Mandatory CTC Electronic Invoicing model in Malaysia as of August, 2024
The IRB has released both a beta version of the e-Invoicing Software Development Kit (SDK) and an update of the guidelines.
The e-Invoice Software Development Kit (SDK) is a collection of tools, libraries, and resources providing a set of functionalities, Application Programming Interfaces (APIs), and development guidelines to assist businesses in integrating their existing system into the MyInvois System via API.
The Malaysian tax authority, Inland Revenue Board, and the Malaysian Digital Economy Corporation (MDEC) will introduce the mandatory electronic invoicing in Malaysia gradually. The massification of electronic invoicing will affect all types of B2B, B2C and B2G transactions.
The mandatory use of electronic invoicing will begin in August 2024 for taxpayers with an annual turnover of more than MYR 100 million.
Electronic Invoice Pilot Project: May 2024
The IRB will launch an electronic invoice pilot program in the country in May 2024. The goal is to test the system's effectiveness and ensure that the integration between companies and the central platform is carried out correctly, leading up to the mandatory requirement in August 2024.
At EDICOM, we assist you in adapting and complying with the technical and legal requirements of electronic invoicing in Malaysia. We are an accredited Peppol Access Point and implement integrated solutions tailored to your internal operations, both for sending and receiving electronic documents from all your business partners.
EDICOM has been invited by the IRBM to participate in the pilot phase. If you are interested in joining the pilot project with EDICOM or have questions about how electronic invoicing works in Malaysia, please contact us.
e-Invoicing process in Malaysia: How to achieve compliance with EDICOM
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:
- 01/05/2024: Start of the pilot phase.
- 01/08/2024: Electronic invoicing for taxpayers with an annual turnover of MYR 100 million or more.
- 01/01/2025: Mandatory electronic invoicing for taxpayers with an annual turnover of more than 25 million MYR and up to 100 million MYR.
- 01/07/2025: Mandatory electronic invoicing for all other taxpayers.
Electronic Invoicing Model in Malaysia
There are two methods available for transmitting invoices to the IRBM portal:
- Manually via the MyInvois portal hosted by IRBM.
- 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. The eligible documents for interchange include invoices, credit and debit notes, as well as refund invoices.
- e-Invoice issuance: When a transaction is made, the supplier creates an electronic invoice and shares it with the IRBM.
- Validation: IRBM validates the e-Invoice in real time. Once validated, the supplier will receive a Unique Identifier Number from IRBM, that will allow traceability.
- Notifications: IRBM will inform both supplier and buyer once the e-Invoice has been validated.
- e-Invoice sharing: Subsequently, it becomes the responsibility of the supplier to deliver the validated document with the embedded QR code to the buyer through their channels.
- Rejection or cancellation: Upon issuance, a stipulated time is given for
- The buyer to request for rejection of the e-Invoice
- The supplier to perform cancellation of the e-Invoice
- MyInvois Portal: supplier and buyer will be able to obtain a summary of the e-Invoice transactions via the portal.
The IRBM has published a guidance document for version 2.2.
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. This statement aimed 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.