In a significant move towards modernizing tax systems and enhancing transparency, Malaysia’s Inland Revenue Board (IRBM) has unveiled a major tax reform that will impact all taxpayers engaging in B2G, B2B, and B2C transactions. The comprehensive regulatain aims to digitize invoicing and transaction processes while streamlining reporting requirements for both local and international transactions.
The new e-Invoice regulation is set to be implemented in phases, with a clear timeline provided by the IRBM. The rollout is as follows:
- January 2024: Pilot phase begins, allowing businesses to familiarize themselves with the new system.
- June 2024: Businesses with an annual turnover of MYR 100 million or more are required to adopt the new invoicing and reporting format.
- January 2025: Businesses with an annual turnover of MYR 50 million or more must comply with the new system.
- January 2026: Businesses with an annual turnover of MYR 25 million or more will be brought into the reform.
- January 2027: All other taxpayers will be required to use the new digital invoicing system.
The new system mandates the use of XML or JSON format for all invoices, credits, debit notes, and refunds related to transactions. A technology provider must be utilized to facilitate this transition, although the specific registration conditions have not been fully clarified.
Generated invoices must be signed before transmitted to a public portal. Additionally, digital signatures are linked to a taxpayer’s digital Certificate (e.g., .cer or .pfx) to serve as a unique identifier.
The invoicing process will involve submission through two main methods:
- MyInvois Portal: Hosted by IRBM, this portal enables individual generation of invoices through a comprehensive form. Additionally, businesses have the option to upload spreadsheets for batch generation to process multiple transactions efficiently.
- Application Programming Interface (API): Businesses with high transaction volumes can conveniently transmit their transactions through the API. The API configuration details will be made available in the SDK, expected to be issued in Q4 of 2023.
After submitting the e-invoice, suppliers will receive a cleared invoice in PDF format, complete with a Unique Identifier Number. The supplier is then obligated to share the cleared e-invoice with the buyer, embedded with a QR code provided by IRBM.
The buyer has 72 hours to reject or cancel the e-invoice; if no action is taken, the e-invoice will be automatically accepted. All accepted and validated e-invoice data submitted via the MyInvois Portal will be stored in IRBM’s database.
Both suppliers and buyers will have the option to request and retrieve e-invoice data through the MyInvois Portal, available in various formats, including XML/JSON, metadata, CSV report, grid, and PDF files.
With this new tax regulation a significant step towards a more efficient, digitized billing system in Malaysia. The government believes it will not only reduce paperwork but also increase tax compliance and accuracy in reporting, thereby boosting the country’s overall economic development.