On July 21, 2023, the Inland Revenue Board of Malaysia (IRBM) introduced the e-Invoice Guideline to support the growth of our digital economy. This new e-Invoice system is set to enhance the efficiency of Malaysia’s tax administration, perfectly aligning with the Twelfth Malaysia Plan’s focus on strengthening our digital services infrastructure and modernizing tax management.
Why wait? Get ahead of the curve by adopting e-Invoice early! Reach out to us today to streamline your invoicing process, ensure compliance, and boost your business efficiency with our all-inclusive e-Invoice solutions.
What is an e-Invoice?
An e-Invoice is a digital version of a transaction between a supplier and a buyer, replacing traditional paper or electronic documents like invoices, credit notes, and debit notes. It captures all the essential details, such as the supplier and buyer information, item descriptions, quantities, prices excluding tax, tax amounts, and the total amounts—essentially everything needed to keep your daily business operations running smoothly.
Benefits of Adopting e-Invoice
1. Unified Invoicing Process:
Say goodbye to manual paperwork! The e-Invoice system streamlines the creation and electronic submission of transaction documents to IRBM, reducing manual efforts and human errors.
2. Easy Tax Return Filing:
With seamless system integration, you can ensure efficient and accurate tax reporting without the usual hassle.
3. Enhanced Efficiency for Larger Businesses:
Automating your invoicing process means significant time and cost savings. Enjoy smoother data integration and better invoice management.
4. Smooth Transition for MSMEs:
The phased implementation approach allows MSMEs to gradually align their financial reporting with industry standards, minimizing disruptions and ensuring a manageable transition.
Types of Transactions Covered by e-Invoice
e-Invoice applies to various types of transactions, including Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Government (B2G). Whether you’re an individual or a legal entity in Malaysia—such as a corporation, partnership, or trust—this system is designed to fit your needs.
Scenarios and Types of e-Invoices
The e-Invoice model ensures a standardized approach to generating, transmitting, and keeping records of your transaction documents. Here’s a quick rundown:
Scenarios Requiring e-Invoice
- Proof of Income: Issued whenever a sale or other transaction is made to recognize income.
- Proof of Expense: Covers purchases or spending, including returns and discounts. In some cases, like foreign transactions, a self-billed e-Invoice may be required to document the expense.
Types of e-Invoices
- Invoice: A document that itemizes and records a transaction between a supplier and a buyer. It also includes self-billed e-Invoices.
- Credit Note: Used to correct errors, apply discounts, or account for returns on a previously issued e-Invoice, reducing the value of the original document.
- Debit Note: Indicates additional charges on a previously issued e-Invoice.
- Refund Note: Confirms the refund of the buyer’s payment, used when there is a return of monies to the buyer.
Determining Annual Turnover for e-Invoice Implementation
The annual turnover or revenue for e-Invoice implementation is based on:
- Audited Financial Statements: Annual turnover or revenue stated in the statement of comprehensive income for financial year 2022.
- Tax Return for Year of Assessment 2022: Annual revenue reported in the tax return if no audited financial statements are available.
- Change of Accounting Year End for Financial Year 2022: Turnover or revenue pro-rated to a 12-month period for determining the implementation date.
Compliance and Voluntary Participation
Your obligation to comply depends on your annual turnover or revenue. If you meet the threshold, you must issue and submit e-Invoices for IRBM validation according to the implementation timeline. Even if you don’t meet the threshold, you can still voluntarily participate in the e-Invoice implementation earlier—no need to wait!
Note: For new businesses starting in 2023 or later, the e-Invoice implementation date is set for July 1, 2025.