Today, an increasing number of nations are embracing the capabilities of e-invoicing, and this transition is making waves across the EU and Asia. Malaysia stands out as one of the countries undergoing a significant shift towards mandatory electronic invoicing. This decision will not only support digitization and improve the quality of services but also increase the efficiency of business operations.
Current State of e-Invoicing in Malaysia
Currently, Malaysia is on the road to e-invoicing, which means that sending electronic invoices in B2B or B2G transactions is voluntary and has been possible since 2015. However, before the supplier can send an e-invoice, the buyer has to issue a consent form to receive it.
As of now, Malaysian businesses operate in a post-audit e-invoicing model – the tax administration doesn’t have to approve or “clear” the invoice before it is sent to the receiver. This model is about to change because a new national e-invoicing system is set to come into effect in 2024 to capture more sales tax.
Comprehensive Overview of Malaysia’s New e-Invoicing System
In Malaysia, electronic invoicing is supported by the use of a Tax Identification Number, which was introduced in 2022. In March 2023, the Inland Revenue Board of Malaysia (IRBM), the country’s tax office, decided to mandate e-invoicing by presenting a phased implementation plan. After revisions in October 2023, it was ultimately determined that the gradual rollout of this obligation will commence in August 2024.
The new e-invoicing system will apply to all tax-registered businesses in Malaysia and government entities, covering B2G, B2B, and B2C transactions, both domestic and cross-border. Upon validation and approval by the IRB, a certified serial number will be sent to the supplier and the buyer via e-mail. The Malaysian government’s approach to this transition centers on adopting a CTC system connected to the Peppol network. Taxpayers utilizing alternative channels will be required to adhere to the traditional Electronic Data Interchange model for invoice exchange.
E-invoicing Implementation Timeline in Malaysia
- August 2024: E-invoicing regime introduction for taxpayers with a turnover greater than 100 million MYR.
- January 2025: Introduce the e-invoicing regime for taxpayers with a turnover greater than 25 million MYR.
- July 2025: E-invoicing becomes mandatory for all businesses.
Keep in mind that dates for B2C transactions via e-Receipt are yet to be announced.
E-Invoicing Process in Malaysia Step by Step
There are no e-invoicing regulations in Malaysia – no infrastructure, format, or e-signature requirement. The sole provision is that both parties must mutually agree to use e-invoices. However, once e-invoicing becomes mandatory in Malaysia, this process will change.
- Invoice Issuance: The invoice must include appropriate data, including the registered names of both parties, invoice numbers, and the sales and services tax implemented.
- Invoice Conversion to XML: The IRB requires that all invoices be verified in the XML format. Issuers can generate invoices directly in XML format. Still, if the recipient doesn’t have the infrastructure to receive XML files, the seller may need to convert the invoice to PDF or Microsoft Word format.
- Verification and Clearance: The issuer sends the invoice to the IRB’s API to receive clearance.
- QR Code Attachment: All businesses must attach a QR code to all e-invoices before sending them to the buyers. The QR code should be embedded with a link to the invoice on the IRB’s website to enable the receiver to verify that the document complies with the new law.
- Sending the Invoice to the Buyer: The invoice can be sent via the Peppol channel. The myTax portal will also be available, enabling the manual issuing and receiving of e-invoices.
- Archiving: The required e-invoice storage period is seven years. Storage abroad is allowed with the permission of the Director General of the Royal Malaysian Customs.
Strategy Plan for Mandatory e-Invoicing in Malaysia
The best course of action for businesses operating in Malaysia is to identify the relevant implementation date. The timeline should serve as the foundation for an internal preparation strategy. Begin by scrutinizing the requirements and your company’s infrastructure to assess its ability to generate e-invoices in line with upcoming regulations. Consider integrating a technological solution that facilitates the receipt and transmission of invoices, ensuring compliance with evolving global billing laws – that is precisely what Comarch offers.
Get Ready for the e-invoicing mandate in Malaysia with Comarch e-Invoicing
Ensure your operational strategy in countries like Malaysia is future-proof by leveraging systems like Comarch e-Invoicing. We continuously monitor the progress of the planned e-invoicing mandate in Malaysia and other nations to guarantee legal compliance. Our robust platform streamlines workflows, automating all your AP and AR invoicing processes and fostering a highly efficient global electronic document exchange. For more information, schedule a consultation with our e-invoicing experts or visit Comarch e-Invoicing website.