Malaysia E-Invoicing Initiative - All You Need to Know

Malaysia E-Invoicing Initiative: Embracing Digital Transformation

Malaysia is on the brink of a significant digital transformation with the upcoming e-invoicing initiative. As announced by the Inland Revenue Board of Malaysia (IRBM), e-invoicing will soon become mandatory for all businesses in phases. Here’s everything you need to know to stay compliant and leverage this new system for your business's benefit.

What is E-Invoicing?

E-invoicing stands for electronic invoicing—a digital method of issuing invoices between a supplier and a buyer. This system ensures real-time validation and secure storage of transaction data, which includes:

• Supplier and buyer details
• Item descriptions
• Quantities
• Prices excluding tax
• Total amounts with tax

Through the MyInvois portal or an Application Programming Interface (API), businesses can generate, transmit, and store these invoices securely and efficiently. With the shift from traditional paper invoices to digital ones, the aim is to streamline processes, enhance transparency, and reduce errors.

Key Implementation Dates

The rollout of e-invoicing in Malaysia will occur in phases:

• 1 August 2024: Mandatory for businesses with annual revenue above RM100 million.
• 1 January 2025: Required for businesses earning between RM25 million and RM100 million.
• 1 July 2025: Full implementation for all remaining taxpayers.

Businesses are encouraged to adopt the system early to familiarize themselves with the new process and enjoy the associated benefits.

Objectives of E-Invoicing

The primary goals of Malaysia’s e-invoicing initiative are to:

1. Enhance Tax Administration: Streamline tax submission processes and improve accuracy.
2. Prevent Tax Leakages: Minimize errors and fraudulent activities associated with paper invoicing.
3. Save Time and Resources: Reduce manual effort and errors in invoice handling.
4. Facilitate International Trade: Standardize invoice formats for global business operations.

Who Needs to Implement E-Invoicing?

All Malaysian businesses will be required to adopt e-invoicing as per the outlined schedule. By 1 July 2025, it will become mandatory for all taxpayers. Compliance isn't optional, so early adoption will help in securing a smoother transition.

Benefits of E-Invoicing

E-invoicing offers myriad benefits to both small and large businesses:

• Reduce Human Error and Manual Effort: Automates data entry and reduces mistakes.
• Efficient Tax Filing and Compliance: Ensures that tax reporting is accurate and integrates seamlessly with existing systems.
• Meet Regulatory Requirements: Aligns business operations with local tax laws.
• Digitalize Financial Reporting: Enhances the ease and accuracy of financial statements.

How Does E-Invoicing Work?

There are two main ways to implement e-invoicing for your business:

1. MyInvois Portal

The MyInvois Portal is provided by the IRBM and can handle both individual and batch invoice processing. This method is especially suitable for small to medium-sized enterprises (SMEs) with fewer transactions.

Step-by-Step Process:

1. Issuance: Supplier generates an e-invoice and sends it to IRBM.
2. Validation: IRBM validates the invoice, assigns a Unique Identifier Number (UIN), and ensures tampering is minimized.
3. Notification: IRBM notifies both parties of the invoice validation.
4. Sharing: Supplier shares the validated e-invoice, embedded with a QR code, with the buyer.
5. Rejection/Cancellation: Buyers can request a rejection within 72 hours. If approved, the supplier cancels the invoice and issues a new one.
6. Transaction Summary: Both parties view their transaction summaries on the portal.

2. Application Programming Interface (API)

For larger organizations with high transaction volumes, API integration enables direct communication between the MyInvois system and the company’s ERP system. This method supports:

• Direct integration with ERP systems
• Using Peppol or non-Peppol service providers

This approach is ideal for businesses ready to invest in technology to gain efficiency in the long run.

FAQs

What Model is Adopted for E-Invoicing?‍

The IRBM adopts the Continuous Transaction Control (CTC) model for real-time and transparent reporting.

What is Peppol?

‍Pan-European Public Procurement On-Line (PEPPOL) is a list of technical specifications that can be integrated into any ERP system or eProcurement solution, offering interoperability across various countries.

Are E-Invoices Applicable Only in Malaysia?

‍No, e-invoices apply to both domestic and cross-border transactions, including imports and exports.

What File Formats are Required for E-Invoicing?

‍E-invoices should be generated in either XML or JSON file formats for validation purposes by IRBM.

Where Can I Find Detailed Guidelines for the E-Invoicing Initiative?

‍The detailed guidelines are available on the IRBM website. These guidelines will provide comprehensive instructions and requirements for seamless adoption.

Who Can I Reach Out To for Further Questions?

‍For further clarification, you can email myinvois@hasil.gov.my. The IRBM’s support team will assist you with any questions you may have regarding the e-invoicing system.

Conclusion

The Malaysia e-invoicing initiative signifies a substantial step towards digital transformation and efficient tax administration. By adopting e-invoicing, businesses can expect enhanced accuracy, reduced errors, streamlined operations, and better compliance with tax regulations.

Staying ahead of the curve by adopting e-invoicing early not only ensures compliance but also positions your business to leverage the full benefits of digitalization. Whether you choose the MyInvois Portal for simplicity or API integration for handling large volumes, the goal is to transition smoothly and efficiently.

Key Takeaways:

• Understand the basics and benefits of e-invoicing.
• Keep track of key implementation dates.
• Choose the right method (MyInvois Portal or API) based on your business needs.
• Obtain the necessary details and formats for e-invoices.
• Refer to IRBM’s guidelines and seek support when needed.

Prepare your business for this upcoming change and embrace the advantages of a digitalized invoicing system.

For more information and updates, visit the our malaysia e-invoicing blog page (https://www.complyance.io/malaysia/blog) or get in touch via email at sales@complyance.io.