Comprehensive Guide to E-Invoicing in Malaysia

Introduction to E-Invoicing in Malaysia

E-invoicing in Malaysia is a digital transformation initiative led by the Inland Revenue Board of Malaysia (LHDN) to modernize tax administration and improve business efficiency. 5 It involves the creation, validation, and transmission of invoices in a structured digital format, replacing traditional paper-based or PDF invoices. 5 This move is designed to enhance transparency, reduce manual errors, and streamline tax reporting for businesses of all sizes. 5

Phased Implementation Timeline

The implementation of e-invoicing is being rolled out in phases based on a company’s annual turnover. This allows businesses to adapt to the new system gradually.

1 2 4 5

Key Requirements for E-Invoicing

To comply with Malaysia’s e-invoicing regulations, businesses must adhere to the following requirements:

• Data Fields: Each e-invoice must contain 55 mandatory data fields, including details about the seller and buyer, item descriptions, quantities, prices, taxes, and payment information. 1
• Format: E-invoices must be in the specified UBL 2.1 format (XML or JSON). 1 2
• Digital Signature: All e-invoices must be digitally signed using a certificate issued by the IRBM. 1
• Transmission: E-invoices can be submitted to the LHDN for validation through two primary models: the MyInvois Portal or via API integration. 1 4

E-Invoicing Models

Businesses can choose the e-invoicing model that best suits their operational needs and transaction volume.

MyInvois Portal

The MyInvois Portal is a web-based platform provided by the LHDN that allows businesses to manually create and submit e-invoices. 4 This model is ideal for small and medium-sized enterprises (SMEs) with lower transaction volumes. 4

API Integration

For larger businesses with high transaction volumes, direct API integration with the LHDN’s MyInvois system is the recommended approach. 4 This allows for the automated submission and processing of e-invoices directly from a company’s existing ERP or accounting system. 4

The E-Invoicing Process

The e-invoicing process involves several key steps, from invoice creation to validation and sharing.

1. Issuance: The supplier creates an e-invoice in the required format and submits it to the LHDN via the MyInvois Portal or API. 1
2. Validation: The LHDN validates the e-invoice in real-time. Upon successful validation, a Unique Identification Number (UIN) is assigned to the invoice. 1
3. Notification: Both the supplier and the buyer are notified of the validated e-invoice. 1
4. Sharing: The supplier shares the validated e-invoice with the buyer, which includes a QR code for verification. 1
5. Rejection or Cancellation: The buyer has 72 hours to request a rejection of the e-invoice if there are any discrepancies. The supplier can also cancel the e-invoice within this timeframe. 1

Benefits of E-Invoicing

Adopting e-invoicing offers numerous benefits for businesses, including:

• Improved Efficiency: Automating the invoicing process reduces manual data entry and processing time. 4
• Cost Savings: E-invoicing eliminates the costs associated with paper, printing, and postage.
• Enhanced Accuracy: Structured data formats and automated validation minimize the risk of errors. 4
• Faster Payments: Streamlined processes can lead to quicker invoice approval and payment cycles.
• Improved Compliance: Real-time validation and reporting help ensure compliance with tax regulations. 4

Conclusion

The transition to e-invoicing is a significant step forward for businesses in Malaysia. By understanding the requirements, timelines, and available models, companies can ensure a smooth transition and leverage the benefits of a fully digital invoicing ecosystem.