The Malaysian government has expressed its intention to adopt e-invoicing Malaysia nationwide, aligning with global trends in its widespread adoption. The move towards digitizing tax administration tasks is highlighted in the 2023 Pre-Budget announcement by the Ministry of Finance for e-invoicing Malaysia.

However, the Malaysian Inland Revenue Board (IRBM) announced in October 2023 that the implementation of e-invoicing Malaysia would be postponed, with a phased rollout scheduled to commence on August 1, 2024.

This article provides an overview of e-invoicing Malaysia, detailing its definition, applications, implementation timeline, and the scope of transactions it encompasses in e-invoicing Malaysia.

What is e-Invoice Malaysia

An e-Invoice Malaysia refers to a file formatted according to the specifications set by the Inland Revenue Board of Malaysia (IRBM), which can be automatically processed by relevant systems. Essentially, it serves as a digital record confirming a transaction between a seller and a buyer in e-invoicing Malaysia.

Moreover, e-Invoicing Malaysia supplants traditional paper-based or other electronic documents like invoices, credit notes, debit notes, or invoices in unspecified formats such as images, PDFs, or Excel files. In Malaysia, a valid e-Invoice must contain 53 mandatory fields, encompassing crucial information such as seller and buyer details, item descriptions, quantities, prices, taxes, total amounts, payment specifics, and more in e-invoice Malaysia.

Process in e-invoice Malaysia

Following the completion of a transaction of e-invoicing Malaysia, the supplier generates an e-Invoice and submits it to the Inland Revenue Board of Malaysia (IRBM) via the MyInvois portal or through specialized e-Invoicing Malaysia software utilizing an Application Programming Interface (API).

Subsequently, the e-Invoice Malaysia undergoes validation by the IRBM, with notifications sent to both the supplier and the buyer upon completion of the validation process.

Following validation, the onus falls on the supplier to provide the e-Invoice tailored for Malaysia, now containing an embedded QR code, to the buyer.

e-invoice Malaysia timeline

👉1 August 2024

Participation in the e-Invoice Malaysia implementation is compulsory for taxpayers whose annual turnover or revenue exceeds RM100 million in e-invoice Malaysia.

Nevertheless, it should be emphasized that taxpayers retain the freedom to voluntarily participate in the early stages of e-invoicing Malaysia implementation in e-invoice Malaysia, irrespective of their annual turnover or revenue.

👉1 January 2025

Participation in the e-Invoice Malaysia implementation is mandatory for taxpayers with an annual turnover or revenue ranging from over RM25 million to RM100 million.

Additionally, taxpayers retain the option to voluntarily engage in the implementation for e-invoicing Malaysia ahead of schedule, irrespective of their annual turnover or revenue.

👉1 July 2025

For all other taxpayers, the implementation of e-Invoicing Malaysia is mandatory.

Covered transactions under Malaysia's e-invoicing system

E-invoicing Malaysia covers a range of transaction types, spanning Business to Business (B2B), Business to Customer (B2C), and Business to Government (B2G) interactions. This digital invoicing system applies to all commercial activities conducted in e-invoicing Malaysia, spanning the sale of goods, provision of services, and specified non-business transactions between individuals.

In the context of B2C transactions, sellers are not required to issue e-invoice Malaysia directly to end consumers; instead, they issue standard invoices or receipts. Subsequently, within a specified timeframe, sellers are obliged to consolidate all standard invoices or receipts and issue a unified e-invoice Malaysia.

For further details regarding the transaction types covered by e-Invoicing Malaysia, please refer to the provided link.

What is the procedure for reporting e-invoice Malaysia?

In Malaysia, companies have the option to report e-invoices through the following transmission modes:

👉MyInvois Portal hosted by IRBM: Accessible to all businesses, this portal is particularly suitable for managing a smaller volume of data and is well-suited for Micro, Small, and Medium-sized Enterprises (MSMEs).

👉Application Programming Interface (API): Available in XML or JSON format, utilizing an API for e-invoice reporting necessitates technology investment and system modifications. However, it serves as the preferred mode for generating e-invoices, especially for larger businesses dealing with high transaction volumes.

For more detailed information on reporting e-invoice Malaysia, please click here.

Advantages of e-invoicing Malaysia

Implementation of e-invoicing Malaysia offers businesses a seamless experience, enhancing operational efficiency and facilitating improved tax compliance. Here are some key benefits of e-invoicing Malaysian context:

• Unified invoicing process: Businesses can streamline the creation and submission of invoices, while also automating data entry processes for e-invoicing Malaysia.
• Integrated tax return filing system: Seamless integration enables efficient and accurate reporting of tax returns, simplifying compliance requirements for e-invoicing Malaysia.
  
  
• Streamlined operations: With improved efficiency, businesses can save significant resources and streamline their overall operations for e-invoicing Malaysia.
  
  
• Improved cash flow: E-invoicing reduces calculation and billing errors, leading to faster payment cycles, and minimized disputes, ultimately enhancing cash flow for e-invoicing Malaysia.
  
  
• Digitized financial reporting: By adopting e-invoicing Malaysia, businesses can align their financial reporting processes with industry standards, facilitating digitalization and enhancing overall financial management for e-invoicing Malaysia.

What are the obstacles businesses face with e-invoicing adoption in Malaysia?

The implementation of e-Invoicing Malaysia has brought about significant changes in the Malaysian business landscape, impacting various operational aspects and overall efficiency. However, this transition comes with its fair share of challenges for businesses:

• Compliance with these regulations poses a significant hurdle, particularly for businesses grappling with intricate systems, within the realm of e-invoicing implementation in e-invoicing Malaysia.
  
  
• Transitioning to e-invoicing Malaysia requires a departure from traditional manual invoicing methods towards automated systems. Businesses may face challenges in acclimatizing to novel technologies, integrating e-invoicing Malaysia systems with existing frameworks, and ensuring the adeptness of their workforce in navigating this digital shift.
  
  
• Technological preparedness is a critical factor in e-invoicing adoption in Malaysia. Smaller enterprises, particularly those with limited IT infrastructure, may find it arduous to align their systems with Malaysian e-invoicing standards. The process of adapting and upgrading systems can prove to be resource-intensive for e-invoice Malaysia. Connect with Taxilla today and make your e-Invoicing in Malaysia hassle free.