Your Strategic Guide to Adopting e-Invoicing in Malaysia

As Malaysia launches its electronic invoicing (e-Invoicing) regulations, the question that every Malaysian based business should ask themselves: Are we compliant? And if not, ‘How do we get there?’.

On 1 August 2024, Malaysia’s tax authority - the Inland Revenue Board of Malaysia (IRBM) - rolled out Phase One of its new mandatory e-Invoicing implementation plan.

This initial phase of the new e-Invoicing framework required all Malaysian businesses earning an annual revenue over RM 100 million to transform their paper-based invoicing systems to Malaysia’s new and improved e-Invoicing system. This means Malaysian businesses may be required to invest in new IT infrastructure, e-Invoicing expert guidance, and hiring employees that are familiar with the new electronic invoicing regulations in Malaysia.

Phase Two of Malaysia’s e-Invoicing implementation plan is now on the horizon. By 1 January 2025, all Malaysia based businesses earning an annual revenue between RM 25 million and RM 100 million are expected to make the switch to Malaysia’s new e-Invoicing platform. The new platforms include the IRBM hosted ‘MyInvois Portal’ or the Malaysian Government’s Application Programming Interface (API).

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Malaysia RegTech Readiness: Is Your Business Ready to Adopt Malaysia’s e-Invoicing Regulations?

With the flurry of e-Invoicing compliance standards in Malaysia’s RegTech pipelines, IRBM advises Malaysian companies to assess their readiness in adopting the new e-Invoicing protocols based on the following:

1. Human Resources: Allocate and equip personnel with the necessary capabilities to adopt and oversee the new e-Invoicing implementation. Although the e-Invoicing process is automated, businesses will require personnel to facilitate the new e-Invoicing system adoption.
2. Tech Infrastructure: Determine the availability of data sources, data structures, current IT capabilities that support system readiness and processes to comply with Malaysia’s digital invoice requirements and obligations.
3. Revolutionised Systems: Review the current processes in issuing transaction documents (i.e., invoice, credit note, debit note, refund note) to ascertain what your business requires in the form of technology, tools, and invoicing format in order to meet the new e-invoicing compliance requirements.

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What are the Types of e-Invoices to be Issued?

1. Invoice: An invoice is a commercial document used to record and document a transaction between two parties, namely a supplier and buyer. While traditional invoices are paper-based, invoices now include ‘digital invoices’ and ‘electronic invoices’.
2. Credit Note: Credit notes are issued by the supplier to rectify errors, effect discounts, and/or to account for sale returns in a prior e-Invoice. In effect, a credit note reduces the value of the original electronic invoice. A credit note is used in situations where the reduction of the original e-Invoice does not involve return of monies to the buyer.
3. Debit Note: In contrast to a credit note, debit notes are issued to indicate additional charges on a previously issued e-Invoice.
4. Refund Note: An e-Invoice in the form of a refund note is a document issued by a supplier to confirm the refund of the buyer’s payment. This is used, as opposed to a credit note, in situations where there is a return of monies to the buyer.

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Deciding Between Malaysia’s e-Invoicing Models: MyInvois Portal vs API Integration

The Malaysian Government has mandated the use of either the IRBM hosted MyInvois Portal or API Integration to carry out the creation, submission, validation, sharing, reporting, and storage of all Malaysian business’ electronic invoices.

With the expansion of Malaysian e-Invoicing into the digital foray, businesses – big and small – must decide which model best suites their capabilities and processes.

MyInvois Portal

• Creation & Submission: e-Invoices are manually created either individually or in batches.
• Validation: Where IRBM finds an error in the e-Invoice, it requires rectification and resubmission. Validations are received in PDF format.
• Notification: Notification sent via the MyInvois Portal and email to both supplier and buyer.
• Sharing: Requires suppliers to manually share the validated e-Invoice with buyers along with QR code.
• Rejection/Cancellation: Requests must be made within 72 hours of issuance via the portal.
• Storage: IRBM’s database. Buyers and sellers are also advised to maintain their independent records.

API Integration

• Creation & Submission: e-Invoices are automatically submitted from Enterprise Resource Planning (ERP) systems or, alternatively, third-party software.
• Validation: Validation is granted instantly along with Unique Identifier Number. If e-Invoice contains errors, will require rectification.
• Notification: Notification sent directly to both supplier and buyer via the integrated ERP system or third-party software.
• Sharing: Buyers have direct access to validate e-Invoices via the ERP system or third-party software.
• Rejection/Cancellation: Requests must be made within 72 hours of issuance via the API integrated software.
• Storage: IRBM database which is accessible via business’ ERP system.

As is apparent from the above comparison, there are benefits to be derived from both e-Invoicing models.

If you’re a Malaysian based business that has the budget, capabilities, and tech infrastructure to adopt the API Integration model, you would be able to enjoy seamless connection with IRBM’s e-Invoice processes. This means your business’ transaction processes would enjoy a higher level of efficiency in the creation, submission and sharing of digital invoices. The more efficient your processes, the more time and resources saved, translating to higher revenues in the long run.

On the other hand, the MyInvois Portal offers businesses with budgetary constraints and limited tech infrastructure with a government hosted solution for free. This means that if your business can’t afford the adoption of the API Integrated model, you can still remain compliant with Malaysia’s e-Invoicing regulations.

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Key Takeaways

With the dawn of the new year, Malaysia is set to roll out Phase Two of its mandatory e-Invoicing regulations requiring all businesses with an annual turnover between RM 25 million and RM 100 million to adopt either one of the following e-Invoicing models: The MyInvois Portal or an API Integration.

While the API Integrated system offers businesses with a higher level of convenience, efficiency and time-saved, the MyInvois Portal offers smaller businesses with a cost-effective, e-Invoicing solution that ensures their e-Invoicing compliance.

Ensure your business’ e-Invoicing compliance with Malaysia based Metora’s comprehensive e-Invoicing solutions. Connect to get started.