On August 1, 2024, the mandatory pre-clearance e-invoicing regime for B2B, B2C and B2G transactions started in Malaysia. Known as the "soft launch", taxpayers with a turnover of more than MYR100 million were the first to be subject to the new mandate.
However, they were not required to submit e-invoices to the relevant authority until September 7.
It was also stipulated that taxpayers who voluntarily adopted the MyInvois system from August 1, 2024, would be eligible for accelerated capital deductions for IT expenses related to e-invoicing.
In early October, the Malaysian Inland Revenue Department (LHDN) updated its e-invoicing guidelines and issued version 4.0, which details the technical and operational requirements that taxpayers must follow to comply with the e-invoicing regime.
Timetable for the introduction of e-invoicing in Malaysia
From January 1, 2025, taxpayers with an annual turnover between MYR25 million and MYR100 million will be required to issue invoices electronically.
February 1, 2025 will mark the end of the "soft launch" and the start of the application of penalties. From this date, taxpayers in the first wave will be required to comply with the real-time invoicing mandate through the MyInvois system, as penalties will be imposed for not declaring e-invoices directly through the portal.
Finally, on July 1, 2025, the e-invoicing regime will apply to all taxpayers, except those with annual turnover of less than MYR150,000, who will be exempted from the mandate.
On the other hand, B2C transactions through e-invoicing will become mandatory from 2027.
Malaysian e-invoicing model
The model for e-invoicing in Malaysia will be the Continuous Transaction Control (CTC). In addition, a PEPPOL option will be offered for this invoice exchange and a QR code must be included on the invoice sent to the customer.
Taxpayers have two options for sending and receiving invoices, depending on their business needs and specific situation: the MyInvois portal, a free portal provided by the IRBM that is accessible to all taxpayers and those who need to issue electronic invoices in Malaysia when no API connection is available, or the API.
This is an application programming interface (API) that connects the taxpayer's system with MyInvois. It requires an initial investment and some adjustments to the taxpayers' existing systems. The API is particularly suitable for large taxpayers or businesses with a significant volume of transactions.
What is the process for issuing and receiving e-invoices in Malaysia?
The e-invoice exchange process in Malaysia comprises six steps.
Firstly, the supplier creates an e-invoice when a transaction is made and shares it with the IRBM through the MyInvois Portal or API for validation. Secondly, the e-invoice is validated. The IRBM performs validation of the e-invoice almost in real-time to ensure compliance with necessary standards and criteria. Upon validation, the supplier will receive a unique identification number from the IRBM, ensuring traceability.
Notification of the validated e-invoice follows. Once the e-invoice has been validated through the MyInvois Portal or the APIs, the IRBM will inform both the supplier and the buyer.
The supplier is then obliged to share the validated e-invoice (with a QR code) with the buyer. The QR code can be used to validate the existence and status of the e-invoice via the MyInvois Portal.
After the e-invoice has been issued, the buyer is given a specific period of time to request rejection or for the supplier to cancel the e-invoice.
Both requests must be accompanied by justifications. Additionally, the supplier and the buyer can access a summary of the e-invoice transactions through the MyInvois Portal.
SERES, an ideal partner for multi-country projects
For companies operating in multiple countries, compliance with international obligations can be achieved through a global e-invoicing solution that is certified in all relevant countries. The SERES multi-country e-invoicing solution offers several benefits, including:
- Adhere to legal and technical requirements in each country, ensuring compliance.
- Streamline workflows between subsidiaries or companies in different countries, making it easier to share information.
- Real-time visibility of subsidiary information, enabling efficient management of treasury, receivables and payables.
- Access to a global operator, eliminating the need for each subsidiary to adapt to different providers and providing support throughout the activation process.
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