Smart eInvoicing | E-Invoice Malaysia
Revolutionize Your Business Efficiency
Malaysia Embarks on the Journey of e-Invoice:
The Lembaga Hasil Dalam Negeri Malaysia (LHDN) has officially announced a planned rollout of e-Invoicing, as outlined in the 2023 Budget. This implementation will be carried out in phases and is expected to commence in early 2024, taking inspiration from the ATAIC/CIAT (2021) on Electronic Tax Invoice (ETI).
Malaysia E-Invoice Implementation by Phases:
01 Aug 2024: Mandatory for businesses >MYR 100 million annual sales
01 Jan 2025: Mandatory for businesses >MYR 25 million and up to MYR 100 million annual sales
01 Jul 2025: Mandatory for businesses MYR 500,000 and up to MYR 25 million annual sales
01 Jan 2026:Taxpayers with an annual turnover or revenue of up to RM500,000
The e-Invoice implementation timeline was updated on 21 February 2025.
Key Benefits
Smart Tax Filing
Integration with systems makes tax reporting seamless. It ensures accurate and efficient tax return filing, reducing the complexities of compliance.
Automated Process
E-invoicing unifies creating and submitting transaction documents electronically to the tax authority. Automation reduces manual work and errors.
Simplified Operations
Larger businesses gain efficiency through streamlined operations. Data integration, and better invoice management save time and costs.
Optimizing Smooth Transition for SMEs
Small businesses transition gradually to e-invoicing, aligning financial processes with industry standards. This helps adapt over time and minimizes disruptions.
Data Integrity Verification
Integration and management of Digital Templates for ensuring secure authentication and non-repudiation, encompassing Data Encryption and the creation of Audit Trails for logging activities. This incorporates features like QR Code Generation and the implementation of a Secure Digital Signature.
e-Invoice Validation
An advanced Data Validation Engine guarantees precision and adherence to the LHDN-required 53 data fields essential for e-Invoice issuance, while the Data Format Flexibility feature is to support both XML and JSON formats for e-Invoice data submission.
e-Invoice Aging And Tracking
Late Payment Analytics provides an analysis of data related to overdue payments, contributing to the understanding of “bad debts, whereas Payment Trend Analytics facilitates the prediction of cash flow through payment trend analysis.
Auto Trigger Submission & Tracking
API-based Submission enables taxpayers to submit e-Invoices directly to the Inland Revenue Board of Malaysia (IRBM) via Application Programming Interfaces (APIs), ensuring a seamless and automated process.
e-Invoice Status Tracking & Maintenance
A comprehensive tracking and notification system for status updates, rejections, and cancellations.
Technology
Data Analytics: A business insight (data-centric dashboard) metrics, such as the total number of e-invoices issued, received, and processed, along with the corresponding values and trends.
Robotic Process Automation, RPA: Streamline the e-invoicing processes, improve accuracy, and achieve greater efficiency by automating repetitive tasks and leveraging data-driven automation via its utilization in Data Extraction, Data Validation, Invoice Matching, Workflow Automation, Integration with ERP Systems, Exception Handling & Error Resolution, and Reporting & Analytics.
Online Framework, APIs, and Orchestrator: Online framework, an underlying infrastructure of real-time, interactive data access and transactions, while integration APIs enable data exchange with external systems. Orchestrator empowers users to design and execute automated workflows by integrating various applications,
systems, and data sources.
Auto Reconciliation: A crucial role in optimizing the e-invoicing process by ensuring accuracy, reducing errors, and improving operational efficiency. It automatically verifies details against corresponding purchase orders, contracts, payment records, and other relevant data sources via processes of Data Matching, Quantity and Price Verification, Payment Matching, Tax Compliance, and Exception Handling.
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Mission
Real-time Monitoring: CTC systems allow tax authorities to monitor business transactions as they occur in real-time. This enables them to have immediate visibility into sales, purchases, and other financial activities, reducing the possibility of tax evasion or underreporting.
Automated Validation and Auditing: CTC systems often include automated validation mechanisms that verify the integrity and compliance of submitted data. They can perform real-time checks on invoice information, such as tax identification numbers, invoice totals, and product codes. This helps identify discrepancies or non-compliance issues promptly.
Simplified Compliance Processes: CTC systems streamline tax compliance processes by automating data collection and reporting. Businesses can integrate their accounting or enterprise resource planning (ERP) systems with the CTC platform, allowing seamless data transmission and reducing the administrative burden associated with manual reporting.
Faster Tax Audits and Enforcement: With access to real-time transaction data, tax authorities can conduct audits more efficiently and effectively. They can identify potential non-compliance issues promptly and take appropriate enforcement actions, such as conducting targeted audits on high-risk taxpayers.
Enhanced Revenue Collection: By improving tax compliance and reducing opportunities for evasion, CTC systems contribute to increased revenue collection for governments. Real-time monitoring and automation help minimize tax gaps and ensure that businesses fulfill their tax obligations accurately and promptly.
Increased Accuracy and Transparency: By requiring electronic invoicing and reporting, CTC systems facilitate the accurate and standardized recording of transactions. This reduces errors and enhances transparency in business operations, making it easier for tax authorities to verify the accuracy of reported data.
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FAQ
Why is an e-invoice required?
The adoption of e-Invoicing not only ensures a seamless experience for taxpayers but also enhances business efficiency and boosts tax compliance. Key benefits include:
1. Minimize Manual Work and Errors: Streamlined invoicing through the electronic creation and submission of transaction documents and data.
2. Simplify Tax Filing: Efficient and accurate tax reporting through integrated system solutions.
3. Increase Operational Efficiency: Significant time and cost savings through enhanced efficiency.
4. Digitalize Tax and Financial Reporting: Align financial reporting and processes with industry standards through digitalization.
How to submit e-invoice in Malaysia?
Here are two options for e-Invoice transmission mechanisms for taxpayers to choose from:
1. MyInvois Portal
•A portal hosted by the Inland Revenue Board of Malaysia (IRBM)
•Free and accessible to all taxpayers
•Suitable for taxpayers who need to issue e-Invoices but lack an Application Programming Interface (API) connection
2. Application Programming Interface (API)
•An API is a set of programming codes that facilitate direct data transfer between the taxpayers’ system and the MyInvois system
•Requires an initial investment in technology and modifications to the taxpayers’ existing systems
•Ideal for large taxpayers or businesses with high transaction volumes
Is e-invoicing mandatory for Malaysia?
Yes, all businesses will be required to issue e-Invoice in accordance with the phased mandatory implementation timeline, which is based on the business’ annual turnover or revenue threshold.
Is there any adjustment window allowed to the supplier to cancel an invoice submitted to IRBM?
Yes, there is a 72-hour window for the supplier to cancel the e-Invoice. Once the e-Invoice has been validated by the IRBM, both the supplier and buyer have a specified period to cancel or reject it.
1. Buyer Requests Rejection of the e-Invoice:
• If the e-Invoice contains errors, the buyer can request its rejection within 72 hours from validation via the MyInvois Portal.
• The rejection request should include the reason, such as incorrect information (e.g., SST number, business registration number, or other business-related details).
• Upon the buyer’s rejection request, the supplier will be notified.
• If the supplier agrees with the reason, they can proceed to cancel the e-Invoice within 72 hours from validation.
• If the supplier does not accept the buyer’s request or fails to cancel the e-Invoice within the 72-hour timeframe, no cancellation will be allowed afterward. Any corrections will require issuing a new e-Invoice (e.g., credit note, debit note, or refund note e-Invoice).
2. Supplier Cancels the e-Invoice:
• If the e-Invoice has errors or was issued by mistake, the supplier can cancel it within 72 hours from validation via the MyInvois Portal.
• Cancellation requests must include justifications.
• Upon cancellation, the buyer will be notified.
If the e-Invoice is not rejected or canceled within the 72-hour period, no cancellation will be allowed, and any subsequent adjustments will require issuing a new e-Invoice (e.g., credit note, debit note, or refund note e-Invoice).
Please note that the 72-hour timeframe for buyers to request a rejection and suppliers to cancel the e-Invoice is provided for their convenience. If the supplier chooses not to use the cancellation/rejection function, adjustments can still be made by issuing a credit note, debit note, or refund note e-Invoice.
Who/which industry are exempted in the e-invoice implementation?
Currently, no industries are exempt from the implementation of e-Invoicing. However, the following individuals and entities are exempt from issuing e-Invoices, including self-billed e-Invoices:
(a) Rulers and Ruling Chiefs
(b) Former Rulers and Ruling Chiefs
(c) Consorts of Rulers of States with titles such as Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri, or Permaisuri
(d) Consorts of Former Rulers of States who previously held titles such as Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri, or Permaisuri
(e) The Government
(f) State governments and state authorities
(g) Government authorities
(h) Local authorities
(i) Statutory authorities and statutory bodies
(j) Facilities provided by the aforementioned government, authorities, or bodies (e.g., hospitals, clinics, multipurpose halls, etc.)
(k) Consular offices and diplomatic officers, consular officers, and consular employees
(l) Individuals who are not conducting business