has now added four more conditions that apply on top of that original requirement and all of them must be satisfied simultaneously.

Your contract must have been stamped by LHDN on or before 9 June 2025. This is a hard deadline that cannot be corrected after the fact. If your contract was signed before that date but only stamped later, the exemption is gone. Your contract must also contain absolutely no mechanism for price adjustment of any kind, which was the only condition under the old guide. On top of that, your contract must explicitly state the type of service being provided, the fixed contract value, and the duration of the contract. Finally, the contract must still have been active and running after 1 July 2025. All five conditions must be present. A contract that satisfies four out of five does not qualify.

What you should do right now is pull out every active rental contract now, whether you are the landlord or the tenant, and check it against all five conditions. No LHDN stamp before 9 June 2025? Exemption gone. Any price review clause? Exemption gone. Do not assume. Verify. If you are the one providing the rental service, make sure your invoices from 1 July 2025 onward reflect the correct service tax treatment.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, e-stamping, payroll, and tax planning matters for you. Feel free to WhatsApp us at 010-246 2151.

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14/05/2026

If you own or manage a commercial property and your tenants pay for utilities through you in any form, you need to read this carefully. The updated service tax guide released by the Royal Malaysian Customs Department on 14 May 2026 has introduced new and specific guidance on how electricity and water charges should be treated for service tax purposes. This topic was completely absent from the earlier version of the guide. Getting this wrong could mean you have been undercharging or overcharging service tax, and both carry consequences.

The clearest way to understand the rules is through three different billing arrangements that the guide now addresses directly. First, if your tenants registered the utility accounts in their own names and pay the utility companies directly, there is no service tax involved. The landlord is not in the picture at all. Second, if the utility account is in the landlord's name but the tenancy agreement instructs the tenant to pay the utility company directly based on the original bill, and the landlord does not issue any separate invoice or recharge for utilities, then again there is no service tax on those utility payments. Third, and this is where many landlords get it wrong, if the landlord pays the utility bills first and then bills the tenants back for their share, whether based on meter readings, actual usage, or a fixed allocation, those charges are subject to service tax. This applies even if the landlord is not marking up the amount at all. If there is any additional management fee charged on top of the utility recharge, that entire amount including the fee is also subject to service tax.

The reason this matters so much is that many commercial tenancy agreements in Malaysia are structured with the utility account in the landlord's name and a monthly recharge to tenants. This is extremely common in office buildings, retail complexes, and business parks. If you are operating this way and you are a registered service tax person under Group K, you should already be including those utility recharges in your taxable value and charging 6% service tax on the total. If you have not been doing this, you have a gap in your compliance that needs to be addressed now.

What you should do immediately is review how utilities are billed across all your tenancy agreements. If you are a landlord, check whether the utility account is in your name and whether you are the one issuing the bill to tenants. If yes, that recharge is part of your rental service and service tax applies to it. Update your invoices to reflect this correctly. If you are a tenant and your landlord is registered under Group K but has not been charging you service tax on utility recharges, be aware that the liability sits with the landlord and any shortfall may eventually be recovered. Either way, clarity on your billing structure now is far better than an audit finding later.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, e-stamping, payroll, and tax planning matters for you. Feel free to WhatsApp us at 010-246 2151.

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13/05/2026

In a closely held Malaysian company, shareholder disputes are more common than most people think. What starts as a business partnership often ends in one party feeling sidelined, cheated, or cut out of decisions. The Companies Act 2016 provides very clear legal remedies for this.

Section 346 allows any member or debenture holder to apply to the Court if the affairs of the company are being run in a way that is oppressive to them, or if their interests as a shareholder are being disregarded. This is known as the oppression remedy. It is not limited to dramatic cases of fraud. It covers situations where a majority shareholder simply uses their position to benefit themselves at the expense of a minority, such as paying themselves excessive salaries while declaring no dividends, or diluting a minority's shares without fair justification.

Section 347 goes even further with derivative proceedings, where a shareholder can take action on behalf of the company itself against a director or officer who has caused harm to the company.

In the Malaysian case of Re Kong Thai Sawmill (Miri) Sdn Bhd, a minority shareholder alleged that the majority shareholders were managing the company in a manner that was unfair and prejudicial to minority interests in a closely held, family-controlled business. The complaint was not based on fraud or illegality, but on the manner in which control and management decisions were exercised. The case is significant because the court recognised that oppression under company law does not require unlawful conduct, and may arise where there is a departure from standards of fair dealing in the management of the company.

The practical lesson here is that shareholder agreements matter enormously. Without one, disputes fall back entirely on the Act and on what the constitution says. Many partnerships in Malaysia are run on trust and handshakes, which is fine until it is not.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, e-stamping, payroll, and tax planning matters for you. Feel free to WhatsApp us at 010-246 2151.

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12/05/2026

This case is useful for property buyers, developers, and finance teams because it clarifies a very practical issue. Whether a property qualifies as a “residential property” for stamp duty exemption purposes. The distinction may appear technical, but as this case shows, it has direct cost implications even for first-time buyers.

𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞
The taxpayer purchased a service apartment in Johor and was assessed stamp duty of RM4,800 under Section 39(1) of the Stamp Act 1949. The taxpayer appealed the assessment, claiming eligibility for exemption under the Stamp Duty Exemption Order 2021, which applies to first-time purchases of residential property below RM500,000. A statutory declaration was submitted to support this claim.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐭𝐚𝐱𝐩𝐚𝐲𝐞𝐫
The taxpayer argued that the property met the definition of “residential property” under the Exemption Order. The purchase price was within the qualifying threshold and it was a first-time purchase. On that basis, the taxpayer took the position that the stamp duty exemption should apply.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐋𝐇𝐃𝐍
The Collector of Stamp Duty took a stricter interpretation. The authority argued that the burden of proof lies with the taxpayer to show that the property clearly falls within the definition of “residential property.” The title of the property described it as having mixed use elements such as residence, commercial, or club use.

𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐂𝐨𝐮𝐫𝐭
The High Court dismissed the taxpayer’s appeal. The Court held that a service apartment does not fall within the meaning of “residential property” under the Exemption Order. As a result, the taxpayer was not entitled to the exemption, and the stamp duty assessment issued by the Collector was upheld as valid.

Subsequent to this decision, Parliament enacted an amendment to the Stamp Act 1949 (commencing 1 January 2026) which now expressly defines "residential property" in Section 2 as follows:

❝ "𝘳𝘦𝘴𝘪𝘥𝘦𝘯𝘵𝘪𝘢𝘭 𝘱𝘳𝘰𝘱𝘦𝘳𝘵𝘺” 𝘮𝘦𝘢𝘯𝘴 𝘢 𝘩𝘰𝘶𝘴𝘦, 𝘤𝘰𝘯𝘥𝘰𝘮𝘪𝘯𝘪𝘶𝘮, 𝘢𝘱𝘢𝘳𝘵𝘮𝘦𝘯𝘵, 𝘧𝘭𝘢𝘵, 𝘴𝘦𝘳𝘷𝘪𝘤𝘦 𝘢𝘱𝘢𝘳𝘵𝘮𝘦𝘯𝘵 𝘰𝘳 𝘴𝘮𝘢𝘭𝘭 𝘰𝘧𝘧𝘪𝘤𝘦 𝘩𝘰𝘮𝘦 𝘰𝘧𝘧𝘪𝘤𝘦 𝘴𝘰𝘭𝘦𝘭𝘺 𝘵𝘰 𝘣𝘦 𝘶𝘴𝘦𝘥 𝘢𝘴 𝘢 𝘥𝘸𝘦𝘭𝘭𝘪𝘯𝘨 𝘩𝘰𝘶𝘴𝘦; ❞

The inclusion of service apartment in the statutory definition directly addresses the definitional gap that led to the taxpayer's defeat in this case. Had this definition been in force at the time of the transaction, the taxpayer would have had a far stronger basis to claim the exemption.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, e-stamping, payroll, and tax planning matters for you. Feel free to WhatsApp us at 010-246 2151.

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12/05/2026

I am sharing this case because it highlights an important and practical issue for many businesses, particularly those with long-standing financial arrangements such as director loans. It raises the question of whether tax rules introduced at a later date can apply to transactions that took place earlier but remain outstanding. This is especially relevant for companies that may not have revisited older arrangements in light of new tax developments.

𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞:
The Taxpayer, RFSB, provided interest-free loans totalling RM4,091,272 to its directors in 2008 using its own internal funds. These loans remained unpaid over the years. On 2 August 2021, the Director General of Inland Revenue (DGIR) issued Notices of Assessment (Form J) for the years of assessment (YAs) 2015 to 2019, including taxes and penalties. The DGIR relied on Section 140B of the Income Tax Act 1967 (ITA 1967), which came into force in 2014, to treat the Taxpayer as having earned “deemed interest income” from these loans. The key issue was whether Section 140B could apply to loans that were originally granted before the law came into effect.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐭𝐚𝐱𝐩𝐚𝐲𝐞𝐫:
The Taxpayer argued that Section 140B should not apply retrospectively to loans granted in YA 2008, as the law only came into force in 2014. It maintained that there was no legal basis to impose deemed interest income on transactions that occurred before the provision existed, even if the loans remained outstanding in later years.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐋𝐇𝐃𝐍:
The DGIR contended that the Taxpayer should be taxed on deemed interest income under Section 4(c) and Section 140B of the ITA 1967. Referring to Public Ruling 08/2015, the DGIR argued that deemed interest should be calculated based on the outstanding loan balances at the end of each month, including loans granted before YA 2014, as long as they remained unpaid. Therefore, the Taxpayer was considered to have earned taxable interest income during YAs 2015 to 2019.

𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐂𝐨𝐮𝐫𝐭:
On 19 September 2025, the Special Commissioners of Income Tax (SCIT) allowed the Taxpayer’s appeal. The SCIT found that the Taxpayer had met its burden of proof under Paragraph 13, Schedule 5 of the ITA 1967 and ruled that Section 140B should not be applied to loans granted before its effective date. As a result, the Notices of Assessment for YAs 2015 to 2019, along with the associated penalties, were set aside. The DGIR retains the right to appeal this decision within 21 days from the date of the ruling.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, e-stamping, payroll, and tax planning matters for you. Feel free to WhatsApp us at 010-246 2151.

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Our Services: CFO Advisory | Financial Operations Support | Taxation | Payroll | Corporate Secretarial | e-stamping | e-invoice Training

11/05/2026

LHDN has announced that e-Invoice is expected to play a bigger role in supporting individual tax relief claims starting from Year of Assessment 2026. As part of its move towards a more digital tax system, taxpayers are now encouraged to request an e-Invoice for expenses that qualify for personal tax relief. This may include purchases such as laptops, smartphones, insurance, childcare fees, and lifestyle related expenses.

For businesses, this means customers may increasingly ask for e-Invoice even for everyday retail transactions. Over time, LHDN plans to use e-Invoice transaction data to support a pilot initiative where eligible tax relief information may be automatically pre filled into income tax returns. To issue an accurate e-Invoice, businesses will need to collect the customer’s identification number or Tax Identification Number where required.

𝗞𝗲𝘆 𝗣𝗼𝗶𝗻𝘁𝘀 𝘁𝗼 𝗡𝗼𝘁𝗲
* Customers may start requesting e-Invoice more frequently for purchases linked to individual tax relief.
* Expenses potentially covered include personal computers, smartphones, lifestyle spending, insurance, childcare fees, and other approved relief categories.
* Businesses may need to collect customer identification details or TIN to issue e-Invoice correctly.
* Customers can review and manage their e-Invoice records through the MyInvois portal, which may increase expectations for accuracy and timely issuance.
* This forms part of LHDN’s preparation for possible pre filled individual tax relief information in income tax returns for YA 2026.

𝗙𝗶𝗻𝗮𝗹 𝗡𝗼𝘁𝗲
Although the initiative is aimed at Year of Assessment 2026, businesses should not wait until the last minute. You should start reviewing whether your invoicing systems, staff processes, and customer data collection methods are ready to handle increased e-Invoice requests smoothly and accurately. Businesses that prepare early are likely to face fewer operational issues and better customer experience as requirements evolve.

As tax and finance requirements continue to change, good planning makes all the difference. Our CFO advisory team helps businesses stay ahead of regulatory changes and strengthen compliance readiness. WhatsApp us at 010-246 2151.

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