E-Invoicing Mandate in Malaysia: Rollout and Implications Explained

The Inland Revenue Board of Malaysia (IRBM) has released comprehensive guidelines regarding the forthcoming launch of its B2B e-invoicing through the innovative MyInvois Portal or API interface, as well as the B2C e-Receipt systems set to debut on June 1, 2024.

For B2C transactions, wherein end consumers are not obligated to possess e-invoices for tax-related transaction support, suppliers will be authorized to issue conventional receipts or invoices according to their existing practices. Over a designated time period, suppliers will be required to consolidate the customary receipts or invoices issued to end consumers, subsequently issuing a unified e-invoice to substantiate the transactions involving end consumers. The full guideline is available here.

The guidance encompasses the following aspects:

1. Transactions within the scope of regulation

2. Mandatory data fields

3. Utilizing the MyInvois Portal: submission, validation, notifications, sharing with counterparts, rejection procedures

4. Submission through the API

5. Frequently Asked Questions (FAQs)

6. Matters related to data security and privacy In April 2023, the IRBM confirmed the phased introduction of compulsory CTC (Continuous Transaction Control) e-invoicing, to be executed between June 2024 and January 2027.

Malaysia is on track to join the ranks of countries implementing obligatory electronic invoicing for Sales and Services Taxes, spanning from June 1, 2024, to January 1, 2027. This mandate encompasses B2C, B2B, and B2G transactions, incorporating imports and exports. The obligation solely applies to resident taxpayers.

The Inland Revenue Board of Malaysia (LHDNM) will execute a gradual and compulsory roll-out of this initiative.Moreover, the myTax portal has been adopted as the no-cost e-invoicing solution. From January 2024, there will be the choice to voluntarily embrace e-invoicing with LHDNM. Subsequently, from June 2024 onward, this will become mandatory for taxpayers with an annual turnover of MYR 100 million and above. The subsequent phases are as follows:

• January 2025: Annual turnover of MYR 50 million and above

• January 2026: Annual turnover of MYR 25 million and above

• January 2027: All other taxpayers

Starting January 2027, B2C transactions conducted through e-Receipts will be subjected to live digital reporting. Malaysia is set to adopt a Continuous Transaction Control (CTC) model, necessitating sales invoices (in XML format) to be initially forwarded to tax authorities for validation via the government's API.

Upon validation, the invoice will receive a distinctive digital Certification Serial Number. Only after obtaining this certification can the seller send the invoice to the customer in any suitable format. The option of using PEPPOL for this invoice exchange will be available, and an obligatory QR Code must be included in the invoice sent to the customer.

This development forms an integral component of the broader initiative to digitize tax administration. A pilot phase is scheduled to commence in early 2024, with a staggered implementation for other taxpayers throughout the year.

It's noteworthy that electronic invoicing has been permissible in Malaysia since 2015, contingent on mutual agreement between both parties, i.e., the vendor and the customer. Electronic invoices must be retained for a minimum of seven years.