e-Invoicing Disbursements and Client Money: A Guide for Law Firms

Legal bills mix three kinds of money: your fees, costs you pay on the client's behalf, and money you hold for the client. On an LHDN e-Invoice they are treated differently. HASiL's e-Invoice Specific Guideline (version 4.9, 7 September 2026, section 5) sets out how.

This guide applies if your firm is within e-Invoice scope — annual turnover of RM3 million or more; below that, firms are exempt (HASiL timeline, updated 30 August 2026). It is general information, not tax advice.

Reimbursements: your own out-of-pocket costs

HASiL calls reimbursements the expenses the firm incurs itself while acting for the client and then recovers — travel, accommodation, telephone, photocopying, courier. These go on your own e-Invoice to the client, alongside your fees.

Disbursements: costs paid to a third party for the client

Disbursements are costs that belong to the client but that you pay to someone else on the client's behalf — a valuer, an expert, a search or a filing. HASiL's guideline describes two scenarios, and which one applies depends on who the third party issues its e-Invoice to.

Scenario 1: the third party invoices your client

If the third party issues its e-Invoice directly to your client and you only pay it on the client's behalf, you do not include that cost in your own e-Invoice, and you do not issue a separate e-Invoice for it. You give the client the proof of payment to recover the money. Your e-Invoice covers your own services only.

Scenario 2: the third party invoices your firm

If the third party issues its e-Invoice to your firm, you then issue an e-Invoice to your client that shows the cost as a separate line item next to your fees — one line for professional fees, another for the disbursement or reimbursement.

In practice, decide with each regular supplier which way they invoice, and record it on the matter, so the bill is right first time.

Money you hold for the client

Money held in your client account — a deposit or purchase price held as stakeholder, a settlement sum, money for stamp duty or registration — is the client's money, not a sale of your services. It is not part of your fee and does not belong on your e-Invoice as income. Keep it in your client account records as the Solicitors' Account Rules require.

A worked example

A conveyancing matter: legal fees of RM4,000, a land search paid by the firm, a valuer who invoices the client directly, and the balance purchase price held as stakeholder.

• Legal fees — on the firm's e-Invoice.
• Photocopying and courier — reimbursements, on the firm's e-Invoice.
• A cost the supplier invoiced to the firm — a separate line on the firm's e-Invoice (Scenario 2).
• The valuer's fee invoiced to the client — not on the firm's e-Invoice; the client receives proof of payment (Scenario 1).
• The purchase price held as stakeholder — client money, not on the e-Invoice.

How a particular statutory fee should be shown is worth confirming once with your tax agent, and then setting up the same way for every matter.

Questions