What is E-invoicing?

E-invoicing is a digital version of traditional paper invoices. Instead of sending a physical invoice, businesses send an electronic invoice (e-invoice) that contains the same information, such as the supplier's and buyer's details, item descriptions, quantities, prices, taxes, and the total amount.

Why is Malaysia implementing E-invoicing?

Malaysia is implementing E-invoicing to:

1. Improve Efficiency: E-invoices are faster to process and reduce the chances of errors compared to manual paper invoices.

2. Enhance Transparency: E-invoicing helps the government track transactions more accurately, reducing tax evasion and improving tax compliance.

3. Support Digital Transformation: This initiative is part of Malaysia's Digital Economy Blueprint, aiming to strengthen the country's digital infrastructure and modernize tax administration.

Implementation Timeline

The implementation of E-invoicing in Malaysia is being rolled out in phases based on business turnover:

  • Phase 1: Businesses with an annual turnover of more than RM100 million started using E-invoicing from August 1, 2024.
  • Phase 2: Businesses with an annual turnover between RM25 million and RM100 million began on January 1, 2025.
  • Phase 3: Businesses with an annual turnover between RM500,000 and RM25 million will start on July 1, 2025.
  • Phase 4: All other businesses, except those with an annual turnover below RM150,000, will begin on January 1, 2026.

Difference between E-invoicing and Consolidated E-invoicing

E-invoicing: Involves issuing an individual e-invoice for each transaction. This e-invoice is shared with the buyer and submitted to the Inland Revenue Board of Malaysia (IRBM) for validation.

Consolidated E-invoicing: Used when buyers do not require an individual e-invoice for each transaction. Suppliers issue regular receipts for each transaction and then combine these receipts into a single consolidated e-invoice, which is submitted to the IRBM for validation within 7 calendar days after the end of the month.

Importance of Declaring Expenses for E-invoicing

Declaring expenses accurately is crucial for several reasons:

1. Tax Compliance: Properly declared expenses ensure that businesses comply with tax regulations and avoid penalties.

2. Accurate Financial Records: Declaring expenses helps maintain accurate financial records, which are essential for financial planning, audits, and decision-making.

3. Transparency: Transparent expense declarations build trust with stakeholders, including investors, customers, and regulatory authorities.

4. Reimbursements and Claims: Accurate expense declarations are necessary for claiming reimbursements and deductions, which can reduce the overall tax liability4.

Benefits for Businesses

1. Cost Savings: Reduces the need for paper, printing, and postage.

2. Faster Payments: E-invoices can be processed and paid more quickly.

3. Better Record-Keeping: Digital records are easier to store, search, and retrieve.

Support for Small Businesses

To help small businesses transition to E-invoicing, the government has introduced several initiatives, including the MyInvois Portal, a free platform for issuing e-invoices.