E-invoicing in Malaysia: impact to businesses

Introduction

Effective 1 August 2024, e-invoicing becomes mandatory in Malaysia for businesses with turnover or revenue of more than RM100 million, marking a pivotal moment for businesses as they adopt this change to the way in which they invoice their financial transactions. Taxpayers with an annual turnover or revenue of more than RM25 million and up to RM100 million would need to comply with the e-invoicing requirement from 1 January 2025. The adoption of e-invoicing becomes mandatory for all taxpayers from 1 July 2025.

Background

The government has introduced e-invoicing with the aim of:

• improving the tax administration of the country
• supporting the digital growth of the economy

increasing transparency and, therefore, the government’s ability to monitor corporate activity in the country. The Inland Revenue Board of Malaysia (IRBM) has introduced 2 e-invoice transmission mechanisms for taxpayers to choose from — the MyInvois Portal and the Application Programming Interface (API).

The MyInvois Portal, hosted by the IRBM, is accessible to taxpayers at no cost and is also available to taxpayers who need to issue an e-invoice if the API connection is unavailable.

The API is a set of programming codes that enables direct data transmission between the taxpayers’ system and the MyInvois system. Taxpayers would need to invest upfront in technology and adjust their existing systems with this option.

Impact on businesses

The adoption and implementation of e-invoicing has short-term and long-term impacts on businesses.

The short-term impact to businesses may include:

• additional labour
• possible operational hiccups or delays
• penalties from non-compliance due to unfamiliarity with the e-invoicing requirements
• additional costs for information technology systems, and
• system glitches and errors.

The long-term impact of adopting and implementing e-invoicing would be positive, resulting in:

• improved operational efficiency
• smoother book-keeping and tax filing
• reduced tax audits
• ensured completeness and authenticity of documentation
• cost savings as businesses see improved cash flow and faster debt collection
• reduced printing cost
• increased compliance
• transparency to achieve higher environmental, social and governance (ESG) ratings
• increased competitiveness in the market, and
• improved supplier/buyer relationship.

Next steps

Businesses will need to prepare for the adoption and implementation of e-invoicing by:

• ensuring their people, processes and technology are to the required standard
• providing adequate training and tools essential for personnel overseeing the adoption and implementation of e-invoicing
• scrutinising existing processes for issuing invoices, credit notes and other transaction documents
• reviewing existing information technology capabilities, and
• determining the availability of data sources to comply with e-invoicing requirements and obligations.