Implementation of E-Invoice in Malaysia: 10 Things to Take Note
Malaysia is set to implement the electronic invoice (e-invoice) policy starting in 2024. Here are some key points to note:
1. Implementation Timeline
The implementation of e-invoices will be done in phases as follows:
| Phase | Date | Applicable Entities |
|---|---|---|
| Phase 1 | August 2024 | Companies with annual turnover exceeding RM 100 million |
| Phase 2 | January 2025 | Companies with annual turnover around RM 25 million |
| Phase 3 | July 2025 | All remaining companies |
This phased implementation allows companies of all sizes to have sufficient time to adapt to the new e-invoice system.
2. E-Invoice Validation
After a transaction, businesses need to issue an E-invoice and submit it to LHDN for validation through MyInvois or API. This ensures the authenticity of the E-invoice and prevents forgery and tampering.
3. E-Invoice Retraction
If the buyer encounters any issues, they must notify the seller within 72 hours for the seller to retract the E-invoice. This provision protects consumer rights and allows sellers enough time to address the problem.
4. E-Invoice Viewing
Upon successful upload and validation of the complete E-invoice, the E-invoice information will be stored in the LHDN system. Both the seller and buyer can view the E-invoice anytime through their respective tax accounts (MyInvois) or accounting systems (API interface). This allows both parties to easily access and verify E-invoice information, eliminating the issues of lost or damaged physical invoices.
5. E-Invoice Format
E-invoices are different from the typical electronic documents (PDF) we receive via email. E-invoices have a special file format that can contain more information and can be better recognized and processed by electronic devices.
6. E-Invoice Transmission Mechanism
LHDN provides two electronic invoice transmission mechanisms: MyInvois web portal and application programming interface (API). Both options make it more convenient for businesses to upload and manage E-invoices.
7. MyInvois Platform
The MyInvois platform is a dedicated E-invoice system introduced by LHDN for taxpayers. It allows taxpayers to manually prepare individual E-invoices or upload multiple transaction E-invoices for LHDN’s authentication. This platform makes it easier for businesses to manage and track their E-invoices.
8. API Interface
The API interface enables businesses to link their own billing systems to LHDN, allowing them to upload E-invoices for authentication directly after generating them in their own billing systems. This streamlines the E-invoice management and tracking process for businesses.
9. Benefits of E-Invoices
E-invoices improve efficiency through automated processes, seamless data integration, and enhanced invoice management, resulting in time and cost savings for businesses. This method also provides businesses with a more convenient way to manage and track their E-invoices.
10. Digital Financial Reporting
For Micro, Small, and Medium Enterprises (MSMEs), the phased implementation of the E-invoice system provides a progressive and controlled transition, aligning their financial reporting and processes with industry-standard digitization. This ensures that MSMEs can adapt over time and mitigate potential risks.
This phased implementation approach allows companies of all types to have sufficient time to adapt to the new e-invoice system.
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