As Malaysia adopts e-invoicing under the MyInvois Portal system, businesses must prepare for the gradual but mandatory shift to digital tax reporting. To assist in this transition, we’ve compiled detailed e-invoicing FAQs, covering essential and advanced topics surrounding Malaysia e-invoicing framework. Whether you’re a large enterprise or an MSME, this guide will help clarify the important points you need to know.
Part 1: Malaysia e-invoicing FAQs: General
Introduction to e-invoice
- What is an e-invoice?
- An e-invoice is a machine-readable digital representation of a transaction between a supplier and a buyer. It is not in formats like PDF or JPG but is structured in XML or JSON format according to IRBM requirements.
- What formats are accepted by IRBM for e-invoices?
- Only XML or JSON formats are acceptable, and these must follow the standards provided in the e-invoice Software Development Kit (SDK) from IRBM. The SDK can be accessed via a provided link.
- Transmission Mechanisms:
- IRBM offers two transmission methods: MyInvois Portal or API.
- Taxpayers can use one or both methods but should avoid duplicating e-invoices.
- Malaysia adopts the Continuous Transaction Control (CTC) Model, which allows strict control through real-time validation by IRBM.
- Tax Deductions Without e-invoice:
- Existing documentation remains valid for tax deductions and personal tax relief until the relevant laws are amended.
Applicability of LHDN e-invoice Implementation in Malaysia
- Is e-invoice applicable only within Malaysia?
- No, e-Invoicing is applicable to both domestic and cross-border transactions.
- Are all businesses required to issue e-invoices?
- Yes, all taxpayers involved in commercial activities in Malaysia are required to implement e-invoice, following a phased timeline.
- Are there any exemptions for industries?
- No industries are currently exempt from e-invoice implementation. Specific types of income and expenses may be exempt, as outlined in the e-invoice Guideline.
- Threshold for e-invoice Implementation:
- Implementation is based on annual turnover or revenue as reported in the 2022 audited financial statements. Phases are as follows:
- Annual turnover > RM100 million: From 1 August 2024.
- Annual turnover RM25 million to RM100 million: From 1 January 2025.
- All other businesses: From 1 July 2025.
- Implementation is based on annual turnover or revenue as reported in the 2022 audited financial statements. Phases are as follows:
- Changes to Mandatory Implementation Date:
- There has been no change to the mandatory dates despite the Income Tax (Issuance of Electronic Invoice) Rules 2024. The mandatory date for those with revenue exceeding RM100 million remains 1 August 2024, with penalties enforced from 1 October 2024.
Available e-invoicing Support and Assistance in Malaysia
- How can businesses prepare for e-Invoicing?
- Businesses should focus on:
- Assembling a team with the necessary expertise.
- Reviewing and updating business processes related to invoicing.
- Ensuring IT systems are compatible with the e-invoice requirements.
- Businesses should focus on:
- Will there be engagement sessions with IRBM?
- Yes, IRBM is actively conducting engagement sessions with industry players, tax practitioners, and professional bodies. These sessions provide updates on e-invoice developments and gather feedback.
- Who to contact for queries?
- Businesses can reach out via:
- Email: [email protected]
- Customer Feedback Form
- 24-hour help desk at 03-8682 8000
- MyInvois Live Chat
- Businesses can reach out via:
- Are there any incentives for implementing e-Invoicing?
- Yes, the government has announced tax incentives in Budget 2024, including tax deductions of up to RM50,000 annually for e-invoice consultation fees for MSMEs from 2024 to 2027.
Part 2: Malaysia e-invoicing FAQs: Scope and Process
General Malaysia e-invoicing Process
- Are transactions in foreign currencies required to be converted to Ringgit Malaysia (RM)?
- No, e-invoices can be issued in any currency unless there are legal requirements for RM conversion.
- Issuing self-billed e-invoices in rural areas with poor internet connectivity:
- In areas with poor internet, businesses should consult the nearest IRBM office to discuss solutions.
- Can self-billed e-invoices be issued if the supplier does not provide one?
- Self-billed e-invoices are allowed only for specific transactions listed in Section 8.3 of the e-invoice Guideline.
- Issuing self-billed e-invoices under special circumstances:
- Issuance is limited to scenarios specified in the e-invoice Specific Guideline.
- Do taxpayers need to include sales tax exemption details in e-invoices?
- Yes, if applicable, C3 details from the Sales Tax (Exemption) Order 2018 must be included in the e-invoice.
Details of Supplier and Buyer in Issuing e-invoice
- Buyers’ details for issuing e-invoices:
- Buyers must provide relevant information to the supplier to facilitate the issuance of e-invoices.
- Tax Identification Number (TIN) for individuals:
- Individual taxpayers must provide a TIN with the prefix “IG.”
- Issuing e-invoices to non-TIN holders (e.g., foreign buyers):
- Suppliers must collect the necessary details from foreign buyers and use a general TIN code for non-TIN holders (EI00000000020).
- Using a general TIN for foreign suppliers:
- It is the taxpayer’s responsibility to verify whether the foreign supplier has a specific TIN.
- Business registration numbers for e-invoices:
- Businesses registered with SSM must use their new 12-digit business registration number. The validation requirement has been temporarily disabled to allow time for businesses to comply.
- Information for non-SSM registered taxpayers:
- Taxpayers registered with other authorities should use their relevant registration number when issuing e-invoices.
Issuance of e-invoices
- Timing for issuing e-invoices:
- No specific timing is required except in certain cases (e.g., consolidated e-invoices must be issued within seven days after the end of the month).
- Consolidated e-invoices for buyers who do not require e-invoices:
- Consolidated e-invoices can be issued for all transactions unless restricted by specific guidelines.
- Draft e-invoices in the MyInvois Portal:
- Yes, suppliers can create and store e-invoices in draft form until they are validated.
- Consequences of failing to issue e-invoices:
- Non-compliance can lead to fines between RM200 and RM20,000 or imprisonment for up to six months.
Validation of e-invoices
- Validation time for e-invoices:
- e-invoices are validated by IRBM in real-time, typically in less than two seconds.
- What is validated in e-invoices?
- Validation ensures that the e-invoice format and data structure conform to IRBM standards.
- Invoice numbers:
- The supplier’s invoice number remains unchanged, but IRBM assigns a Unique Identifier Number (UIN) to each validated e-invoice.
Sharing of e-invoices
- Sharing e-invoices with buyers:
- There is no standard visual template, but a QR code must be embedded for validation.
- Required sharing of e-invoices:
- Suppliers can share either the validated e-invoice or a visual representation, or both.
Adjustments to e-invoices
- Editing information after validation:
- Editing is not allowed after validation. The supplier must cancel the e-invoice within 72 hours and issue a new one if corrections are needed.
- 72-hour adjustment window:
- Suppliers have 72 hours to cancel a validated e-invoice.
- Mistakes made within 72 hours:
- Issuers can cancel the e-invoice and reissue it within 72 hours if errors are discovered.
- Adjusting an e-invoice with a credit/debit note:
- If a mistake is found after 72 hours, a credit note, debit note, or refund note e-invoice must be issued.
- Corrections after the 72-hour period:
- After the 72-hour window, adjustments must be made using credit/debit/refund note e-invoices, referencing the original e-invoice’s UIN.
- Timeframe for adjustments:
- There is no restriction on the timeframe for issuing adjustment e-invoices (e.g., credit or debit notes).
- Multiple original e-invoices adjustments:
- A single credit note e-invoice can be used to adjust multiple original e-invoices.
- Refunds to buyers:
- Refund note e-invoices are required for returning money to buyers, except in cases like overpayment or incorrect payment.
Part 3: Malaysia e-invoicing FAQs for MSMEs
- Applicability to MSMEs:
- MSMEs with annual turnover below RM150,000 are exempt from issuing e-invoices. For businesses with revenue exceeding this amount, e-invoice is mandatory.
- Does the exemption apply to all MSMEs?
- Exemption applies to all taxpayer categories, except subsidiaries or related companies exceeding the RM150,000 threshold.
- Implementation timeline for MSMEs exceeding RM150,000:
- MSMEs are required to implement e-invoice starting from 1 January of the second year after exceeding RM150,000.
- How is annual turnover calculated for MSMEs?
- The annual turnover for e-invoice applicability is based on audited financial statements or tax returns.
- For sole proprietors with multiple businesses:
- All sole proprietorship businesses owned by the same individual are aggregated for calculating the RM150,000 threshold.
- Loss of exemption after crossing the threshold:
- Once mandated to implement e-invoice, MSMEs must continue, even if turnover falls below the RM150,000 threshold in subsequent years.
Part 4: e-invoice Treatment During Interim Relaxation Period
- 6-month interim relaxation period:
- This applies to all phases of e-invoice implementation, providing businesses with additional time to adjust to the new system:
- For taxpayers with more than RM100 million in annual turnover: 1 August 2024 to 31 January 2025.
- For taxpayers with RM25 million to RM100 million in turnover: 1 January 2025 to 30 June 2025.
- For all others: 1 July 2025 to 31 December 2025.
- This applies to all phases of e-invoice implementation, providing businesses with additional time to adjust to the new system:
- Does the relaxation period start later for businesses with more than RM100 million in turnover?
- No, the relaxation period still starts from 1 August 2024, despite the new Income Tax Rules issued in September 2024.
- Is the interim relaxation period mandatory? – No, businesses ready to issue individual e-invoices can do so immediately without adopting the relaxation period.
- Issuing e-invoices during the interim relaxation period: – Businesses must still issue consolidated e-invoices on a monthly basis, not once at the end of the 6-month period.
- Self-billed e-invoices for imports during the interim period: – If customs clearance is obtained before the mandatory implementation date, no self-billed e-invoice is required.
MyInvois Portal: Advanced e-invoicing FAQs
103. What APIs are available in the Sandbox and Production environments?
- There are two types of APIs: Actual APIs that return real responses and Stub APIs that provide mock responses until the full API is available. Examples of actual APIs include submitting documents, validating taxpayer TIN, and fetching recent documents.
104. What should be done if Error 400 (BadArgument) occurs during TIN validation?
- This error indicates that the input parameters (e.g., TIN number) are not in the correct format. You need to check the TIN format to ensure it meets the required structure.
105. What happens if you get Error 401 (Unauthorized) while using the API?
- Error 401 occurs when the access token has expired. To resolve this, you need to generate a new access token by logging in as either the taxpayer or intermediary again.
106. What if Error Code 429 (Too many requests) occurs?
- This error arises when the API receives too many requests in a short period. Wait a few moments and try again.
107. Can e-invoices be issued with negative values?
- Yes, negative values are allowed for certain fields within the document submission.
108. Is there a limit to buyer email addresses in an e-invoice?
- There is no limit to the number of buyer email addresses as long as the field does not exceed 320 characters.
109. How to reduce the file size if an XML document exceeds the 300KB limit?
- You can use minification techniques to reduce the file size without altering the document’s functionality. Minification removes unnecessary whitespace, comments, and formatting.
110. How does the system detect duplicate e-invoices?
- The system checks several fields such as e-invoice type, issuance date and time, invoice number, and TIN numbers for suppliers and buyers to identify duplicates. If all these fields match with a previous submission, the system flags it as a duplicate.
Wrapping Up Malaysia e-invoicing Process
As Malaysia moves toward a fully digital invoicing system under the MyInvois portal platform, businesses must stay informed and compliant. Whether you’re a large enterprise or a small business, e-invoicing offers numerous benefits, including greater efficiency, reduced errors, and improved tax compliance. The phased implementation, tax incentives, and support provided by LHDNM ensure that businesses have the resources they need to make a smooth transition.
For more details or technical specifications, visit the official MyInvois SDK site.
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