The Ultimate Guide to E-Invoicing for Airline Operators

The Inland Revenue Board of Malaysia (LHDN) has released a detaileddocument made explicitly for the aviation sector. This document, in the form of an FAQ is designed to provide guidance and explain various business scenarios, along with providing practical advice to help aviation-related businesses in Malaysia. Thereby, enabling them to adhere with the Malaysian e-invoicing regulatory requirements.

1. Issuing e-Invoices for Flight Tickets and Private Air Charter services

The sale of flight tickets and private air charter services, make it mandatory for an e-invoice to be issued. This condition comes with certain requirements depending on the type of airline operator, explained as below:

Local Airline Operators: All local airline operators are bound to issue e-invoices for all flight tickets and services. This isirrespective of where the sale occurs.

Foreign Airline Operators: All foreign airline operators are bound to issue e-invoices only when the point of sale is in Malaysia, as defined by the International Air Transport Association (IATA).

Key consideration: Consolidated e-invoices are not allowed for thesedealings. For furtherinformation on this, refer to Sections 2.3, 2.4, and 3.7 of the e-invoice Guidelines.

2. Buyer Information in E-Invoices

Information of the buyer in e-invoicing in aviation differsbased on the nature of the buying:

In case of Personal Travel:Details of the individual who made the purchase must be entered as buyer’s details.

In case of Group Bookings:Airlines have two options:

All the invoices can contain the details of the person who made the purchase for all the invoices

Each invoice can have the details of the respective passenger

3. Privacy Concerns with Buyer Data

Global data protection laws, such as GDPR, may cause airlines to face challenges in gathering personal details like Tax Identification Numbers (TIN).

In order to mitigate this issue, the Inland Revenue Board of Malaysia (IRBM) provides the following temporary options:

Buyer’s Name: Enter “General Public.”

TIN: Enter “EI00000000020.”

Business Registration Number (BRN): Enter “N/A.”

Other Details (Address, Contact Number, SST Registration Number): Enter “N/A.”

This methodensures complete compliance in e-invoicing in aviation, adhering to privacy laws.

4. E-Invoices for Excess Baggage Fees

Airlines must issue e-invoices based on the following conditions, in situations where fee is charged on excess baggage during checkin:

If Requested: e-invoice must be issued instantly.

If Not Requested: Must provide a receipt and consolidate these transactions into a e-invoice within seven days after the end of the month.

5. Handling Price Adjustments and Refunds

Changes in ticket prices need specific e-invoicing procedures:

In case of increase in price, they are required toissue a separate e-invoice or debit note for the difference.

In case of reductions in price or Refunds they are required toissue a credit note or refund note.

In cases where there are no changes in monetary value, additional e-invoice is not required.

6. Issuing E-Invoices for Ancillary Services

When it comes to flight and non-flight related ancillary services, the following e-invoicing in aviation rules must be followed by airlines:

Flight related Ancillary services Eg: Seat selection, baggage: If these items are sold together in one deal, there are two options available for airlines:

1. A single e-invoice can be issued consisting of both ticket and ancillary services.

2. Separate e-invoices can be issued, one for the ticket and one on ancillary services.

If ancillary services and flight ticket are sold separately:

1. A separate e-invoice for the flight ticket

2. Based on the request of the buyer, either an e-invoice or receipt will be issued for the ancillary service.

Non-flight related ancillary services (Eg: car rentals, travel insurance)

1. In cases where airline is the main provider of the service, they must issue the e-invoice.

2. The service provider must issue the e-invoice or receipt in cases where the airline acts as agent.

Key Takeaways for e-invoicing in aviation

Airline operations, need to understand the rules for e-invoicing in aviation in order to stay compliant with the Income Tax (Issuance of Electronic Invoice) Rules 2024. By understanding these rules, the airlines can transition seamlessly to e-invoicing and mitigate any regulatory or compliance issues.