Malaysia’s Electronic Invoice (e-Invoice) System​

The Guideline sets out 2 scenarios that require e-invoices to be issued:

1. Proof of income: e-invoices are to be issued by the taxpayer when a sale or other transaction is made to recognise income.
2. Proof of expenses: e-invoices issued by a vendor / supplier should be in place as evidence to support taxpayers’ expenses, such as purchase of goods and services, payment of business expenses, return of goods and discounts given. For purchases of goods or services from a foreign supplier, the IRBM states that the Malaysian party (i.e. purchaser) will need to issue a self e-invoice to document such expense incurred. This is because foreign suppliers do not issue e-invoices under the MyInvois System and require the Malaysian taxpayer to issue a self e-invoice instead.   

There are 4 types of e-invoice documents to be issued which seek to address different transactional needs of a business:

• Invoice – Records sales transactions of suppliers for sales made to buyers, including self-issued invoices by the Malaysian buyer to document expenses invoiced by foreign suppliers
• Credit note – Records reduction in the value of the original e-invoice (does not involve a refund of monies by the supplier to the buyer)
• Debit note – Records increase in the value of the original e-invoice
• Refund e-invoice – Records refund of the overpayment by a buyer

A supplier / seller needs to issue e-Invoices for its sales to local buyers (domestic sales) as well as foreign buyers (international sales).

When is the e-Invoicing implementation date?

To facilitate existing taxpayers in their full transition to the e-invoicing system, the implementation will be staggered over 3 years from June 2024 to December 2026. The date of implementation shall depend on the taxpayer’s annual sales turnover in the reference year which is the taxpayer’s financial year ended in 2022.

The timelines for existing taxpayers (those which commenced business in either 2022 or in a prior year) and new taxpayers (those which commenced business in 2023 or after) are shown in the table below:

For taxpayers who are ready for early adoption of the e-invoicing system, they may opt to do so at an earlier date.

The IRBM has also clarified in the Guideline that the annual turnover or revenue for 2022 in ascertaining the date of implementation can be obtained from:

• audited financial statements for the financial year ended 2022, or
• tax returns (e.g. Form C, Form B, Form PT, etc.) for year of assessment 2022 filed to the IRB for taxpayers without the audited financial statements.

Further, if the taxpayer’s financial year for 2022 exceeds or falls short of the normal 12 months period due to a change of accounting year end, the taxpayer’s turnover or revenue will be pro-rated to a 12-month period for purposes of determining the e-Invoice implementation date.