e-Invoice Compliance in Malaysia: What You Need to Know

Learn about e-Invoicing in Malaysia. IRBM and LHDN guidelines help make business transactions simple.

By
Ajith Kumar M
March 12, 2024
5 min

In today's world, Malaysia is moving towards digital ways of handling business, especially when it comes to invoices. An e-Invoice is just like a regular invoice, but it's all done digitally. This is great news for businesses as it makes things faster and more accurate. Let's break down what you need to know about e-Invoice in Malaysia in simple terms.

What is an e-Invoice?

An e-Invoice is a digital version of a traditional paper invoice. It has all the same details like what you're buying, how much it costs, and who's selling it, but it's all online. This is part of Malaysia's plan to make tax handling better and more digital.

Why Use e-Invoice?

Using e-Invoice has a lot of benefits:

  1. Everything in One Place: It keeps all your invoices in one digital spot, making it easier to handle.
  2. Less Mistakes: Since it's all automated, there are fewer chances of making errors.
  3. Saves Time: It's quicker to deal with digital invoices than paper ones.
  4. Good for the Environment: Less paper means it's better for our planet.

When Do You Need to Start Using e-Invoice?

The government is rolling out e-Invoice in stages. When you need to start using it depends on how big your business is. Some businesses need to start using it in 2024, and others in 2025. It's important to check when your business needs to make the switch.

How to Get Ready for e-Invoice

Getting ready for e-Invoice means making sure your business can handle digital invoices. This might mean updating your computer systems or learning how to use new software. The government has guidelines to help you get ready.

Compliance Requirements

To comply with e-Invoice regulations, businesses must ensure that their electronic invoices meet specific criteria set by the Inland Revenue Board of Malaysia (IRBM). Key requirements include:

  • Accuracy: All details in the e-Invoice must be correct and complete.
  • Format: e-Invoices should follow the prescribed format, including mandatory fields such as transaction details, supplier and buyer information, and tax calculations.
  • Validation: e-Invoices must be validated by the IRBM's system to ensure their authenticity and accuracy.
  • Storage: Businesses are required to store e-Invoices for a specified period, typically seven years, for audit and compliance purposes.

Technical Considerations

Implementing e-Invoice involves several technical considerations:

  • Software Integration: Businesses may need to update their accounting or invoicing software to support e-Invoice generation and submission.
  • Data Security: Ensuring the security of digital invoices is crucial. Measures like encryption and secure data transmission should be in place.
  • Training: Staff should be trained on the new e-Invoice system to ensure smooth operation and compliance.

Staying Up to Date

The rules around e-Invoice can change, so it's important to keep up with the latest news. This way, you can make sure your business is always following the rules.

Conclusion

Moving to e-Invoice is a big step for businesses in Malaysia. It's all about making things faster, more accurate, and better for the environment. By understanding what e-Invoice is, why it's useful, and how to get ready for it, your business can make the switch smoothly.