The Holding Company Earns the Interest. So Why Must the Subsidiary Issue the e-Invoice?

01Summary

Interest income belongs to the Holding Company,

BUT the Subsidiary may be the one issuing the e-Invoice.

A client asked me this recently:
"The Holding Company lends money to its Subsidiary, and the Subsidiary pays interest to the Holding Company."

At first glance, most of us may think:
“The Holding Company earns the interest, so it should issue the e-Invoice, right?”

Not necessarily.

In this situation, the Subsidiary, as the payer of the interest, is required to issue a Self-Billed e-Invoice to the Holding Company.

LHDN Guideline

This is also illustrated in LHDN’s e-Invoice Specific Guideline Version 4.8 (7 July 2026) for loans between a holding company and its subsidiary.

A few points worth remembering:
- The e-Invoice is for the interest, not the loan principal.
- For interest payments, don’t just look at who earns the income.
- Check who is paying the interest and the relationship between the parties.

There are exceptions, including certain centralised treasury arrangements within related companies, so always check the facts before applying the general rule.

Another situation to take note of:
"What if the company has a staff loan arrangement and charges interest to the employee?"

The treatment changes.

In this case, although the employee is the one paying the interest, the employer issues the e-Invoice to the employee for the interest received.

So when you see an interest expense in the accounts, perhaps one more question should be added to the checklist:
“Who should actually issue the e-Invoice?”

Sometimes, a small difference in the relationship between the parties changes the treatment.