Malaysia E-Invoice Implementation
What is e-Invoice?
The Malaysian Inland Revenue Board (IRB) has introduced the usage of e-Invoice and set to kick off starting 1 August 2024, while the nation is currently moving more and more towards digitalisation, local SMEs owners might wonder, what is the real purpose of e-Invoice and how does e-Invoice benefits SMEs?
While some of the SMEs has been preparing invoices digitally and share to customers or receive from suppliers in digital form, often via email and in pdf or excel files, this single-sided operation requiring your recipient to re-enter the details of the invoice into their own accounting system (e.g. accounts payable), but the e-Invoice IRB introduce is something totally different. With e-Invoice, the e-Invoice is prepared and shared within a standardized system, using format such as XML and JSON, and when both sender and receiver are on a same platform, the data can be shared and transmitted among each other in a faster, standardized, and uniformed structure. The e-Invoice system will enable validation and storage of transactions, accommodating Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Government (B2G) transactions.
Types of transmitting mechanisms.
According to info provided by LHDN, there are two main mechanisms can be utilized to transmit e-Invoice, either through official portal, or through API integrating with management system.
Portal (MyInvois Portal) hosted by LHDNM
- Enables individual generation through a comprehensive form and the option for batch generation through spreadsheet upload for processing multiple transactions.
- Accessible to all taxpayers.
- Suitable for micro, small and medium-sized enterprises (MSMEs).
- Businesses that need to issue e-Invoice, but API connection is unavailable.
- May not be efficient for large volume of data.
- Through API- Application Programming Interface
- Enables businesses to conveniently transmit high-volume of transactions.
- Requires upfront investment in technology and adjustments to existing systems. API connection may be made directly to LHDNM or through intermediary technology providers.
- Ideal for large taxpayers or businesses with substantial transaction volume.
Launch and Implementation
The latest updates on Malayisian 2024 Budget states that starting August 1, 2024, taxpayers with annual income or sales exceeding RM100 million will be required to implement e-invoicing, instead of June 1, 2024, and will be implemented gradually for taxpayers in other income categories, with an earlier full implementation target of July 1, 2025.
When invoices are transmitted in a uniformed and standardized format, it speeds up document preparation and transmission time, improve efficiency, and ensuring tax compliancy. What another benefits e-Invoice delivers?
Simplifying invoicing process, by electronically creating and submitting transaction documents to the tax authorities, reducing manual work and errors.
Streamlining tax return filing, through seamless system integration, ensuring efficient and accurate tax reporting.
Enhancing efficiency and saving time and costs for larger businesses by adopting e-Invoice, thanks to automated processes, seamless data integration, and improved invoice management.
Digitalize financial reporting for micro, small, and medium-sized enterprises (MSMEs) to adapt e-invoice, and align their financial reporting with industry standards, reducing potential disruptions.
As the implementation for e-invoice has been officially announced and will be mandatory for all businesses within the nation in phases, businesses should start preparing on the adoption of e-invoice in their daily operation and routine, and start invoicing easier, more efficient, and at better compliancy, stay tune to find out more about coming e-invoice and further development, to ensure you never missed out any updates! Or contact us to talk to our sales consultant to find out how to include official e-Invoice feature into your accounting system!