E-Invoicing in Malaysia

E-Invoicing is not just a trend but something that forms a part of the most important transformation business process in Malaysia. In the past, if this word is mentioned in Malaysia or Singapore, the general public and businesses would be thinking of creating invoices through either Excel, Word, Accounting softwares, ERP systems or specialised E-Invoicing applications which also integrate with automated payment solutions. However, today we are referring to invoices created based on the require­ments of the Inland Revenue Board of Malaysia (“IRBM”). In short: If you created an invoice that is not based on the essential requirements listed in the guide from IRBM, this invoice would be rejected. There are certain situations that could exclude you from the requirements of E-Invoicing. But in general, it would be something imple­mented by everyone doing business in Malaysia, since it basically aims at B2C, B2G and B2B.​​

​The tax authorities of Malaysia have created a detailed workflow guideline for businesses to follow, aiming at assisting to streamline the invoicing process and enhancing efficiency. The whole plan is in line with the government’s focus on strengthening digital services and digitalising tax administration. This includes sending invoices to be validated on a real-time basis and having a deadline of sending consolidated E-Invoices latest within 7 days from month end. Only once the invoice is validated, then it would be a proof of expense for tax purpose, unless under certain exemptions as described in the guidelines.

  

The process begins with a supplier creating an E-Invoice upon a transaction of sale occurring. Depending on the internal structure, a business might send the invoice through the MyInvois portal or via an API. Upon validation, a notification is sent to both, supplier and buyer, where comments or rejections can be performed within 72 hours. The supplier is obliged to share the validated E-Invoice with the QR code to the buyer separately. If using API, the supplier or technology provider has to create E-Invoices either in Extensible Markup Language (“XML”) or JavaScript Object Notation (“JSON”) to be submitted to IRBM via API for validation. This also means, all other data format of E-Invoice, such as Portable Document Format (“PDF”) etc., is not accepted.

  

​A company is required to implement E-Invoicing during the first and second phase – respectively being 1 June 2024 and 1 January 2025 –, if company’s revenue is of MYR100 million or MYR25 million in its audited financial statement for financial year 2022. It will only be mandatory for all businesses commencing 1 July 2025. 

  

When a business falls under phase three, but its customers fall under phase one and two, there is no obligation for the business to provide its customers with an E-Invoice as their supporting document to be tax deductible. IRBM has clearly stated in their FAQ for E-Invoicing that during the transitional period, all taxpayers will be allowed to provide either normal bills, receipts or invoices as per normal business practice until the point, where full implementation is in place.

  

​Following steps should be taken now although your business may not fall under phase one and two of the implementation:

  

Between steps 2 and 3, communication with suppliers and customers is also required since there will be additional information that will now be required for E-Invoicing purposes, for example the Tax Identification Number (“TIN”).

  

​Non-compliance is an offence and will incur a fine of not less than MYR200 and not more than MYR20,000 or imprisonment not exceeding six months or both.

  

​It is without a doubt, at the initial stage of E-Invoicing there will be many challenges that could already be foreseeable, such as 

  

To manage the possible issues, the general implementation strategy mentioned above will help. Our experts will gladly provide you with the necessary assistance.