Boost Your Business with E-Invoicing in Malaysia

If you are a business owner or a taxpayer in Malaysia, you might have heard of the new E-Invoicing system that is being implemented by the government. The electronic exchange of invoices between a supplier and a buyer is known as electronic invoicing or E-Invoicing.

But what exactly is E-Invoicing, and how does it affect your business? What are the benefits and challenges of adopting this system? How can you ensure compliance and avoid penalties? And most importantly, how can you leverage E-Invoicing to boost your business performance and growth?

In this article, we will answer these questions and more. We will explain the basics of e-invoicing, the key features and benefits of Samadhan’s E-Invoicing solution for Malaysia, and the process of implementing E-Invoicing in your business. We will also share some tips and best practices to help you make the most of this new system.

E-Invoicing in Malaysia: Support growth of digital economy

To support the growth of the digital economy, the Government intends to implement e-Invoice in stages in an effort to enhance the efficiency of Malaysia’s tax administration management. This is in line with the Twelfth Malaysia Plan, where one of the key focus is on strengthening the digital services infrastructure and digitalising the tax administration.

The e-Invoice will enable near real-time validation and storage of transactions, catering to Business-to-Business (B2B), Business-to-Consumer (B2C) and Business-to-Government (B2G) transactions.

The E-Invoicing mandated by the government of Malaysia aims to digitize invoicing for transparency and efficiency in tax operations. It is a new system in Malaysia that lets businesses digitally send and receive invoices, credit notes, and debit notes. Think of it like online banking for your bills!

Now let’s know why it is happening?

The government wants to make business transactions smoother, more secure, and easier for everyone. E-invoicing helps by:

• Reducing paperwork: No more filing cabinets overflowing with paper!
• Improving accuracy: No more typos or errors from hand-written invoices.
• Boosting transparency: The government can easily see what’s happening in the economy.
• Catching fraud: Fake invoices become much harder to pull off.
• Saving time and money: Everything is faster and cheaper electronically.

Benefits of E-Invoice

The implementation of e-Invoice not only provides seamless experience to taxpayers, but it also improves business efficiency and increases tax compliance. Overall benefits include:

• Reduce manual efforts and human errors – unified invoicing process through creation and submission of transaction document & data electronically
• Facilitate efficient tax filing – seamless system integration for efficient and accurate tax reporting
• Streamline operational efficiency – enhanced efficiency and significant time and cost savings
• Digitalise tax and financial reporting – aligns financial reporting and processes to be digitalised with industry standards

E-Invoice Implementation Timeline

• E-Invoice will be implemented in phases to ensure smooth transition. The roll-out of E-Invoice has been planned with careful consideration, taking into account the turnover or revenue thresholds, to provide taxpayers with sufficient time to prepare and adapt to the E-Invoice implementation.
• Below is the E-Invoice implementation timeline:

Some of the features of Malaysia E-Invoicing

• Mandatory for all SST-registered businesses:?As of August 1st, 2024, all businesses registered for Sales and Service Tax (SST) in Malaysia are required to comply with Malaysia E-Invoicing regulations.
• Phased rollout: The implementation is being rolled out in three (3) phases.

Phase 1, starting August 1st, 2024, aims to target taxpayers with an annual turnover or revenue of more than RM100 million.

Phase 2, to be enforced from January 1st, 2025, onwards, further includes taxpayers with an annual turnover or revenue of more than RM25 million and up to RM100 million.

Phase 3, commencing from July 1st, 2025, covers all the taxpayers.

Key Benefits of Samadhan’s E-Invoicing for Malaysia

• Effortless Integration: Seamlessly integrate our E-Invoicing solution into your existing Microsoft Dynamics 365 Business Central environment. Say goodbye to tedious manual processes and embrace automation without disrupting your workflow.
• Automated Compliance:?Stay ahead of regulatory changes effortlessly. Our solution is meticulously designed to automate E-Invoicing tasks while ensuring compliance with Malaysia's evolving regulatory landscape. From Tax Identification Numbers (TIN) to invoice registration numbers, every detail is accurately captured and included in the generated E-Invoices.
• Tailored for Your Business:?No two businesses are alike. That's why our solution offers extensive customization options. Tailor E-Invoices to reflect your brand identity with customizable templates. Whether you need to incorporate your company logo or fine-tune formatting, our solution empowers you to create professional-looking E-Invoices that resonate with your brand image.
• Data Security First:?Safeguard your financial data with confidence. Our solution employs state-of-the-art security measures to protect sensitive information from unauthorized access. Rest assured that your data remains secure and compliant with stringent data protection regulations.
• Seamless Implementation:?Embrace the future of invoicing with minimal disruption. Our solution is engineered for easy implementation, allowing you to transition smoothly to E-Invoicing without unnecessary delays. Experience the benefits of streamlined invoicing processes from day one.

Don't let compliance complexities weigh you down. Choose our Malaysian E-Invoicing Solution for Business Central and navigate the E-Invoicing landscape with confidence.

Overview of the E-Invoice Model

To facilitate transition to E-Invoice, taxpayers can select the most suitable mechanism to transmit e-Invoices to IRBM, based on their business requirements and specific situation.

There are two (2) options for the e-Invoice transmission mechanisms for taxpayers’ selection:

A. MyInvois Portal

• A portal hosted by IRBM
• Accessible to all taxpayers at no cost
• Also accessible to taxpayers who need to issue e-Invoice where Application Programming Interface (API) connection is unavailable

B. Application Programming Interface (API)

• An API is a set of programming code that enables direct data transmission between the taxpayers’ system and MyInvois system
• Requires upfront investment in technology and adjustments to taxpayers existing systems
• Ideal for large taxpayers or businesses with substantial transaction volumes

The figure below demonstrates an overview of the e-Invoice workflow from the point a sale is made or transaction is undertaken, and an e-Invoice is issued by the supplier via MyInvois Portal or API, up to the point of storing validated e-Invoices on IRBM’s database for taxpayers to view their respective historical e-Invoices.

1. Issuance of E-Invoice – When a sale or transaction is made (including e-invoice adjustments), the supplier creates an e-invoice and shares it to IRBM via MyInvois Portal or API for validation.
2. Validation of E-Invoice – IRBM validation is performed in near real-time, ensuring that the e-invoice meets the necessary standards and criteria. Once validated, the supplier will receive a Unique Identifier Number (UIN) from IRBM via MyInvois Portal or API. The UIN will allow traceability by IRBM and will reduce instances of tampering with the e-invoice.
3. Notification of validated E-Invoice – IRBM will inform both the supplier and buyer once e-invoice has been validated via MyInvois Portal or API.
4. Sharing of E-Invoice – Upon validation, the supplier is obliged to share the validated e-invoice (embedded with a QR code) with the buyer. The QR code can be used to validate the existence and status of the e-invoice via MyInvois Portal.
5. Rejection or cancellation of e-invoice – Upon issuance of e-invoice, a stipulated period of time is given to a) Buyer to request for rejection of the e-invoice, b) Supplier to perform cancellation of e-invoice. Rejection request or cancellation must be accompanied by justifications.
6. MyInvois Portal – Supplier and buyer will be able to obtain a summary of the e-invoice transactions via MyInvois Portal.

Overall, Samadhan’s e-invoicing solutions for users of MS Dynamics 365 Business Central offer a comprehensive suite of benefits, including compliance assurance, seamless integration, cost savings, and enhanced efficiency, tailored to meet the specific needs of businesses operating in Malaysia.

Contact Samadhan today to discover how our tailored e-invoicing solutions integrated with MS Dynamics 365 Business Central can empower your business. Let’s embark on this journey together towards a compliant and thriving future for your business!

You may learn more about us on Microsoft AppSource Partners -?Samadhan and about our industry-specific Microsoft certified solutions on Business Central and F&O on Industry-specific Business Apps from?Samadhan?- Microsoft AppSource.