Other BriefingsMandatory E-invoicing in Malaysia: A Guide for Businesses
As Malaysia continues its journey toward a fully digital economy, implementing e-invoicing marks a significant step forward in modernizing business transactions and enhancing tax compliance.
With the Inland Revenue Board of Malaysia (IRBM) rolling out e-invoicing in phases — starting with the largest businesses in August 2024 — companies of all sizes must understand and prepare for this transition.
As of August of this year, the first phase targeted businesses with annual revenues of 100 million ringgit (US$23 million) or more.
The second phase will be implemented on January 1, 2025, and will target taxpayers with annual turnover of between 25 million ringgit (US$5.7 million) and 100 million ringgit (US$23 million). The final phase will target all other taxpayers from July 1, 2025.
The introduction of e-invoicing will help support the growth of Malaysia’s digital economy and improve the government’s ability to monitor corporate activity throughout the country.
What is the e-invoicing process in Malaysia?
Generating an invoice in Malaysia varies depending on the e-invoicing model. The IRBM has introduced two e-invoice transaction mechanisms:
- MyInvois Portal; and
- Application Programming Interface (API).
The MyInvois is hosted by the IRBM and is accessible to all taxpayers at no cost. The MyInvois model is ideal for businesses that want to need to issue an e-invoice, but the API connection is unavailable.
The API is a collection of programming codes that facilitates direct data transmission between the taxpayer’s system and the MyInvois system. With this option, taxpayers must make an upfront investment in technology and modify their existing systems accordingly.
E-invoicing process for B2B transactions
Issuance of e-invoice
When a sale is made, the supplier generates an e-invoice via the MyInvois Portal or the API for validation.
Validation
The e-invoice is then validated by the IRBM, after which the supplier will receive unique identification number via the MyInvois Portal or the API.
Notification
The IRBM notifies the supplier and the buyer that the e-invoice has been validated.
Sharing of e-invoice
Upon validation, the supplier must share the cleared invoice with the buyer. The cleared invoice comes embedded with a QR code.
Rejection or cancellation of an e-invoice
Once the e-invoice has been received, both the buyer and the supplier are given a stipulated period to reject or cancel the e-invoice. This must be accompanied by justifications.
Businesses must prepare
To prepare for e-invoicing, businesses should start by understanding the specific regulatory requirements and standards in Malaysia. Next, it’s important to assess current systems and processes to identify any gaps that need addressing for successful e-invoicing implementation. This might involve upgrading existing accounting software or integrating new solutions that support e-invoicing. Selecting the right e-invoicing solution that aligns with your business needs and complies with local regulations is crucial.
Once a solution is chosen, businesses should train their finance and accounting teams to ensure they are well-versed in the new e-invoicing processes and systems, including how to create, send, receive, and store e-invoices. Internal processes should also be updated to incorporate e-invoicing, such as revising invoicing workflows, adjusting payment terms, and aligning internal approval processes with the new system.
Communication with stakeholders, including customers and suppliers, is key to ensuring a smooth transition to e-invoicing. Businesses must also prioritize data security and compliance, implementing strong security measures to protect sensitive financial information.
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ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City, and Da Nang in Vietnam, in addition to Jakarta, in Indonesia. We also have partner firms in Malaysia, the Philippines, and Thailand as well as our practices in China and India. Please contact us at asean@dezshira.com or visit our website at www.dezshira.com.
