Everything you need to know about Malaysia E-invoicing LHDN Compliance related
What is an e-Invoice?
An e-Invoice is a digital version of a traditional invoice, used to record transactions between a supplier and a buyer. It contains essential details like supplier and buyer information, item description, quantity, price, and tax details.
What are the benefits of adopting e-Invoice?
The benefits include a unified invoicing process, seamless tax return filing, improved business efficiency, increased tax compliance, and cost savings for both large businesses and MSMEs.
What transaction types does e-Invoice cover?
e-Invoice covers Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Government (B2G) transactions.
Who needs to comply with e-Invoice requirements?
All taxpayers engaging in commercial activities in Malaysia, including associations, corporations, partnerships, and trusts, are required to comply with e-Invoice requirements.
What are the scenarios requiring e-Invoice to be issued?
Scenarios include proof of income for sales transactions and proof of expense for purchases, returns, discounts, and foreign transactions that require self-billed e-Invoices.
What types of e-Invoices need to be issued?
Types include invoices, credit notes, debit notes, and refund notes.
When will e-Invoice be implemented?
E-Invoice will be implemented in phases, starting with taxpayers with an annual turnover of more than RM100 million on 1 August 2024, followed by other thresholds until all taxpayers are included by 1 July 2025.
How is the annual turnover or revenue for e-Invoice implementation determined?
For taxpayers with audited financial statements, it's based on the annual turnover or revenue in the audited financial statements for the financial year 2022. For those without audited statements, it's based on the annual revenue reported in the tax return for the year of assessment 2022.
What happens if a taxpayer's annual turnover or revenue changes after the e-Invoice implementation timeline is determined?
Changes in annual turnover or revenue in subsequent years will not affect the taxpayer's obligations to implement e-Invoice based on the initial implementation timeline.
Are there any exemptions from implementing e-Invoice?
Certain individuals and entities, such as rulers, government bodies, and individuals not conducting business, are exempt from issuing e-Invoices.
Can taxpayers voluntarily participate in e-Invoice implementation before their scheduled timeline?
Yes, taxpayers can opt to voluntarily participate in the implementation of e-Invoice at an earlier date regardless of their annual turnover or revenue.
What is the compliance obligation for issuing e-Invoices?
Taxpayers within the specified annual turnover or revenue threshold are required to issue and submit e-Invoices for IRBM's validation according to the implementation timeline.
Are invoices issued before the e-Invoice implementation date required to be converted into e-Invoices?
No, invoices issued prior to the e-Invoice implementation date applicable to the taxpayers are not required to be converted into e-Invoices.
What happens if a taxpayer's accounting year end changes for the financial year 2022?
The taxpayer's turnover or revenue will be pro-rated to a 12-month period for the purposes of determining the e-Invoice implementation date.
Can e-Invoices be issued for transactions made before the implementation date?
No, e-Invoices are required only for transactions made on or after the implementation date.
Are e-Invoices mandatory for all transactions after the implementation date?
Yes, all applicable transactions after the implementation date must be documented using e-Invoices.
How does e-Invoice implementation benefit MSMEs?
The phased implementation offers a manageable transition to e-Invoice, allowing MSMEs to align their financial reporting and processes with industry standards over a longer period.
How does e-Invoice implementation improve tax compliance?
By automating data entry and streamlining the invoicing process, e-Invoice implementation reduces manual efforts and human errors, leading to more accurate tax reporting.
What types of entities are required to comply with e-Invoice requirements?
Entities such as associations, corporations, limited liability partnerships, and trusts are required to comply with e-Invoice requirements.
What is the purpose of issuing different types of e-Invoices like credit notes and refund notes?
Different types of e-Invoices are issued to document various transaction adjustments, such as correcting errors, applying discounts, or confirming refunds.
