E-Invoicing in Malaysia: A Comprehensive Guide for Businesses

The Malaysian government is encouraging businesses to switch to e-invoicing to boost the digital economy and improve tax collection. As of 1st August 2024, taxpayers with an annual turnover surpassing RM100 million will be required to comply with this new system.

As the world becomes more digital, it is essential for businesses, whether B2B (Business-to-Business), B2C (Business-to-Company), or B2G (Business-to-Government) to operate efficiently and follow tax rules. 

This transition can reduce mistakes, facilitate faster payments, and enhance financial management. The process also helps businesses track their finances in real-time, consolidate their records, and make informed decisions based on accurate data.

This guide explains everything you need to know about the new system, including its advantages, how it works, technical guidelines, and how Portcities can help you make the switch.

What is E-Invoicing in Malaysia?

E-invoicing, or electronic invoicing, is a digital method of creating, sending, receiving, and storing invoices. It replaces traditional paper invoices with electronic documents transmitted and managed electronically.

The systems often integrate with other business software, such as accounting and enterprise resource planning (ERP) systems, to streamline invoicing processes and improve efficiency. Additionally, the use of the MyInvois System, provided by the government, simplifies the process for taxpayers by ensuring compliance with tax administration requirements.

Learn more about Best Accounting Software for Small Retail Business: Standalone or ERP?

E-Invoicing Implementation Timeline

The phased rollout will begin on 1st August, 2024, for companies with an annual turnover surpassing RM100 million, culminating in full implementation for all businesses by July 1, 2025. This applies to various types of taxpayers, from large corporations to smaller entities needing to consolidate their financial processes.

Benefits of E-Invoicing Implementation for Malaysian Businesses

Adopting this system brings several benefits, streamlining operations and enhancing financial processes, regardless of whether you operate in a B2B or B2G setting. Below is a detailed breakdown of these advantages:

Operational Efficiency

• Reduced Human Error and Manual Effort: Automating data entry and eliminating manual tasks significantly reduces the chances of human error, such as typos or incorrect calculations.
• Cost Savings: Transitioning to this system eliminates the need for paper, printing, and postage, resulting in substantial cost savings. Streamlined processes also reduce labor costs associated with manual invoicing tasks.

Improved Accuracy and Compliance

• Enhanced Accuracy: The systems often incorporate standardized invoice formats and automated validation checks, ensuring that invoices are accurate and complete.
• Simplified Compliance: These systems are designed to integrate with tax authorities, making it easier for taxpayers to generate and submit tax-compliant invoices, particularly through the MyInvois system. This helps businesses prepare for the upcoming e-invoicing timeline.

Enhanced Financial Performance

• Improved Cash Flow: By accelerating the invoicing and payment process, businesses can receive payments faster. The use of QR codes within these systems can further simplify transactions.
• Real-time Tracking and Transparency: The systems provide real-time visibility into the status of invoices, allowing businesses to track their progress and identify potential issues. This transparency also improves communication with suppliers and customers.

Enhanced Security

• Strengthened Security: The systems often incorporate advanced security features, such as digital signatures and secure transmission methods, to protect sensitive invoice data from unauthorized access or tampering, reducing the risk of fraud and data breaches.

Additional Benefits

• Environmental Friendliness: By eliminating the need for paper invoices, it can help reduce the environmental impact of businesses.
• Improved Customer Satisfaction: It can enhance the customer experience by providing faster and more accurate invoices.
• Scalability: The systems are highly scalable, making them suitable for businesses of all sizes, from small startups to large corporations.

E-invoicing models offer a wide range of benefits for Malaysian businesses, from improved efficiency and cost savings to enhanced security and compliance. By adopting it, businesses can streamline their operations, improve their financial performance, and stay competitive in today's digital age.

Understanding the Malaysian E-Invoicing System

The Malaysian government is rolling out e-invoicing as part of its broader push to digitalize business processes and improve the country’s tax system. By introducing the MyInvois system, the government ensures that business transactions, whether B2B or B2C are more transparent and efficient. The system will also help taxpayers with annual turnovers of various sizes comply with tax regulations.

Starting in June 2024, it will become mandatory for Malaysian businesses, with a phased implementation of e-invoicing plan based on the size and turnover of companies. Larger corporations are expected to adopt the system first, followed by small and medium enterprises (SMEs). 

This nationwide roll-out aligns with global trends where many countries, including Indonesia and Singapore, have already implemented similar frameworks to modernize their tax and financial reporting systems.

Not applying the system could have some serious consequences. Businesses that fail to comply might face fines, penalties, or even legal action, as the authorities see this as essential for tax compliance. 

On top of that, companies that are slow to adopt e-invoicing could fall behind their competitors. The system not only helps reduce mistakes and speed up payment processes but also brings an overall efficiency that many businesses will benefit from. So, adopting it early is a smart move for companies looking to stay competitive in today’s fast-paced business world.

The Malaysian e-invoicing system comprises several key components:

• MyInvois Portal: This free platform, provided by IRBM (Inland Revenue Board of Malaysia), allows businesses to manually create, submit, and manage their e-invoices.
• Application Programming Interface (API): Businesses can integrate it directly into their accounting systems for automated invoice exchange with MyInvois.
• PEPPOL Network: The Pan-European Public Procurement Online Network is a widely adopted standard that facilitates cross-border transactions.

Implementing E-Invoicing in Your Business

Embracing e-invoicing can significantly streamline your business operations. Here's how to do it:

1. Assess Your Needs
   • Evaluate Your Current Processes: Analyze your existing invoicing procedures to identify areas where it can improve efficiency and accuracy.
   • Consider Your Business Size: Determine whether your business falls under the mandatory the requirements, especially if you are a taxpayer with an annual turnover exceeding the RM100 million threshold.
   • Assess IT Infrastructure: Evaluate your current IT infrastructure to ensure compatibility with the solutions. Consider factors like internet connectivity, system security, and the capacity of your accounting software.
2. Choose the Right Solution
   • MyInvois Portal: This government-provided platform is ideal for smaller businesses with moderate invoicing volumes.
   • API Integration: For larger businesses with high transaction volumes and existing IT infrastructure, API integration provides greater flexibility and customization.
3. Select a Reliable Service Provider
   • Partner with an Expert: Choose a reputable service provider like Portcities that can offer guidance, support, and ensure compliance with government regulations.
   • Consider Integration Services: Look for a provider that can assist with integrating e-invoicing into your existing business systems, such as accounting software or ERP systems.
4. Update Systems and Train Staff
   • Upgrade Accounting Software: Ensure your accounting software is compatible with e-invoicing and can seamlessly integrate with the chosen solution.
   • Provide Comprehensive Training: Conduct training sessions for your staff to familiarize them with the new e-invoicing procedures, system functionalities, and best practices.
5. Implement and Test
   • Pilot Implementation: Consider a pilot implementation to test the e-invoicing system in a controlled environment before full-scale deployment.
   • Monitor and Optimize: Continuously monitor the performance of the e-invoicing system and make necessary adjustments to optimize its efficiency and effectiveness.

By following these steps and working closely with a trusted service provider, you can successfully implement it in your business and reap the benefits of improved efficiency, accuracy, and compliance.

Portcities: Your Partner for Seamless E-Invoicing Integration

Portcities specializes in integrating Odoo with MyInvois, the government-mandated the platform in Malaysia, ensuring that businesses comply with e-invoicing in Malaysia. Whether you operate in a B2B, B2C, or B2G environment, Portcities has the expertise to assist you.

Portcities offers a comprehensive suite of services to help Malaysian businesses successfully implement the solutions. Here's a more detailed look at how Portcities can assist your organization:

Expertise in Odoo and MyInvois Integration

• Odoo ERP System: As a leading Odoo partner, Portcities leverages the power of this versatile ERP system to streamline business processes and improve efficiency. Odoo offers a wide range of modules, including accounting, sales, inventory, and project management, making it a suitable choice for businesses of all sizes.
• Seamless Integration with MyInvois: Portcities specializes in integrating Odoo with MyInvois, the government-mandated the platform in Malaysia. This integration ensures compliance with local regulations and streamlines the invoicing process.

Comprehensive Services

• Technology Consulting: Portcities provides expert consulting services to help businesses assess their specific needs and identify the most suitable the solution.
• Solution Implementation: Our team of experienced professionals can assist with the implementation of Odoo and MyInvois, ensuring a smooth transition to it.
• Training and Support: Portcities offers training programs for your staff, ensuring they are well-equipped to navigate the new the systems. We also provide ongoing support to address any questions or challenges that may arise during the transition.

Learn more about 5 Top ERP Features for Accounting and Efficient Financial Management

Proven Track Record

Portcities has successfully assisted numerous businesses across various industries in Malaysia with their implementations. Our commitment to excellence and customer satisfaction has earned us a reputation as a trusted partner for businesses seeking to modernize their invoicing processes.

By partnering with Portcities, you can benefit from:

• Streamlined operations
• Improved efficiency
• Enhanced compliance
• Reduced costs
• Improved customer satisfaction

Contact Portcities today to learn more about how we can help your business implement e-invoicing and achieve your goals.

E-Invoicing Malaysia Seminars

As a leading expert in Odoo and MyInvois integration, Portcities invites you to our seminar, "Bridging Your Business To E-Invoicing via MyInvois x Odoo" on October 16, 2024. Dive deep into how our integrated solution can revolutionize your invoicing processes.

Leveraging our extensive experience in implementing Odoo across various industries, we will share best practices and insights on how to fully harness the power of MyInvois and Odoo to:

1. Expert Insights: Hear industry leaders on e-invoicing implementation and regulations affecting Malaysian businesses.
2. Exclusive Solution Preview: Be among the first to see our intuitive ERP solution with tailor-made MyInvois integration - we're the only Odoo partner in Malaysia offering this!
3. Networking Opportunity: Connect with fellow industry leaders and innovators.

Conclusion

E-invoicing has become the new standard in the Malaysian business landscape. Businesses need to catch up with the regulations. However, applying it to your business could pose problems due to the complexities of integration and ensuring compliance. 

This is where Portcities can help. With its expertise in Odoo and MyInvois integration, Portcities offers comprehensive solutions to streamline your transition, making it easier for your business to meet regulatory requirements while boosting efficiency and reducing costs.

Through our seminars and consultations, you will gain a deeper understanding of e-invoice and how to implement it effectively. Feel free to reach out to our expert team to discuss your specific business needs. Let's work together to build a smarter and more efficient business future.

Frequently Asked Questions

1. Is e-invoicing mandatory in Malaysia?

As of now, e-invoicing is not mandatory for all businesses in Malaysia. However, the Malaysian government, through Lembaga Hasil Dalam Negeri Malaysia (LHDNM), has announced plans to implement e-invoices gradually. Large companies will likely be mandated first, followed by small and medium-sized enterprises (SMEs) in the coming years. Businesses need to stay updated on any future mandatory deadlines.

2. Who is mandatory for an e-invoice?

Currently, no specific group is mandated to use it, but large enterprises are expected to adopt it first, with SMEs being phased in later. The authorities are still developing the exact timeline and criteria.

3. What are the requirements for an invoice in Malaysia?

A valid invoice in Malaysia must include the following information:

• Invoice number
• Date of issuance
• Supplier’s name and address
• The customer’s name and address
• Tax Identification Number (TIN) or GST/VAT registration number
• Description of goods or services provided
• Unit price and total amount
• Tax rate (if applicable) and tax amount

4. Is there a grace period for e-invoice in Malaysia?

Since e-invoicing is not mandatory yet, no official grace period has been announced. Once the system becomes required, the government may provide a grace period or phased implementation, allowing businesses time to comply with the new regulations.

5. What is the difference between e-billing and e-invoicing?

• E-billing: This refers to the electronic delivery of bills (requests for payment) to customers. It can be done through email or a web portal.
• E-invoicing is a broader concept involving the creation, exchange, and processing of invoices in a structured electronic format (such as XML or UBL). It ensures that invoices comply with legal and tax requirements and can be integrated directly into the buyer’s and seller’s accounting systems.

6. What if e-invoicing is not done?

Once it becomes mandatory, non-compliance may result in penalties, fines, or interest charges imposed by tax authorities. Businesses may also face operational issues, such as difficulty with tax filings or audits. It’s essential to follow the regulations once they are in place.

7. Who has to generate an e-invoices in Malaysia?

Typically, the seller or supplier of goods or services is responsible for generating the e-invoice. If mandated, businesses must adopt systems that generate and transmit e-invoices in compliance with the LHDNM’s rules.

8. Can I generate an e-invoice after the invoice date?

In most cases, e-invoices must be generated and issued when the transaction occurs. However, some systems may allow for backdating if the proper controls and justifications are in place. To avoid compliance issues, it’s always best to issue invoices as soon as the transaction is completed.