Malaysia to Introduce Mandatory Electronic Invoicing: CTC clearance model
As of June 2024, electronic invoicing will first impact taxpayers with an annual turnover of MYR 100 million or more.
The nation's tax authority, IRBM, has unveiled plans to establish a platform where all electronic invoices must be submitted for validation and registration.
The Malaysian tax authority, Inland Revenue Board, and the Malaysian Digital Economy Corporation (MDEC) have confirmed in a briefing the gradual introduction of electronic invoicing in the country. The widespread use of electronic invoicing will affect B2B, B2C, and B2G transactions, both local and international, and will begin in June 2024.
Electronic Invoicing Model in Malaysia
The Inland Revenue Board of Malaysia has announced the creation of a platform where all electronic invoices must be sent for validation and registration.
There are two methods available for transmitting invoices to the IRBM portal:
- Manually via the MyInvois portal.
- Automatically via API in either XML or JSON format.
This approach constitutes a validation framework by the tax authority, wherein each document is allocated a distinctive identifier and QR code by the IRBM. Following validation, both the sender and the recipient will be informed by the IRBM. Subsequently, it becomes the responsibility of the supplier to deliver the validated document to the buyer through their own channels.
The IRBM has stipulated a specific timeframe within which electronic invoices can be retracted or declined.
The eligible documents for interchange include invoices, credit and debit notes, as well as refund invoices.
The IRBM has published a guidance document for version 1.0.
Key dates for electronic invoicing in Malaysia
The planned implementation schedule for the adoption of the national electronic invoicing system in Malaysia is as follows:
- 01/06/2024: Electronic invoicing for taxpayers with an annual turnover of MYR 100 million or more.
- 01/01/2025: Electronic invoicing for taxpayers with an annual turnover of MYR 50 million or more.
- 01/01/2026: Electronic invoicing for taxpayers with an annual turnover of MYR 25 million or more.
- 01/01/2027: Electronic invoicing for all other taxpayers.
Taxpayers can opt to voluntarily participate in the implementation at an earlier date.
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Context of electronic invoicing in Malaysia
In the pre-budget report for 2023 from the Ministry of Finance, the intention to develop an electronic invoicing model in the country was already mentioned. The aim of this statement was to reinforce recovery and facilitate reforms towards sustainable socioeconomic resilience.
As the momentum of the recovery gained traction in the post-COVID-19 period, the government decided to focus on reforms to improve the welfare of the rakyat, particularly income and social protection, the competitiveness of Malaysia, and strengthen the nation's resilience against future setbacks, while also consolidating the government's fiscal position.
The government is committed to prioritizing its digital transformation in order to have a positive impact on society and the economy. Efforts will be intensified to increase the use of digital technology to improve the quality of service and productivity of government services.
To support the growth of the digital economy and improve efficiency in the management of the country's tax administration, electronic invoicing will be a relevant part of its digital transformation. As part of its strategies to increase tax revenues, the government has announced a phased plan to implement electronic invoicing in the country.
The implementation of electronic invoicing will improve the quality of services and increase taxpayer compliance, as well as increase the efficiency of business operations.