What is Electronic Invoicing in Malaysia?
The Malaysian government has taken note of global trends in e-Invoicing adoption and has set plans in motion to introduce similar measures in Malaysia. In line with this, the Ministry of Finance outlined in its 2023 Pre-Budget statement that Malaysia will be embracing the e-Invoice initiative to streamline tax administration processes through digitization.
However, in October 2023, the Inland Revenue Board of Malaysia (IRBM) announced a delay in the implementation of e-Invoicing, with a gradual rollout scheduled to commence from 1st August 2024.
This article provides an overview of e-Invoicing in Malaysia, covering its definition, rationale for implementation, scope of transactions covered, applicability, implementation timelines, and other pertinent details.
Who is Obliged to Use e‑Invoicing in Malaysia?
Currently, e-Invoicing in Malaysia remains voluntary. However, there are plans in place for its mandatory adoption by all tax-registered businesses in Malaysia, including government entities, in the future. This will entail the implementation of new regulations that will apply to both domestic and cross-border transactions across various categories:
- Business to Business (B2B)
- Business to Customer (B2C)
- Business to Government (B2G) transactions.
The Malaysian government has opted for a phased approach to introduce e-Invoicing, which will unfold in three stages:
- Starting August 2024: Mandatory for taxpayers with an annual turnover or revenue exceeding MYR 100 million (approximately $21 million).
- Starting January 2025: Mandatory for taxpayers with an annual turnover or revenue exceeding MYR 25 million (approximately $5 million).
- By July 2025: Mandatory for all taxpayers to adopt e-Invoicing, regardless of their turnover or revenue levels.
What are the Benefits of the Malaysia e-Invoice?
This streamlined process reduces manual efforts and mitigates human errors, offering a unified approach to invoicing for seamless transaction management. Tax return filing becomes more efficient, thanks to digital submission capabilities. Additionally, digitalized financial reporting aligns with industry standards, facilitating streamlined operations and delivering substantial time and cost savings.
How can I Issue an e-Invoice in Malaysia?
The e-Invoicing system in Malaysia offers a streamlined digital framework to facilitate efficient and secure transactions between suppliers and buyers. Here’s an outline of its operation:
1. E-Invoice Generation: Suppliers generate an e-Invoice post-sale or transaction and submit it to the IRBM (Inland Revenue Board of Malaysia) for validation either via the MyInvois Portal or utilizing an API.
| What is MyInvoise Portal | What is Application Programming Interface (API) |
| • Hosted by IRBM, this portal is accessible to all taxpayers at no cost. • Taxpayers who do not have API connections can still use this portal to issue e-Invoices. • Accessible to all taxpayers, especially those unable to establish an API connection. | • An API comprises programming code facilitating direct data transmission between the taxpayers’ system and the MyInvois system. • Initial investment in technology and modifications to existing taxpayer systems are necessary. • Primarily suited for large taxpayers or businesses handling significant transaction volumes. |
2. Validation Process: The IRBM conducts real-time validation to ensure compliance with established standards and criteria. Successful validation results in the issuance of a Unique Identifier Number to the supplier, enhancing traceability and reducing tampering risks.
3. Notification: Both supplier and buyer receive notifications through the MyInvois Portal or APIs upon validation of the e-Invoice, ensuring mutual awareness.
4. E-Invoice Sharing: Suppliers share the validated e-Invoice, containing a QR code, with the buyer. This QR code allows buyers to verify the e-Invoice’s authenticity and status via the MyInvois Portal.
5. Rejection or Cancellation: Buyers have a specified timeframe to request rejection of the e-Invoice, while suppliers retain the option to cancel it if necessary, with all actions requiring justification and proper communication.
6. MyInvois Portal Access: Both suppliers and buyers gain access to a summary of e-Invoice transactions via the MyInvois Portal, offering a comprehensive overview of Invoicing activities.
IRBM will provide technical guidance on system integration. There will be a Software Development Kit (SDK) to facilitate system integration.
In summary, the introduction of electronic invoicing (e-Invoicing) in Malaysia signals a progressive move towards modernizing tax administration and enhancing business efficiency. Despite a temporary delay announced by the Inland Revenue Board of Malaysia (IRBM), plans for phased implementation remain intact, with mandatory adoption slated for all tax-registered entities by July 2025.
Sources:
1 – https://www.cleartax.com/my/en/e-invoicing-malaysia
2 – https://webtel.in/Blog/E-Invoicing-in-Malaysia
3 – https://blogs.sap.com/2023/10/03/electronic-invoicing-in-malaysia/
4 – https://www.pwc.com/my/en/perspective/tax/230815-e-invoicing-malaysia-integration-model.html
5 – https://www.vatcalc.com/malaysia/malaysia-e-invoicing-2023/
6 – https://www.pwc.com/my/en/services/tax/e-invoicing.html
7 – https://www.hasil.gov.my/en/e-invoice/
9 – https://edicomgroup.com/blog/malaysia-electronic-invoicing-implementation
10 – https://www.hasil.gov.my/en/e-invoice/frequently-asked-questions/
11 – https://www.hasil.gov.my/en/e-invoice/overview-of-the-e-invoice-model/
