Countdown to E-Invoice Implementation
What is e-Invoicing?
An e-invoicing, or electronic invoicing, replaces paper invoices with digital ones, simplifying and streamlining the invoicing process for both businesses and the government.
With only 5 months left until August 1st, 2024, e-invoicing will become mandatory for Malaysian businesses with annual income or sales exceeding RM100 million.
The Benefits of e-Invoice
Unified Invoicing Processes
Businesses streamline document creation, submission, and automate data entry.
Facilitated Tax Filling
Seamless integration aids efficient and accurate tax return reporting.
Digitalized Financial Reporting
Aligns financial reporting with industry-standard digitalization.
Phase | Targeted Businesses Annual Turnover | Implementation Date |
---|---|---|
1 | > RM 100 million | 1 August 2024 |
2 | > RM 25 million and up to RM 100 million | 1 January 2025 |
3 | All taxpayers | 1 July 2025 |
# | Scenario | Annual Turnover/ Revenue Based On |
---|---|---|
1 | Businesses with audited financial statements | Based on annual turnover or revenue in the audited financial statements for financial year 2022. |
2 | Businesses without financial statements | Based on annual revenue reported in the tax return for year of assessment 2022. |
3 | Businesses with change of financial year 2022 | Taxpayer’s turnover or revenue will be pro-rated to a 12-month period for purposes of determining the e-Invoice implementation date. |
Types of e-Invoice To Be Issued
E-Invoice
Credit Note
Debit Note
Refund Note
Implementation Timeline
Targeted Taxpayer | Implementation Date |
---|---|
Taxpayers with an annual turnover or revenue of more than RM100 million | 1 August 2024 |
Taxpayers with an annual turnover or revenue of more than RM50 million and up to RM100 million | 1 January 2025 |
Taxpayers with an annual turnover or revenue of more than RM25 million and up to RM50 million | 1 January 2026 |
All taxpayers and certain non-business transactions | 1 January 2027 |
Malaysia e-Invoicing Process
The E-Invoice Process Flow:
Overview of Supplier Issues e-Invoice to Buyer
Example of e-Invoice Required Fields
Field Name | Description |
---|---|
Supplier's TIN | Supplier’s (i.e., issuer’s) Tax Identification Number (TIN) assigned by IRBM |
Buyer's TIN | Buyer’s TIN assigned by IRBM |
Supplier’s Registration / Identification Number / Passport Number | Business registration number (For Businesses)/ MyKad identification number (For Malaysian individual)/ Passport number (For non-Malaysian) |
Buyer’s Registration / Identification Number / Passport Number | Business registration number (For Businesses)/ MyKad identification number (For Malaysian individual)/ Passport number (For non-Malaysian) |
e-Invoice Code / Number | Document reference number used by supplier for internal tracking purpose (e.g., INV12345, CN23456, DN34567) |
e-Invoice Date | Date of issuance of the e-Invoice (Note that the date must be the current date) |
Description of Product or Service | Details of products or services being billed as a result of a commercial transaction |
Tax Type | Type of taxes that will be applicable (SST and / or withholding tax) |
Tax Rate | The appropriate tax rate that is applicable (%) |
Tax Amount | The amount of tax payable |
Total Excluding Tax | Sum of amount payable exclusive of applicable taxes (e.g., sales tax, service tax) |
Total Including Tax | Sum of amount payable inclusive of total taxes chargeable (e.g., sales tax, service tax) |
*Format of Transmission: Extensible Markup Language (XML) and JavaScript Object Notation (JSON)
Check LHDN e-Invoice Guideline (released on 29 September 2023) for all 53 required fields.
Example of Validated e-Invoice
Goldsoft E-Invoicing ERP Features and Benefits
Provide staff training on using the system, along with ongoing support and technical assistance to ensure smooth operations.
Protect your valuable financial information through industry standard encryption, secure cloud infrastructure, and stringent access controls.
System keep up with future enhancement with evolving IRBM requirements.
Comprehensive e-invoicing management from generating compliant invoices to secure submission to the LHDN Malaysia.
Automatic invoice generation, data validation, secure storage and transmission, QR code generation, and real-time tracking of invoice statuses.
Employing Smart Validation Checks Tailored Specifically for E-Invoices to Ensure Accuracy.
How to Prepare for e-Invoice Implementation?
Understanding the timeline for implementation allows companies to plan and allocate resources effectively to meet the deadline without facing penalties or disruptions to their operations. Refer implementation date
here.
How To Submit e-Invoices?
MyInvois Portal
Application Programming Interface (API)
E-Invoice FAQ- General Questions
e-invoice signifies the digital process of documenting each transaction electronically. With the comprehensive adoption of electronic invoicing, physical receipts will become unnecessary, and all transaction records will be securely stored in the LHDN database.
1. Invoice: A commercial document that itemises and records a transaction between a Supplier and Buyer, including issuance of self-billed e-Invoice to document an expense.
2. Credit Note: A credit note is issued by Suppliers to correct errors, apply discounts, or account for returns in a previously issued e-invoice with the purpose of reduced the value of the original e-invoice. This is used in situations where the reduction of the original e-invoice does not involve returning of monies to the Buyer;
3. Debit Note: A debit note is issued to indicate additional charges on a previously issued e-Invoice;
4. Refund Note: A refund e-invoice is a document issued by a Supplier to confirm the refund of the Buyer’s payment. This is used in situations where there is a return of money to the buyer.
No. The issuance of e-Invoice is not limited to only transactions within Malaysia. It is also applicable for cross-border transactions.
According to the e-Invoicing guidelines set forth by LHDN (Lembaga Hasil Dalam Negeri), Malaysia, these three transaction types are currently considered primary within the invoicing scope.
B2B (Business-to-Business) Transactions: B2B transactions involve the exchange of goods or services between two businesses. These transactions occur between manufacturers, wholesalers, retailers, or service providers.
B2C (Business-to-Consumer) Transactions:B2C transactions involve the sale of goods or services from a business directly to consumers. These transactions are commonly seen in retail environments, online shopping platforms, and service industries.
B2G (Business-to-Government) Transactions: B2G transactions involve business entities providing goods or services to governmental organizations or agencies.
No. An e-invoice pertains to an invoice that is created, issued, and capable of generating documents that the LHDN system can automatically interpret in an electronic format.
Documents meeting these criteria include XML and JSON formats.
Documents that do not meet these criteria include PDF, DOC, JPG, etc.
A TIN number is a person’s tax number, refer to the link for details: https://www.goldsoft.com.my/e-invoice-malaysia-what-is-tin-number
E-Invoice FAQ- Seller and Buyer Questions
IRBM has provided two (2) e-Invoice transmission mechanisms:
1. Through the MyInvois Portal provided by IRBM; and
2. Application Programming Interface (API).
MyInvois Portal:
API Integration:
All sellers must implement e-invoicing, but LHDN allows sellers to issue standard bills/receipts/invoices based on sellers' current practices to those buyers not requesting e-invoices for tax deduction purposes. Subsequently, sellers are required to consolidate all standard invoices and issue a consolidated e-invoice at the end of each month.
Yes. For taxpayers, an e-invoice requires either a TIN or an IC number, but for non-taxpayers, the TIN number is mandatory.
No, the supplier would need to cancel the e-invoice within 72 hours from the time of validation and reissue a new e-invoice. The cancellation request should specify the reason.
Any changes after 72 hours from time of validation would require the supplier to issue a new e-Invoice (i.e., debit note, credit note, refund note e-Invoice) to adjust the original e-Invoice issued.
Yes, e-Invoices can be canceled within 72 hours of issuance. To cancel an e-invoice. the supplier/customer must submit a cancellation/rejection request to buyer/seller within 72 hours via the MyInvois Portal.
Any changes after 72 hours from time of validation would require the supplier to issue a new e-Invoice (i.e., debit note, credit note, refund note e-Invoice) to adjust the original e-Invoice issued.
Once the 72-hour window has passed, the e-invoice status will automatically transition to "Valid," and any subsequent modifications will necessitate the issuance of a Debit or Credit Note.
After an e-Invoice is generated, it is sent to IRBM. IRBM then verifies mandatory fields and other crucial details, informing both supplier and buyer accordingly. Additionally, they can access a summary of generated e-Invoices via the My Invois Portal.
Failure to issue e-Invoice is an offence under Section 120(1)(d) of the Income Tax Act 1967,
and will result in a fine of not less than RM200 and not more than RM20,000 or imprisonment not exceeding 6 months or both, for each non-compliance.
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