In October 2022, the Inland Revenue Board of Malaysia (LHDNM) and the Malaysian Digital Economy Corporation (MDEC) jointly announced their collaboration on the National e-Invoicing Initiative. LHDNM is responsible for tax administration in Malaysia. The goal of the new system is to enhance efficiency and reduce tax costs. After six months, both parties announced the phased mandatory implementation of the National e-invoicing system.
Several countries have already implemented mandatory regulations for electronic invoicing, while others are planning to introduce it in phases. Malaysia is among the countries planning to introduce it gradually, through the Malaysia e-Invoice System. Therefore, businesses with current or future interests in Malaysia should prepare accordingly to avoid penalties from tax authorities. The new e-invoicing will apply to all tax-registered businesses and government entities in Malaysia. The regulations will apply to all organizations, whether engaged in domestic or cross-border transactions.
e-Invoicing Implementation Timeline in Malaysia
According to the 2023 Budget, a phased introduction of Malaysia e-invoice obligation is confirmed by the Inland Revenue Board of Malaysia (IRBM). The shared e-invoice implementation dates by IRBM are in the following::
- August 1, 2024: Taxpayers with annual income or sales exceeding RM100 million
- January 1, 2025: Taxpayers with annual income or sales exceeding RM25 million and up to RM100 million
- July 1, 2025: All taxpayers
e-Invoicing process in Malaysia
To support the growth of the digital economy, the Government intends to implement e-Invoice in stages to enhance the efficiency of Malaysia’s tax administration management. It is in line with the Twelfth Malaysia Plan, where the focus is on strengthening the digital services infrastructure and digitalizing the tax administration. The e-invoice implementation date in Malaysia is crucial for enabling real-time or near-real-time validation and storage of transactions, catering to Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Government (B2G) transactions. Also, the following documents will be under the scope:
- Credit and Debit Notes
- Invoices
- Receipts
- Cancellations and Refund
Introduction of Centralized Continuous Transactions (CTC) in Malaysia
In this model, for verification purposes, the invoices and receipts are first sent to the tax authorities in real time before the buyers. For the verification, a structured XML invoice file is required to be submitted to the IRBM platform via API. After verification is done, the supplier will receive the XML invoice then it can be exchanged with a trading party in any format or method. The Buyers will be notified by the IRBM for access to invoices that have been cleared. Regarding the exchange of invoices with the buyers, PDF and other paper forms can be used, however a QR code with a URL needs to be displayed.
Details and Issuing Process of the Malaysian e-Invoicing
In Malaysia, an e-invoice includes 55 fields detailing the transaction, such as information about the seller and buyer, item description, quantity, price, tax, total amount, and payment details. Once validated and generated, e-invoices are assigned a Universally unique identifier (UUID) and a QR Code by the MyInvois Portal or via e-invoicing software using an API, allowing for online validation.
The IRBM then validates the invoice and notifies both the supplier and buyer. Once validated, it is the supplier’s responsibility to provide the buyer with the e-invoice, which includes an embedded QR code.
How can SNI help you?
SNI offers SAP solutions for generating and transmitting qualified invoices between public authorities, and private entities.
SNI’s solution extracts taxpayers’ data from their accounting system and directly converts it into the required electronic format. It is transmittable through the Peppol Network by Access Point Providers.
SNI’s solution provides complete support for both outbound and inbound invoices. Outbound invoices are transmitted to the tax authorities through official APIs or web services. Similarly, for inbound invoices (issued by suppliers to clients), solution automatically retrieves data at regular intervals using the appropriate APIs or web services provided by the tax authorities.
All inbound invoices are displayed on SNI’s Inbound Cockpit, a dedicated interface designed to enhance the user experience and allow efficient management. Each invoice is available in both XML and (human-readable) HTML/PDF formats, ensuring detailed insight and compliance with regulatory requirements.
SNI’s invoice reconciliation feature offers seamless validation of incoming invoices by automatically matching them with purchase orders, delivery notes, or other internal records. This feature simplifies the validation of incoming invoices, reduces manual effort, and minimizes errors thus offering a quick resolution. With enhanced accuracy and efficiency, businesses can gain better control over their financial workflows and ensure smooth operations.
SNI solution integrates with clients’ systems without the need for updates to existing system versions and is independent of SAP versions. SNI’s SAP solution is compatible with SAP ECC 4.7 and above, as well as SAP Business Technology Platform (BTP), SAP R3 and SAP S/4HANA. In addition, SNI provides ERP-independent solutions designed to integrate with any ERP system clients may use.
