With the evolution of technology and the move towards complete automation and digitization, e-Invoicing is becoming a standard norm in many countries. With increased tax evasions, e-Invoicing is one of the mediums through which it can be curbed. The government taxation departments can have businesses’ data in real time. The recent country in which e-Invoicing applicability was announced is Malaysia.
In this article, we aim to provide the readers with a brief overview of the same.
Understanding e-Invoicing in Malaysia
The Inland Revenue Board of Malaysia (IRBM) announced the implementation of e-Invoices in a phased manner starting from 1st August 2024. In Malayasia, e-Invoice must be generated for B2B, B2C and B2G transactions. E-invoices in Malaysia will replace invoices, credit notes, debit notes, and refund notes.
After the completion of the transaction, the supplier will create an e-invoice in his system for the same and share it with IRBM through MyInvois portal or API. IRBM will validate the same, and the supplier will receive a unique identification number and an embedded QR Code. Once it has been validated, both the supplier and recipient will be notified. The supplier will be responsible for sending the invoice to the buyer. Through API integration of e-Invoicing software in Malaysia, e-invoices can be generated.
The implementation of e-Invoicing in Malaysia
The implementation of e-invoice in Malaysia is planned from 1st August 2024. To check the applicability of e-invoices, the taxpayers in Malaysia would have to verify the annual sales turnover or revenue in the financial year 2022. Further, taxpayers who have commenced the business after the financial year ending 2022 have a requirement set for them as well.
|Type of taxpayers
|Taxpayers with an annual turnover or revenue of more than RM 100 million
|1st June 2024
|Taxpayers with an annual turnover or revenue of more than RM 50 million
|1st January 2025
|Taxpayers with an annual turnover or revenue of more than RM 25 million
|1st January 2026
|Any other taxpayer
|1st January 2027
The annual turnover or revenue would be based on the audited financial statements for taxpayers who are audited. In the case of non-audited taxpayers, the turnover would be calculated based on the annual revenue reported in the tax return of the assessment year 2022.
Benefits of e-Invoicing for Malaysia
· E-Invoices are validated in real-time, ensuring accuracy and reducing the risk of errors.
· Appropriate invoices and reporting them to tax authorities result in a faster payment cycle, thereby unblocking the working capital.
· It helps to save time, increasing efficiency and reducing cost.
· A proper QR code and information reduces the chances of tax evasion.
· Both the supplies and buyers have access to detailed information, providing transparency.
With the adoption of e-Invoices practices, the processes are streamlined. Though there are various challenges which businesses have to face, the benefits outweigh those challenges. With its implementation, a transparent process would benefit both the company and the tax authorities.