The mandatory implementation of e-invoicing in Malaysia has been in effect since August 1, 2024. This initiative by the Inland Revenue Board of Malaysia (IRBM) aims to digitize the economy and streamline tax administration under the Twelfth Malaysia Plan.
The implementation is being rolled out in phases:
Phase 1: Starting August 1, 2024, for businesses with annual turnovers over RM100 million.
Phase 2: From January 1, 2025, for businesses with turnovers exceeding RM25 million.
Phase 3: Beginning July 1, 2025, all businesses except those with annual turnovers below RM150,000 (which are exempt) must comply.
Businesses are now submitting e-invoices to the IRBM using the UBL 2.1 format (XML or JSON) through the MyInvois portal or via direct API integration.
What is E-Invoicing?
E-invoicing is a digital process for issuing, receiving, and managing invoices electronically, eliminating paper-based transactions. It ensures accuracy, efficiency, and compliance with Malaysia’s tax regulations. The Inland Revenue Board of Malaysia (IRBM) mandates e-invoices to be validated before being shared with recipients.
Key Benefits of E-Invoicing:
Efficiency: Reduces processing times and human errors.
Cost Savings: Eliminates expenses for paper, printing, and storage.
Faster Payments: Shortens payment cycles by enabling real-time validation.
Regulatory Compliance: Ensures adherence to tax regulations.
Sustainability: Supports a paperless, environmentally friendly invoicing system.
How E-Invoicing Works in Malaysia
The e-invoicing process consists of several essential steps:
Invoice Creation: Businesses generate invoices using their accounting or ERP systems.
Submission to IRBM: The invoice is submitted via the MyInvois portal or API in UBL 2.1 (XML or JSON) format.
Validation & QR Code Generation: IRBM validates the invoice and assigns a unique identifier and QR code.
Invoice Distribution: The validated invoice is sent to the buyer digitally.
Archiving & Compliance: Businesses must store e-invoices for a minimum of seven years.
E-Invoicing Process for B2B Transactions
For business-to-business (B2B) transactions, e-invoicing follows this structured process:
The seller generates an e-invoice containing transaction details.
The invoice is submitted to IRBM for validation.
Once validated, the invoice is electronically sent to the buyer.
Both parties retain the invoice for compliance and audit purposes.
E-Invoicing Process for B2C Transactions
Business-to-consumer (B2C) transactions require a different approach:
Individual invoices are issued to customers as usual.
Sellers consolidate these transactions into a single e-invoice periodically.
The consolidated e-invoice is submitted to IRBM for validation.
E-Invoicing Model in Malaysia
Malaysia follows a hybrid e-invoicing model combining:
Continuous Transaction Control (CTC): Ensures real-time validation before invoice issuance.
Peppol Framework: Enables standardized e-invoice exchange between businesses and tax authorities.
MyInvois Portal & API Integration: Facilitates submission and validation of invoices.
MyInvois Portal
The MyInvois Portal, developed by IRBM, serves as a user-friendly platform for managing e-invoices. It is particularly beneficial for:
SMEs: Simplified invoice submission for small businesses.
Manual Submissions: Allows direct e-invoice uploads for businesses without API integration.
Application Programming Interface (API) for E-Invoicing
Larger enterprises handling high volumes of invoices can integrate IRBM’s e-invoicing API for:
Automation: Seamless processing of invoices through ERP systems.
Scalability: Capable of managing thousands of invoices daily.
Real-Time Validation: Ensures compliance with tax regulations.
Types of E-Invoices in Malaysia
Different types of e-invoices are applicable based on transaction scenarios:
Invoices: Standard e-invoice for recording sales transactions.
Credit Notes: Issued for reducing an invoiced amount due to adjustments.
Debit Notes: Used for increasing the invoice amount.
Refund Notes: Documents issued for payment reimbursements.
Compliance and Penalties for Non-Compliance
Businesses must comply with Malaysia’s e-invoicing regulations. Non-compliance may result in:
Fines and Penalties: IRBM may impose financial penalties for non-submission.
Delayed Transactions: Non-validated invoices may cause processing delays.
Audit Risks: Failure to comply can lead to increased tax audits.
Conclusion
Malaysia’s e-invoicing mandate marks a significant step toward digital tax administration, promoting efficiency, cost savings, and compliance. Businesses must prepare for this transition by adopting e-invoicing systems, integrating with IRBM’s MyInvois portal, or using API solutions.
Melasoft provides end-to-end e-invoicing solutions to ensure seamless compliance with Malaysia’s regulatory framework. Whether you are a small business or a large enterprise, our solutions simplify the invoicing process, enhance compliance, and improve overall efficiency.
In addition to our tailored e-invoicing solutions, we offer the Melasoft Portal, a global platform fully compatible with Peppol standards. The Melasoft Portal enables businesses to manage their e-invoicing needs efficiently, ensuring compliance across multiple regions. As part of our commitment to accessibility, businesses can issue up to 20 free invoices per month through our portal, making it an ideal solution for companies of all sizes looking for a cost-effective and scalable e-invoicing system.
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