Briefing Document: Comprehensive Overview of E-Invoicing Compliance in Malaysia

Not covered in this podcast:

New timeline
- 1 August 2024 for turnover over MYR 100 million remains unchanged
- 1 January 2025 for turnover over MYR 25 million up to MYR 100 million remains unchanged
- 1 July 2025 for turnover over MYR 5 million up to MYR 25 million, previously over MYR 500,000
- 1 January 2026 for turnover over MYR 1 million up to MYR 5 million, previously up to MYR 500,000
- 1 July 2026 for turnover up to MYR 1 million is a new date
Taxpayers with annual turnover below MYR 500,000 are exempt from e-invoicing for now

Executive Summary:

This document provides a comprehensive overview of the e-invoicing mandate in Malaysia, consolidating information from Pagero updates, a study guide, and various FAQs. The Inland Revenue Board of Malaysia (IRBM) is implementing mandatory e-invoicing in phases. Key aspects include a phased implementation timeline, grace periods with consolidated e-invoicing allowances, specific rules for self-billed invoices, technical specifications, exemptions, and the involvement of key players like Peppol and MDEC. This briefing covers the regulatory framework, technical requirements, and practical considerations for businesses in Malaysia.

1. Implementation Timeline and Phased Rollout:

Phase	Annual Turnover	Mandatory From	Grace Period Ends
Phase 1	> RM100 million	1 August 2024	31 January 2025
Phase 2	RM25 million – RM100 million	1 January 2025	30 June 2025
Phase 3	RM5 million – RM25 million	1 July 2025	31 December 2025
Phase 4	RM1 million – RM5 million	1 January 2026	30 June 2026
Phase 5	Up to RM1 million	1 July 2026	31 December 2026

2. Technical Requirements and Formats:

E-invoices must be submitted electronically, adhering to specific formats:

Format: UBL 2.1 in XML or JSON. “Under the second phase, e-invoices must be submitted in electronic formats, using the Universal Business Language (UBL2.1) in XML or JSON formats.“
Document Types Covered: Standard e-invoices (including consolidated and self-billing), credit note e-invoices, debit note e-invoices, and refund e-invoices.
Submission Methods:MyInvois Portal: Suitable for lower transaction volumes.
MyInvois System (API): Designed for larger enterprises, requiring system integration and potential investment.

3. Self-Billed Invoices:

Self-billed e-invoices are issued by the buyer to the supplier in specific scenarios.

Required For: Payments related to capital reduction, share/capital/unit redemption, share buybacks, return of capital, or liquidation proceeds. “Buyers must issue self-billed e-invoices for transactions involving payments related to capital reduction, share/capital/unit redemption, share buybacks, return of capital, or liquidation proceeds.“
Consolidation Rules: Consolidation is generally not permitted for self-billed invoices, except in limited circumstances such as insurance claims or transactions involving overseas branches.
Exceptions to Self-Billed Invoice Issuance: Exceptions exist for certain interest payments, such as those charged to the public by financial institutions or payments made by employees to employers.

4. Exemptions:

Certain entities are exempt from issuing e-invoices, though suppliers to these entities are still required to issue e-invoices.

Taxpayers with annual turnover or revenue less than RM 150,000 (approx. EUR 35,000).
Foreign diplomatic offices.
Individuals who are not conducting business.

5. Key Players and Organisations:

Inland Revenue Board of Malaysia (IRBM): The tax authority responsible for implementing and enforcing e-invoicing regulations. They provide guidelines, updates, and the MyInvois Portal/API infrastructure.
Malaysian Digital Economy Corporation (MDEC): Facilitates e-invoicing compliance and collaborates with service providers.
Peppol: An international e-delivery network providing standards and specifications for secure document exchange.

6. Penalties:

Penalties for non-compliance are being imposed according to the phased implementation.
During the grace periods, penalties are waived if consolidated e-invoicing rules are followed. “For the taxpayers in the scope of the e-invoicing implementation first phase, penalties for non-compliance are imposed from 1 October 2024.“

7. Peppol Specifications and Implementation:

Malaysia is implementing e-invoicing compliant with the Peppol International Invoicing Model (PINT) methodology. This aims to streamline invoicing processes and improve interoperability. Peppol BIS Malaysia Billing process 1.1.0 incorporates invoice and credit note transactions.

8. Software Development Kit (SDK):

The IRBM provides a Software Development Kit (SDK) for the MyInvois System (API) to assist developers with integration.

9. Archiving:

The required archiving period for e-invoices in Malaysia is seven years.

10. Benefit for Early Adopters:

Taxpayers who implement e-invoicing within the stipulated timeline without using the grace period benefit from a reduced capital allowance claim period for ICT equipment and software packages (from 3 years to 2, applicable from the 2024 to 2025 assessment years). This is a financial incentive for businesses to adopt e-invoicing early.

Recommendations:

Determine which implementation phase applies to your business based on annual turnover.
Develop a compliance plan, choosing a submission method (Portal or API) and ensuring adherence to the required formats.
Utilise the grace period to implement e-invoicing and leverage consolidated e-invoicing where possible.
Thoroughly review the updated e-invoice Guidelines and Specific Guidelines published by the IRBM.
Explore Peppol-accredited service providers to assist with compliance.
Stay updated on the latest regulations and guidance from the IRBM.

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