Kota Kinabalu: This is the opportune time for businesses to prepare for Malaysia’s mandatory e-invoicing tax regime that will be starting 2024, first with big firms progressing to smaller companies and other taxpayers to curb tax evasion. The storage period for e-invoices are seven years.
This is in line with the 12th Malaysia Plan, where one of the key focuses is on strengthening the digital services infrastructure and digitalising the tax administration.
Ostensibly, the government says manual data entry and physical paper handling processes can be eliminated with the implementation of e-invoicing and as a result helps businesses transact invoices more efficiently and seamlessly with accurate traceability with no tax leakages.
e-invoicing is not currently mandatory, but has been possible since 2015. However, written consent or authorisation is required to receive electronic invoices. The e-invoicing initiative is supported by the use of TIN (Tax Identification Number), which was introduced in Malaysia in 2022 by the tax authority.
The audience was reminded on this matter at the ‘Tax & Budget 2024 – Updates & ESG Incentive’ seminar on Nov 14, organised by the Federation of Chinese Associations Sabah (FCAS), Sabah Housing And Real Estate Developers Association (Shareda), and Bakertilly and GA Group.
Bakertilly Tax Director Marcus Tan who did the presentation said, “The pertinent points under the Inland Revenue board (IRB)’s Guidelines and Finance No. 2 Bill 2023 issued on Nov 7, 2023 stipulated the implementation dates as Aug 1, 2024 mandatory for taxpayers with annual turnover or revenue of more than RM100 million, followed by Jan 1, 2025 for taxpayers with annual turnover or revenue of more than RM25 million to RM100 million, and July 2025 for all other taxpayers.
“e-invoice is to be legislated under the Income Tax Act, 1967, effective from Jan 1, 2024,” Tan said of the digital representation of a transaction between a supplier and a buyer.
He said IRB’s validation of the e-invoice would be “in real time. Upon validation, the supplier will receive a validation e-invoice, together with date and time of validation, validation link and a Unique Identifier Number or UIN assigned by IRB. The supplier is required to input the UIN in the relevant field.
“Supplier is to send the validated e-invoice to the buyer with the embedded QR code on the validation link provided by IRB.
“Supplier is to issue an e-invoice for validation by the IRB through ‘MyInvois’ portal or Supplier’s ERP system via Application Programming Interface or API.
“e-invoice has 51 data fields, such as the supplier and buyer’s name, TIN, business registration, ID or passport number, SST registration, email, address, contact number, invoice details, IRB’s UIN, products or services details, unit price, SST etc., payment information etc.”
Tan said the IRB was expected to issue a Software Development Kit (SDK) in Dec 2023 to facilitate the e-invoice system registration.
The mandatory exchange of electronic invoices will cover B2G, B2B, and B2C transactions, both domestic and domestic and cross-border, and the model planned by the IRB will be based on CTC connected to the Peppol network.
The government says with e-invoicing, billing and calculation errors can be reduced significantly, thus accelerate payments and minimise disputes in irregularities, thus improving cash flow.
The implementation of a compliant interoperable e-invoicing framework will ensure an organised work process and facilitate effective tax reporting to help Malaysian businesses, including SMEs, reduce tax costs and increase efficiency.
