The Malaysian government has been closely monitoring the global adoption trends of e-invoicing and has initiated plans to implement this system within Malaysia. As outlined in the 2023 Pre-Budget statement by the Ministry of Finance, Malaysia is set to digitize its tax administration activities through the adoption of e-invoicing.
Initially slated for implementation in October 2023, the Inland Revenue Board of Malaysia (IRBM) announced a postponement, with e-invoicing gradually rolling out from August 1st, 2024.
This guide provides an in-depth understanding of e-invoicing in Malaysia, covering its definition, processes, transactions covered, applicability, implementation timeline, and more.
What is e-Invoicing in Malaysia?
An e-invoice in Malaysia is a digital document formatted according to the IRBM's specifications, automating processing within related systems. It serves as digital proof of a transaction between a seller and a buyer, replacing traditional paper or electronic documents such as invoices, credit notes, and debit notes. Mandatory fields include seller and buyer details, item descriptions, quantities, prices, taxes, payment details, and more, totaling 53 fields.
Process Flow of e-Invoice in Malaysia
Following a transaction, the supplier generates the e-invoice and submits it to the IRBM through the MyInvois portal or e-invoicing software via an API. Upon validation by the IRBM, both supplier and buyer are notified. Once validated, the supplier is responsible for sharing the e-invoice, embedded with a QR code, with the buyer.
Transactions Covered Under Malaysia e-Invoice
E-invoicing encompasses Business to Business (B2B), Business to Customer (B2C), and Business to Government (B2G) transactions, with B2G transactions following a similar flow to B2B. It applies to all commercial activities in Malaysia, including the sale of goods and services, as well as specified non-business transactions between individuals.
Types of e-Invoices in Malaysia
Various documents must be issued electronically under Malaysia's e-invoice system, including invoices, credit notes, debit notes, and refund notes.
Reasons for Implementing e-Invoicing in Malaysia
The implementation of e-invoicing aligns with Malaysia's goals of supporting digital economy growth and enhancing tax administration efficiency. It aims to eliminate paper invoicing, prevent tax leakage, save businesses time and resources on tax compliance, and improve ease of business, especially for entities engaged in international trade.
Authority and Guidelines for e-Invoicing in Malaysia
The Inland Revenue Board of Malaysia (IRBM) oversees e-invoicing activities and has issued guidelines outlining implementation methodologies, compliance impacts, record-keeping practices, and addressing common questions and concerns. Additionally, an MoU between the IRBM and the Malaysian Digital Economy Corporation (MDEC) facilitates collaboration on the e-invoicing initiative.
Implementation Timeline for e-Invoicing in Malaysia
E-invoicing will be implemented gradually in phases based on annual turnover, starting from August 1st, 2024, for businesses with an annual turnover exceeding RM 100 million, and extending to all taxpayers by July 1st, 2025. Guidelines determine turnover based on audited financial statements or tax returns for the year 2022.
| Stage | Annual Turnover | Deadline |
|---|---|---|
| 1 | Greater than RM 100 Million | August 1, 2024 |
| 2 | From RM 25 Million upto 100 Million | January 1, 2025 |
| 3 | All Taxpayers | July 1, 2025 |
Reporting e-Invoices in Malaysia
Businesses can report e-invoices through the MyInvois Portal or via API integration, with each method catering to different business sizes and transaction volumes.
Benefits of e-Invoicing in Malaysia
E-invoicing streamlines business processes, enhances tax compliance, improves operational efficiency, accelerates cash flow, and facilitates digitized financial reporting.
Challenges of e-Invoicing for Businesses in Malaysia
Businesses may face challenges in regulatory compliance, technological transition, data security, resistance to change, technological readiness, data accuracy, integration, and supplier onboarding.
Best Practices for e-Invoicing in Malaysia
Best practices include assessing readiness, understanding guidelines, choosing the right integration and vendor, preparing for launch, and implementing diverse project teams, billing processes, and plans for foreign customer invoices.
Role of e-Invoice in Malaysia for Different Industries
The Malaysian government has released FAQs indicating the role of e-invoicing for various industries, including healthcare, construction, telecommunication, e-commerce, and petroleum operations.
How Flick Can Help with e-Invoicing in Malaysia?
Flick offers a comprehensive e-invoicing solution tailored for Malaysia, ensuring seamless integration with ERP/POS systems and 100% IRBM compliance. Key features include dedicated account managers, extensive data validations, rapid ERP integration, data archival, and value-added services.