The global digital transformation has brought significant changes to traditional business practices. One area that has undergone substantial transformation is invoicing. With the rise of technology and automation, businesses are increasingly shifting towards electronic invoicing, or e-invoicing, to enhance efficiency, reduce costs and improve overall financial management. The Government announced its intention to implement e-invoice in stages in an effort to enhance the efficiency of Malaysia’s tax administration management.
Against this backdrop, the Inland Revenue Board of Malaysia (IRBM) issued the much-awaited e-Invoice Guideline Year 2023 (Guideline) on 21 July 2023. The Guideline addresses the scope of implementation of the e-invoice which comprises the simplified e-invoice concepts, the step-by-step guidance on key aspects of e-invoice, practical examples and common questions regarding e-invoices.
What is an e-invoice?
An e-Invoice is a digital representation of a transaction between a supplier and a buyer. An e-Invoice shall replace any other invoice formats that are presently adopted by businesses. These include paper invoices, scanned invoices, invoices in pdf format, etc.
An e-Invoice contains almost similar information as a traditional invoice, for example, supplier’s and buyer’s details, item description, quantity, price excluding tax, tax and total amount. The difference is that an e-Invoice is a file created in the format specified by the IRBM which can be validated by the IRBM’s MyInvois Portal.
E-Invoices cover typical transaction types such as Business-to-Business (B2B), Business-to-Consumer (B2C) and Business-to-Government (B2G) transactions.
Who will be required to comply with the e-invoicing requirements?
The e-Invoice applies to all taxpayers undertaking commercial activities in Malaysia. This includes businesses engaged in the provision of goods and services and certain non-business transactions between individuals.
All individuals and legal entities are required to comply with e-invoice requirements, including the 14 categories of taxpayers: