What is the difference between Tax Code 06 (Not Applicable) and E (Tax Exempt)?

What is the difference between Tax Code 06 (Not Applicable) and E (Tax Exempt)?

The difference between Tax Code 06 (Not Applicable) and E (Tax Exempt) in the context of Malaysia’s e-Invoice implementation is based on their distinct purposes for tax treatment:

Tax Code 06 – Not Applicable

  • Usage: This code is used when no tax is applicable to a transaction, typically because the supply is not within the scope of SST (Sales or Service Tax).

  • Examples:

    • Transactions involving disbursements or out-of-scope services.

    • Sale of non-taxable goods/services.

    • Exports or zero-rated supplies under GST (prior context) or where SST doesn’t apply.

Tax Code E – Tax Exempt

  • Usage: This is used when the transaction is specifically exempted from tax under law, such as those covered under the Sales Tax (Persons Exempted from Payment of Tax) Order 2018 or other statutory exemptions.

  • Requirement: Taxpayers must include relevant exemption details, such as C3 exemption certificate number, in the Details of Tax Exemption field of the e-Invoice.

Key Distinction:

  • Tax Code 06 means tax doesn't apply by nature of the transaction.

  • Tax Code E means tax is normally applicable, but the transaction is exempted under a specific exemption rule or order.

Always ensure the correct tax code is selected based on the legal nature of the transaction and applicable tax legislation. 

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