The retail industry in Malaysia is on the brink of a significant digital transformation with the upcoming implementation of the e-Invoice system. E-invoicing is set to reshape the way transactions are recorded, making processes smoother and more transparent. In simple terms, an e-invoice is a digital version of a traditional invoice, replacing paper invoices and credit or debit notes with an electronic format that meets regulatory requirements. Here’s a deep dive into how this implementation is set to unfold and why it matters to the retail industry in Malaysia.
What is an E-Invoice?
An e-Invoice is a digital document that represents a transaction between a supplier and a buyer. It contains essential details, including:
Supplier and buyer information
Item descriptions
Quantity and price
Taxes and total amount
While e-Invoices carry the same information as traditional paper documents, the advantage lies in their digital nature, making them easier to manage, store, and submit to tax authorities like the Inland Revenue Board of Malaysia (IRBM).
Phased Implementation of E-Invoices in Malaysia
To ensure a smooth transition for businesses, the implementation of e-invoices is being rolled out in phases. The timeline takes into consideration the annual turnover of businesses, giving them sufficient time to adapt to the new system. Below is the timeline:
The Targeted Taxpayers for e-Invoicing implementation in Malaysia are divided into three groups, with specific Implementation Dates. Taxpayers with an annual turnover exceeding RM100 million will be required to comply by 1 August 2024. The next group, taxpayers with an annual turnover between RM25 million and RM100 million, must comply by 1 January 2025. Finally, all other taxpayers will need to adopt the e-Invoicing system by 1 July 2025.
Retailers need to prepare their systems in advance of these deadlines to ensure compliance with the new regulations.
Retail E-Invoicing: Two Scenarios
The retail sector often deals with both types of customers: those who need e-invoices for tax purposes, and those who do not. Here’s how e-invoicing works for both:
1. Retail Customers Who Request an E-Invoice
For customers who require e-invoices, usually for commercial purposes or tax deductions, the process is as follows:
Step 1: Customer Request
When a customer requests an e-invoice, the retailer collects essential information such as the customer’s Tax Identification Number (TIN) or IC number.
Step 2: Real-time Validation
The retailer enters the customer’s data into their Point of Sale (POS) system and sends it to IRBM for validation.
Step 3: Notification
If IRBM finds no issues, both the supplier (retailer) and the buyer (customer) receive a notification of the validated e-invoice.
Step 4: E-Invoice Issuance
The retailer then sends the e-invoice, embedded with a QR code, to the customer. This code links to the validation on the MyInvois portal.
Step 5: View on MyInvois Portal
The customer can view their validated e-invoice on the portal, using it for tax purposes as proof of expense.
2. Retail Customers Who Do Not Request an E-Invoice
Many customers, especially those making purchases for personal use, do not require an e-invoice. For these transactions, retailers follow a different process:
Step 1: Issue a Regular Receipt
Customers receive a regular paper or electronic receipt as they do today.
Step 2: Monthly Consolidation
The retailer consolidates all such receipts on a monthly basis.
Step 3: Submission for Validation
The consolidated receipt details are sent to IRBM within seven days of the end of the month. This consolidated e-invoice serves as proof of income for the retailer.
Post-Issuance Procedures: Rejection, Cancellation, and Amendments
Once an e-invoice is issued, there are additional processes retailers must handle:
Rejection or Cancellation:
Customers or suppliers have a 72-hour window to request amendments or reject the invoice. After this period, any changes require the issuance of a credit or debit note.
Transaction Summary:
Both customers and retailers can view a transaction summary through the MyInvois portal, ensuring full transparency.
Retail Industry's Contribution to Malaysia's Economy
The retail industry is a vital component of Malaysia's economy, consistently contributing a significant portion to the nation's Gross Domestic Product (GDP). Despite global economic fluctuations and local challenges such as the COVID-19 pandemic, Malaysia’s retail market has remained resilient and is expected to continue its upward trajectory.
Key Facts and Figures
Retail Sector’s GDP Contribution:The retail industry has been one of the top contributors to Malaysia’s GDP, generating approximately 15% of the country’s overall GDP. In 2023 alone, the retail sector contributed MYR 178 billion to the national economy, showcasing its vital role.
Growth Forecast:The Malaysian retail industry is projected to grow at a Compound Annual Growth Rate (CAGR) of 5.94% from 2024 to 2029, with the market size expected to increase from USD 89.66 billion in 2024 to USD 119.64 billion by 2029. This growth is driven by a combination of domestic consumption and increasing foreign investments in retail.
Key Retail Segments:
Food and Beverages (F&B) is one of the largest contributors, driven by Malaysia’s position as a global exporter of palm oil-based products.
Apparel, Footwear, and Fashion Accessories have also recovered steadily post-pandemic, contributing significantly to the retail sector's recovery.
The rise of e-commerce and online retail has also contributed to the growth, with more consumers opting for digital shopping channels.
Impact of Hypermarkets and Supermarkets:Large retail outlets such as hypermarkets and supermarkets have consistently been strong revenue generators. Despite a temporary contraction during the pandemic, these outlets are expected to grow by 5-6% annually, as consumers return to physical stores, and businesses continue to expand in suburban and rural areas.
Retail Industry E-Invoicing Implementation Solutions in Malaysia
How Complyance Can Help Retailers with E-Invoicing
To ensure seamless compliance with Malaysia’s e-invoice mandate, retail businesses can use platforms like Complyance, which offer the following benefits:
Automated E-Invoice Generation:
Generate, send, and receive e-invoices seamlessly, reducing manual effort.
Direct API Connection to IRBM:
Submit e-invoices in XML or JSON formats directly from your POS system to IRBM, simplifying compliance.
Real-Time Tracking and Monitoring:
Track and monitor e-invoice submissions, validations, and statuses in real time, ensuring smooth operations and compliance.
By utilising a solution like Complyance, retail businesses can enhance efficiency, ensure compliance with LHDN e-invoice requirements, and foster trust in their transactions.
Conclusion
As the retail industry in Malaysia moves toward full e-invoicing compliance, businesses need to embrace this digital transformation. Whether dealing with customers who request e-invoices or those who do not, following structured processes ensures seamless transactions and tax compliance. The growing retail industry in Malaysia, coupled with efficient e-invoice solutions, positions retailers to improve operational efficiency and contribute to the economy's continued growth. Retailers who adopt platforms like Complyance will be better equipped to stay ahead in this evolving market and ensure a smooth transition into the e-invoice era.
Frequently Asked Questions
Frequently Asked Questions
What is an e-Invoice and how does it apply to retail?
An e-Invoice is a digital representation of a transaction between a supplier and a buyer. It contains essential information such as the supplier’s and buyer’s details, item descriptions, prices, and taxes. In the retail industry, e-Invoices replace paper invoices and ensure compliance with tax regulations.
When will e-Invoicing be mandatory for retailers in Malaysia?
E-Invoicing will be implemented in phases in Malaysia. Retailers with an annual turnover of more than RM100 million must comply by 1 August 2024, those with more than RM25 million turnover by 1 January 2025, and all taxpayers by 1 July 2025.
What are the steps for retail customers who request an e-Invoice?
When a customer requests an e-Invoice, the retailer collects customer details, sends data to the Inland Revenue Board of Malaysia (IRBM) for validation, and issues the validated e-Invoice to the customer with a QR code for viewing on the MyInvois portal.
What happens if a customer does not request an e-Invoice?
If a customer does not request an e-Invoice, the retailer issues a regular receipt. These receipts are consolidated monthly, and a single e-Invoice covering all purchases is submitted to IRBM within seven days of the month’s end.
What is the process for rejecting or amending an e-Invoice?
Customers or suppliers can request rejection or amendments to an e-Invoice within 72 hours. After this period, changes require issuing a credit note, debit note, or refund note.
How will e-Invoicing help the retail industry?
E-Invoicing helps streamline operations, reduce manual errors, ensure tax compliance, and provide transparency for both retailers and customers. Platforms like Complyance offer automated e-Invoice generation, direct API connections to IRBM, and real-time tracking, making the process smoother.
