A Guide to E-Invoicing in Malaysia | iTrainingExpert

A Guide to E-Invoicing in Malaysia

In 2023,  the Inland Revenue Board of Malaysia (LHDN) announced that all businesses registered in Malaysia are required to generate e-invoices for all B2B, B2G and B2C transactions. The implementation of e-Invoicing has been made to support the growth of Malaysia's digital economy and increase the efficiency of the country's tax administration system.

Transitioning to e-invoicing provides benefits otherwise unavailable in traditional paper-based transactions. These include accurate realtime data collection, streamlining of invoice creation and submission, simplified procedures for overseas business transactions and reduced potential for billing errors.

Even so, adapting to a completely online form of financial transaction comes with a learning curve.

For this reason, the e-invoicing system is being implemented gradually according to a three phased timeline in order to provide taxpayers with a period of flexibility to adapt.

Key Phases

1st August, 2024: Taxpayers with an annual turnover or revenue exceeding RM100 million shall comply with e-invoicing.

1st January, 2025: Taxpayers with an annual turnover or revenue between RM25 million and RM100 million shall comply with e-invoicing.

1st July, 2025: All remaining businesses except those with an annual turnover less than RM150,000.00 shall comply with e-invoicing.

As of October, 2024, 7,400 companies in Malaysia are using the e-invoice system and over 58 million e-invoices have been issued, according to LHDN. 

As we enter the year 2025, the final deadline is fast approaching until e-invoicing becomes compulsory. If you’re not yet caught up on the basics of e-invoicing, you really should be!

Who Must Comply With E-Invoicing And Who Is Exempt?

Below is a list of the entities, individuals and businesses that must comply with e-invoicing rules and those who are exempt from them, according to LHDN guidelines.

To help you get started, here are some of the most fundamental facts you need to understand about e-invoicing in Malaysia and how it affects you. 

Parties Required To Comply With E-Invoicing	Parties Exempt From E-Invoicing
Associations Body of persons Branches Business trusts Co-operative societies Corporations Limited liability partnerships Partnerships Property trust funds Property trusts Real estate investment trusts Representative offices and regional offices Trust bodies. Unit trusts	Foreign diplomatic offices Individuals not conducting business Statutory bodies, authorities, and local authorities:For collection of fees, charges, or statutory levies  and for transactions conducted before 1 July 2025 International organizations (for transactions before 1 July 2025) Taxpayers with annual revenue below RM150,000

When Do E-Invoices Need To Be Issued?

An e-invoice must be issued whenever a sale or transaction takes place to register taxpayer income. Including returns and discounts.

What Documents Are Covered Under E-Invoicing

Invoices, credit notes, debit notes and refund notes all fall under the purview of e-invoicing.

What Is The E-Invoicing Workflow

According to LHDN guidelines, there are five steps to the e-invoicing process.

• Issuance: When a sale, transaction or adjustment to either of the two is made, the supplier generates an e-Invoice and submits it to LHDN via MyInvois Portal or API for validation.

• Validation: LHDN shall perform a real time validation of the e-invoice. Once completed, the supplier shall be notified and receive an identification number via MyInvois Portal or API.

• Sharing: Once an e-invoice has been validated, it shall come with a QR code that can be scanned to confirm its status via MyInvois Portal. The supplier is obliged to share this validated invoice with the buyer. 

• Cancellation: A supplier or buyer may reject or cancel an e-invoice within 72 hours of its validation.

• Access to MyInvois Portal: The MyInvois Portal is open to both suppliers and buyers to retrieve e-Invoice data from.

NOTE: Failure to issue an e-invoice will be considered an offence under Section 120(1)(d) of the Income Tax Act 1967. Non-compliance carries a penalty of a fine of RM200 to RM20,000 or imprisonment for up to 6 months or both. For each instance of non-compliance.

How To Prepare Yourself For E-Invoicing

The right personnel in your business must be equipped with the right tools and information to oversee the implementation of e-invoicing. All current SOPs and workflow around company invoicing should also be reviewed for optimization.

This should involve reviewing your business’ transaction history and revenue streams to ensure that all relevant data can be acquired and fit into LHDN’s data field requirements.

This may also entail improvement of IT support systems and strengthened cybersecurity measures.

There is in fact plenty of detailed information around e-invoicing implementation that can't be covered in a single article. All vital knowledge to ensure full compliance with the law and a smooth transition process that must be learned before 1st JULY, 2025 or be at risk of penalties.

Don’t worry, though! We have you covered.

Register for our 2-Day Course on “E-Invoicing for Professionals” and we’ll cover the full range of topics related to e-invoicing implementation in Malaysia to equip you with all the comprehensive knowledge and practical skills you’ll need for this transition

COURSE PAGE: https://www.itrainingexpert.com/course/e-invoicing-for-professionals/?c=NzM3 

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