The Lembaga Hasil Dalam Negeri (LHDN) released a set of Frequent Asked Questions (FAQs) on December 27, 2023, specifically tailored for the petroleum operations industry. Here's a breakdown and summary of key points regarding e-invoice implementation:

When contractor of a Production Sharing Contract (PSC) sells crude oil to buyer, which Tax Identification Number (TIN) should be used as Supplier's TIN (and the corresponding Supplier's details)?
As the sale is between the contractor and the buyer, contractor's TIN assigned for Income Tax Act 1967 (ITA 1967) purposes should be used as the Supplier's TIN, along with the corresponding contractor's details as te Supplier's details, when an e-Invoice is issued.

Which TIN shoud be used as the Buyer's TIN for cost incurred in relation to petroleum operations? Such as joint costs and sole costs.

1. In relation to joint costs, PSC operator's TIN assigned for ITA 1967 purposes should be used as the Buyer's TIN.
2. In relation to sole costs, the contractor's TIN assigned for ITA 1967 purposes should be used as the Buyer's TIN, given that the said expense is incurred solely for the said contractor.

LHDN acknowledges that there may be challenges in issuing e-Invoice for recharge of joint costs in relation to petroleum operations to respective PSC. In this regard, PSC operatior and/or contractor are exepted from issuance of e-Invoice in relation to recharge of joint costs in relation to petroleum operations until further notice.

In the case where several PSCs are located in the same area of operation (i.e. contiguous block), which TIN should be used as supplier's TIN (for sale of crude oil) and buyer's TIN (for costs incurred for petroleum operations)?

1. Supplier's TIN: The TIN number assigned to the contractor for ITA 1967 purposes should be used as the Supplier's TIN in the said e-Invoice.
2. Buyer's TIN: For join costs, the contiguous PSC operator's TIN assigned for ITA 1967 purposes should be used as the Buyer's TIN.

In relation to sole costs incurred by contractors of contiguous PSC, the contractor's TIN assigned for ITA 1967 purposes should be used as the Buyer's TIN.

Would e-Invoice be required for inter-ledger transactions between PSC and operator of PSC (e.g. back charge)?
LHDN acknowledges that there may be chellenges in issuing e-Invoice for inter-ledger transactions in relation to petroleum operations between PSC and operator of PSC. In this regard, e-Invoice would be exempted for inter-ledger transactions in relation to petroleum operations until further notice.

What should be the e-Invoice arrangement if contractor(s) of PSC concluded a sale of crude oil via an agent?
Current invoicing arrangement would be applicable upon implementation of e-Invoice.

Would operator of PSC be allowed to issue e-Invoice on behalf of contractor(s) under Upstream Gas Sales Agreement upon e-Invoice implementation?
PSC operator is allowed to issue e-Invoice on behalf of contractor for the sale of gas under the Upstream Gas Sales Agreement, in line with the current invoicing arrangement. For e-Invoice issuance purposes, contractor's details should be used as the Buyer's detail.

Note that the e-Invoice would only appear in the respective contractor's MyInvois portal upon validation (i.e. not appearing in the Operator's portal).

What is the e-Invoice treatment for supplementary payment (base price increase in every production anniversary)?
Current invoicing arrangement would be applicable upon implementation of e-Invoice. Any true up or true down would be done via issuance of debit note or credit note e-Invoice.

Are cash call and joint interest billing (JIB) in scope of e-Invoice?
As cash call and JIB are methods for settlement, no e-Invoice would be required.

Please do not hesitate to contact us for e-Invoice implementation and consultation at:

Ten Jia Sheng
014-911 1880
jsten@jsc-corp.com