Contributed by Datuk Chang Kim Loong

With the recent implementation of e-invoicing requirements, many organisations are scrambling to ensure compliance. While the objective of e-invoicing is well-intentioned, its broad application to non-profit entities such as Joint Management Bodies (JMBs), Management Corporations (MCs) and Residents’ Associations (RAs) raises significant concerns.

JMBs, MCs and RAs are established to manage and maintain properties on behalf of property owners. Their primary role is to ensure the upkeep of common areas, manage finances responsibly and represent the collective interests of residents. Importantly, these bodies do not generate profits or distribute dividends. Funds collected are fully utilised for the management and maintenance of shared facilities, leaving no taxable income.

The imposition of e-invoicing on JMBs, MCs and RAs presents a perplexing challenge. As entities not subject to corporate tax, requiring them to adopt e-invoicing offers little benefit from a tax compliance standpoint. Instead, it introduces unnecessary administrative burdens, increases operational costs and diverts valuable resources away from their core responsibilities.

Understanding the role of JMB/MC

JMBs and MCs are statutory bodies established under the Strata Management Act 2013 (Act 757) to manage and maintain the common property of stratified developments while RAs are registered under the Registry of Societies. Their sole purpose is to safeguard the well-being of residents and unit owners through:

• The collection of maintenance fees and sinking fund contributions to cover shared expenses such as security, cleaning and building maintenance.
• Administrative and facilities management to ensure smooth operations within the community.
• Ensuring compliance with legal and safety standards for the benefit of all property owners.

Any surplus from funds collected are reserved for future maintenance needs. Given their non-profit nature and limited scope, subjecting them to e-invoicing requirements is unnecessary and counterproductive.

Unnecessary administrative burden

The transition to e-invoicing is not without cost. JMBs, MCs and RAs, often operating on limited budgets, will need to invest in new systems, train personnel and ensure ongoing compliance. These additional expenses inevitably trickle down to property owners in the form of higher maintenance fees, placing an unnecessary financial burden on homeowners already contending with rising living costs.

For example, a JMB managing a mid-sized condominium in Kuala Lumpur estimated that adopting an e-invoicing system would cost approximately RM20,000 annually, covering software subscriptions, staff training and increased administrative workload. “We are already struggling to maintain the property within budget, and now we have to allocate funds for something that brings no real benefit to us or the government,” said Tan Mei Ling, a JMB treasurer from Cheras.

Furthermore, the time and resources required to implement and manage e-invoicing could distract from the JMB’s, MC’s, or RA’s core responsibility. Committee members, many of whom are volunteers serving without remuneration, may find the added workload overwhelming, potentially discouraging participation in these essential community bodies.

Increased financial burden

The introduction of e-invoicing will result in significant additional costs for JMBs, MCs and RAs, including:

• Software and system setup costs: These bodies will need to purchase, implement and maintain e-invoicing software.
• Training and administrative expenses: Committee members and staff will require training, which adds to operational costs.
• Ongoing compliance costs: Continuous resources will be needed for data management and submission of invoices via the e-invoicing system.

These added expenses will inevitably be passed on to property owners in the form of higher maintenance fees, further impacting housing affordability. For many low- and middle-income homeowners, this represents an unnecessary financial burden that could worsen their cost of living challenges.

Wastage of government resources

From a governmental standpoint, imposing e-invoicing on non-profit JMBs, MCs and RAs represents an inefficient use of resources. Monitoring compliance among entities that do not generate taxable income yields little to no return on investment. These resources could be more effectively directed towards sectors where tax leakage is a real concern, thereby improving the overall efficiency of the tax system.

“As a non-profit organisation, we do not generate taxable income. Requiring us to comply with e-invoicing feels like a misplaced policy,” said Ahmad Firdaus, an MC chairman in Penang. “The government’s resources would be better spent on ensuring that large corporations adhere to tax regulations, rather than burdening small non-profit bodies like ours.”

According to the Inland Revenue Board of Malaysia (IRBM), the e-invoicing mandate applies broadly to all individuals and legal entities, including associations and bodies of persons. As a result, non-profit entities such as JMBs, MCs and RAs are subject to the same compliance obligations, despite having no taxable revenue.

A call for exemption

Given these challenges, there is a clear and urgent need for the Ministry of Housing and Local Government as well as the Ministry of Finance to reconsider the applicability of e-invoicing to JMBs, MCs and RAs. Granting an exemption for these non-profit bodies, which manage stratified properties, is not only logical but also necessary to avoid placing undue financial pressure on property owners and to ensure these entities can continue to function effectively.

Other countries, such as Singapore, have already introduced e-invoicing exemptions for non-profit organisations, acknowledging that such entities do not contribute to the tax base. Malaysia would be wise to adopt a similar approach.

Stratified property owners are encouraged to voice their concerns to the relevant authorities. By collectively advocating for an exemption, we can help ensure that the management of our properties remains efficient, financially sustainable and focused on serving residents—without being hampered by unnecessary administrative burdens.

No risk of tax evasion

One of the key objectives of e-invoicing is to combat tax evasion and promote transparency in financial transactions. However, JMBs, MCs and RAs already operate under strict financial regulations, including:

• Mandatory annual audits as required under the Strata Management Act.
• Transparent financial reporting to property owners during Annual General Meetings (AGMs).
• Adherence to banking regulations that ensure traceability and accountability of all transactions.

As these non-profit entities do not engage in commercial activities and are already subject to comprehensive financial oversight, the risk of tax evasion is virtually non-existent. Introducing e-invoicing for JMBs, MCs and RAs does not address any real financial risk.

While the transition towards digitalisation is generally positive, it must be implemented sensibly. Imposing e-invoicing on JMBs, MCs and RAs—organisations that neither pose a tax risk nor benefit from such a system—is a misguided approach that should be urgently revisited.

A more pragmatic policy is needed. One that supports the effective and sustainable management of Malaysia’s stratified properties without creating unnecessary burdens on those tasked with maintaining them.

Datuk Chang Kim Loong is the honorary secretary-general of the National House Buyers Association.

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