Malaysia E-Invoice System

Malaysia is trying something new: digital bills or e-invoices. It’s a big step into the future. Let’s dive in and see what it’s all about – What is it and How it Works ?

Electronic Invoicing (E-invoicing) is like a regular bill, but online. Instead of paper bills, you get them on your computer or phone. It’s faster, cleaner, and you won’t lose them!

Malaysia E-Invoice

Malaysia is taking a big leap with its new e-invoice system. As the world moves more online, Malaysia is joining in to make things easier for businesses and clearer for everyone involved.

Businesses in Malaysia will become part of a countrywide e-invoicing structure following international Peppol standards. This arrangement enables businesses to exchange invoices through the Peppol network, irrespective of the ERP or accounting software they use.

Why the e-Invoice System is a Game-Changer?

1. Efficiency

Gone are the days of drowning in stacks of paper bills or waiting for invoices to arrive by mail. The e-invoice system means everything is at your fingertips instantly.

This is great for businesses because they can now send out bills and get paid faster. It also means customers can view and pay their bills without any fuss.

2. Accuracy

Writing out bills by hand or even typing them up can lead to mistakes. Maybe someone mistypes an amount, or a crucial detail gets left out. With e-Invoicing, a lot of the info is automatically filled in.

This reduces the chance of silly mistakes that can cause confusion or delays. And if there’s a need to correct something, it can be done swiftly online.

3. Transparency

With digital bills, everyone can see the same information at the same time. Businesses can track when a bill is sent, seen, or paid. Customers can easily check their bills whenever they want.

This open view means fewer misunderstandings. It’s like having an open book that everyone can read whenever they like.

4. Good for Nature

Every time we use digital methods instead of paper, we’re doing a small part to help the planet. Fewer paper bills mean fewer trees need to be cut down.

Plus, think about the transport: no more trucks or bikes needed to deliver paper bills means less pollution. It’s a small change, but with everyone on board, it can make a big difference.

The Invoicing methods – MyInvoisPortal Vs. API

Invoices can be generated via two methods in Malaysia – via MyInvoisPortal and via API.

Choosing between MyInvois Portal and API depends on factors such as the business size, technical capabilities, customization needs, and preferences regarding ease of use versus integration flexibility. Small to medium-sized businesses might find MyInvois Portal more accessible, while larger enterprises seeking tailored solutions and deeper integration might opt for API-based invoicing.

SAP ERP seamlessly connects with government-approved e-Invoicing API. This integration allows direct, automated transmission of invoices from the ERP system to these platforms. It ensures compliance with Malaysian regulations, reduces manual effort, minimizes errors, and enhances transparency in the invoicing process.

Also Read: E-Invoicing in SAP Business One – Singapore & Malaysia

Steps to Prepare Your Business for E-Invoicing

To get ready for e-invoicing, businesses should:

1. Evaluate their current invoicing procedures to pinpoint areas for increased efficiency and cost reduction.
2. Select an e-invoicing solution tailored to their requirements and financial plan.
3. Integrate the e-invoicing system with their ERP for automated invoice transmission.
4. Educate their workforce about the updated e-invoicing procedures.

Malaysia E-Invoice Workflow

1. Sale or transaction occurs, prompting the supplier to generate an e-Invoice.
2. The supplier issues the e-Invoice through either MyInvois Portal or API.
3. The e-Invoice travels through the system.
4. The e-Invoice undergoes validation.
5. Validated e-Invoices are stored in the IRBM’s database.
6. Taxpayers gain access to their historical e-Invoices for viewing purposes.

Source: Official Portal Inland Revenue Board Of Malaysia

The implementation dates shared by Inland Revenue Board are as follows:

1 August 2024 : Businesses with an annual turnover or revenue of more than RM100 million

1 January 2025 : Businesses with an annual turnover or revenue of more than RM25 million and up to RM100 million

1 July 2025 : All businesses

E-invoice Guideline by Inland Revenue Board of Malaysia

In an effort to modernize and enhance financial practices, the Inland Revenue Board of Malaysia (IRBM) has implemented comprehensive e-Invoice Guidelines.

These are designed as a systematic approach for entities transitioning from conventional paper invoices to a digitized e-invoicing methodology.

1. Unique Identification

IRBM Unique Identifier Number

Each e-invoice must possess a distinct identifier, provided by the IRBM. This ensures the singularity and authenticity of each transactional document.

2. Product and Service Specifics

• Classification:

The e-Invoice mandates that all products or services be appropriately classified, be it medical expenditures, general expenses, or charitable donations.

• Description of Product or Service:

Clarity is paramount. Every e-Invoice should lucidly detail the nature of the product or service in question.

• Unit Price:

For transparency, the cost per unit of the offered product or service must be distinctly mentioned on the e-invoice.

3. Taxation Details

• Tax Type and Rate:

The e-invoice should categorically specify the nature of the applicable tax – be it sales tax, service tax, or any other variant. Additionally, the corresponding tax rate should also be recorded.

• Tax Amount:

This pertains to the precise tax value derived from the stipulated rate and the overall billable sum.

• Tax Exemption Details:

In instances where tax exemptions are applicable, the e-invoice should enumerate the specifics of the exemption and quantify the exempted amount.

4. Payment and Financial Fields

• Subtotal and Totals:

The e-invoice is required to exhibit both the pre-tax subtotal and the aggregate amounts, both excluding and including relevant taxes.

• Quantity and Measurement:

If relevant, the e-invoice should state the quantity of the product or service and any pertinent measurements.

• Discount Details:

Should any discounts be applicable, the e-invoice needs to state both the rate of the discount and its absolute monetary value.

• Payment Information:

The chosen payment methodology, be it cash, cheque, e-wallet, etc., should be detailed. Supplementary details might include the supplier’s banking particulars, stipulated payment conditions, and pertinent reference numbers.

5. Shipping and Customs Information in the Annexure

• Shipping Recipient Details:

For transactions involving third-party recipients or alternate addresses, comprehensive details including name, address, and registration credentials should be incorporated.

• Customs and Export/Import Details:

E-Invoices that pertain to international trade should provide requisite details such as customs form numbers, relevant product tariff classifications, and pertinent trade agreement clauses.

6. Terminology Clarification

To ensure uniformity and comprehension, the guidelines also elucidate specific terminologies. This ensures that all stakeholders have a comprehensive understanding of terms integral to the e-invoicing process, like B2B, B2C, ERP, QR code, and more.

With these guidelines, businesses can adeptly navigate the e-invoicing ecosystem in line with the expectations set forth by the IRBM. Going digital with e-invoicing is a big win for Malaysia. It’s like upgrading to a faster, smarter phone. It helps businesses, saves trees, and makes life simpler.