Guide to e-Invoicing in Malaysia: Everything You Need To Know

Following the Inland Revenue Board of Malaysia’s ("IRBM") announcement in May 2023 on the implementation of e-Invoicing in 2024, the IRBM has on 6 April 2024 issued updated e-Invoice Guidelines (Version 2.3), Specific Guidelines (Version 2.1) and SDK (Version 1.0) on their website.

The implementation of e-Invoicing is intended to support Malaysia’s digital economy growth and to enhance the efficiency of Malaysia’s tax administration. e-Invoices will replace the traditional paper-based invoices which will enhance the efficiency in recording financial transactions and facilitate real time data collection. 

To support the growth of the digital economy, the Government shall implement e-Invoice in stages, in an effort to enhance the efficiency of Malaysia’s tax administration management.
 

 
what are e-invoices

What are e-Invoices?

An e-Invoice is a digital proof of a transaction between a supplier and a buyer. It eliminates the necessity for paper invoices by enabling businesses to generate and store machine-readable, digitised versions of invoices, facilitating streamlined processes for billing and payments. e-Invoices will be created in IRBM’s specified format (XML, JSON) and shall contain 55 fields (37 mandatory).

What is the e-Invoicing Implementation Timeline in Malaysia?


The e-Invoicing implementation in Malaysia is scheduled to begin on 1st August 2024, initially applicable to taxpayers with an annual turnover or revenue exceeding RM100 million. Starting from 1st January 2025, the system will extend to taxpayers with annual turnovers or revenues ranging from more than RM25 million to RM100 million. Finally, by 1st July 2025, e-Invoicing will become mandatory for all taxpayers in Malaysia, regardless of their annual turnover or revenue.

In summary: 

1 August 2024 - Taxpayers with annual turnover or revenue >RM100 million.

1 January 2025 - Taxpayers with an annual turnover or revenue of more than RM25 million and up to RM100 million.

1 July 2025 - All taxpayers.


e-Invoicing implementation timeline in Malaysiae-Invoicing Implementation Timeline in Malaysia

What are e-Invoicing Transaction Types?

e-Invoicing applies to all taxpayers undertaking commercial activities in Malaysia. It will facilitate instant validation and storage of Business-to-Business (“B2B”), Business-to-Consumer (“B2C”) and Business-to-Government (“B2G”) transactions. It will also apply to certain non-business transactions between individuals. 

For certain B2C transactions where the end consumer does not need e-Invoices to support the transactions for tax purposes, suppliers are allowed to issue normal receipts/invoices based on current practices. 

Overview of e-Invoicing for Transactions with Buyers

Below is an overview of the process for Buyers who do and don’t require e-Invoices.

e-invoicing overview workflowScenarios of e-Invoicing Transaction with Buyers

Scenario 1: Buyer requires an e-Invoice

  1. Supplier obtains Buyer’s details 
    • For Malaysians: Either TIN or IC No. / MyTentera identification number / Both TIN & IC No./MyTentera identification no.
    • For non-Malaysians: Either TIN / Both TIN & Passport

  1. Supplier issues and validates e-Invoice with IRBM

  2. Supplier shares validated e-Invoice to Buyer

  3. Buyer may scan QR code to view e-Invoice validity

  4. Buyer will be able to substantiate the transaction for tax purposes.

Scenario 2: Buyer does NOT require e-Invoice

  1. Supplier issues normal receipts to Buyer (same as current practice). However, the Buyer can request for an e-Invoice within the month of the transaction (i.e. if a purchase was made on 15 September, the Buyer is allowed to request an e-Invoice up until 30 Sept) via web portal/mobile application created by Supplier.
  2. Supplier consolidated all receipts (where e-Invoices are not required by Buyers) on a monthly basis. The consolidated e-Invoice is to be issued and submitted for IRBM’s validation within 7 calendar days after month end. 

Who is Required to Comply with e-Invoicing in Malaysia?

All individuals and legal entities are required to comply with the e-Invoicing requirement, including:

  1. Associations;
  2. Body of persons;
  3. Branches;
  4. Business trusts;
  5. Co-operative societies;
  6. Corporations;
  7. Limited liability partnerships;
  8. Partnerships;
  9. Property trust funds;
  10. Property trusts;
  11. Real estate investment trusts;
  12. Representative offices and regional offices;
  13. Trust bodies; and
  14. Unit trusts.

Scenarios Requiring e-Invoices to be Issued

Proof of Income

Issued whenever a sale or other transaction takes place to recognise the income of taxpayers.

Proof of Expense

Purchases made or other spending by taxpayers, including returns and discounts. It can also be used to correct or subtract an income receipt in terms of the amounts documented. In certain cases, taxpayers may need to issue a self e-Invoice to document an expense such as foreign transactions.

Determination of Annual Turnover or Revenue 

  • Taxpayers with audited financial statements: annual turnover or revenue stated in audited financial statements for FY 2022.  

  • Taxpayers without audited financial statements: annual revenue reported in tax return for YA 2022.  

  • In the event of a change of accounting year end for FY 2022, taxpayer’s turnover or revenue will be prorated to a 12-month period.  

  • For new businesses or operations commencing from the year 2023 onwards, the e-Invoicing implementation date is 1 January 2027 and further guidance will be provided in due course.  Notifications will be sent to taxpayers that are mandated to adopt e-Invoicing, in phases.

What are the e-Invoicing Models in Malaysia?

Two distinct e-Invoice transmission mechanisms are available:

a) A portal (MyInvois Portal) hosted by IRBM; and 
b) Application Programming Interface (API) into IRBM’s related systems. 

Taxpayers can select the most suitable mechanism to transmit e-Invoice to IRBM, based on their specific needs and business requirements. The key features of and considerations for each option are outlined below:


No.

Mechanism 

Key Features

Considerations

1.

MyInvois Portal
(hosted by IRBM) 

A portal hosted by IRBM as an option that is available to taxpayers at no cost

  • Accessible to all taxpayers

  • Suitable for MSMEs  

  • May not be efficient for large volume of data 

  • Businesses that need to issue e-Invoice but API connection is unavailable 

2.

Application Programming Interface (“API”)

(into IRBM’s related systems)


An API is a set of programming code that enables direct transmission between the taxpayers’ system and MyInvois System

  • Requires upfront investment in technology and adjustments to existing systems. API connection may be made directly to IRBM or through intermediary technology providers 

  • Ideal for large taxpayers or businesses with substantial transaction volume

e-Invoicing Overall Workflow

  1. Issuance of e-Invoice

When a sale or transaction is made (including e-Invoice adjustments), the supplier generates an e-Invoice and submits it to IRBM via MyInvois Portal or API for validation.

  1. Validation of e-Invoice

Real-time validation by IRBM is performed, ensuring necessary standards and criteria are met. Once validated, the supplier will receive a Unique Identifier Number via MyInvois Portal or API. 

  1. Notification of validated e-Invoice 

Both the supplier and buyer will be notified via MyInvois Portal or API once e-Invoice has been validated.

  1. Sharing of e-Invoice

Upon validation, the supplier is obliged to share the cleared e-Invoice (embedded with QR code) with the buyer. The QR code can be used to validate the existence and status of the e-Invoice via MyInvois Portal.

  1. Rejection or cancellation of e-Invoice 

Buyer/supplier may reject/cancel the e-Invoice with justifications within 72 hours from the time of e-Invoice validation.

  1. MyInvois Portal

Both supplier and buyer have the option to request and retrieve e-Invoice data via MyInvois Portal. 

e invoicing overview workflow

How To Assess Readiness for e-Invoicing?

  1. People

    Allocate and equip personnel with the necessary capabilities to adopt and oversee the implementation of e-Invoicing.

  2. Process

    Review current processes in issuing transaction documents (i.e. invoices, debit notes, credit notes, refunds). 

  3. Technology

    Determine availability of data sources and structure, current IT capabilities to support system readiness and processes to comply with e-Invoicing requirements and obligations.

How can BDO assist?

GAP ANALYSIS

Our team will review and evaluate current invoicing procedures, process workflow (including internal controls) and related system mechanisms to identify changes/improvements required. We will conduct reviews on revenue related transaction streams and Tax implication to recommend necessary changes whilst assessing potential limitations and identification of gaps noted from the analysis.

We will also review Standard Operating Procedure (SOP) for e-invoice issuance as well as provide Cybersecurity advisory / recommendation in relation to e-invoice architecture.

PROJECT MANAGEMENT

We will manage the implementation of e-invoicing together with your accounting software service provider (e.g. Oracle, SAP, MS, etc.) to be compliant to the IRBM’s requirements and ensure that the implementation is in accordance to a defined scope and timeline.

SYSTEM READINESS ASSESSMENT

We will review the readiness of the new system to comply with IRBM’s requirements as follows:

  • Gap assessment in respect of data field requirements per IRBM taxonomy
  • Validate e-invoice data to and from IRBM to ensure accuracy and correctness

MIDDLEWARE SERVICES

BDO Middleware is software that acts as a bridge between your ERP/business system and IRBM's MyInvois System. The complexity of enhancing your ERP/business system will be reduced to just exporting data to Middleware, which will handle and process e-invoices on your behalf. It will take care of future enhancements to keep up with evolving IRBM requirements, decreasing cost of compliance over time.

Explore more on how our e-Invoicing middleware can help your business here!


how we can assist with e-invoicing

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