Electronic Invoicing in Malaysia

[Mervyn]

What is electronic invoicing in Malaysia?

Electronic invoicing, also known as e-invoicing, is gradually gaining acceptance worldwide, including Malaysia.

In Malaysia, e-invoicing is part of the Malaysian government's initiative to promote digital transformation and a paperless environment among businesses. It's an electronic method of billing your clients for goods sold or services rendered, and it's achieved through email or any other electronic medium.

One key advantage of e-invoicing is that it supports the country's move towards digital tax monitoring. The Malaysia Royal Customs Department introduced the Sales and Service Tax (SST) in 2018. E-invoicing makes it easier for businesses to calculate, track, and pay this tax in real time.

Malaysia plans to implement a mandatory e-invoicing system for all taxpayers, regardless of their sales turnover, from July 2025. This will be a gradual implementation, with the first phase beginning in August 2024 for taxpayers with an annual turnover of MYR 100 million or more.

The Malaysian Inland Revenue Board (IRB) has developed two mechanisms for taxpayers to transmit their e-invoices to the IRB:

• MyInvois Portal: A web-based portal that allows taxpayers to create and submit e-invoices manually or in batches

• API integration: This allows taxpayers to integrate their e-invoicing system with the IRB's system to automate e-invoice transmission.

Taxpayers can choose the mechanism that suits their business requirements better.

Image from the website of LHDN (Lembaga Hasil Dalam Negeri)

The increasing adoption of e-invoicing in Malaysia is expected to help enhance efficiency, reduce costs, speed up payment cycles, improve financial management, and minimize errors and fraud. Businesses also get to contribute to environmental sustainability as e-invoicing reduces paper use.

Malaysian businesses will join a nationwide e-invoicing framework that adheres to international Peppol standards. This framework allows businesses to send and receive invoices over the Peppol network, regardless of their accounting solution.

How to prepare for e-invoicing?

Businesses can start preparing for e-invoicing by carrying out the following activities:

• Assess their current invoicing process to identify the areas where they can improve efficiency and reduce costs.
• Choose an e-invoicing solution that meets their specific needs and budget.
• Integrate their e-invoicing system with their ERP system to automate e-invoice transmission.
• Educate their staff on the new e-invoicing process.
• Check with your tax internal team or tax consultant to procure the digital certificate , please refer to the MCMC website.

As the Malaysian government continues to promote digitalization, further milestones for e-invoicing can be anticipated in the coming years.
SAP’s go-to solution to support electronic documents and statutory reporting requirements globally is SAP Document and Reporting Compliance. This would be the strategic choice to support electronic invoicing in Malaysia too.
SAP is currently analyzing the electronic invoicing requirements available. In the meantime, we are analysing the SDK latest version continuously . If you’d like to explore the SAP Document and Reporting Compliance Cloud Edition solution, please visit SAP Document and Reporting Compliance

According to the guidance , taxpayer is required to have the Digital certificates for signing to submit MY e-Invoice. 

To procure digital certificates, you may refer to the MCMC website for a list of Certificate Authority (CA) in Malaysia.  https://www.mcmc.gov.my/en/sectors/digital-signature/list-of-licensees

For upcoming legal changes, the recommendation is to use our Regulatory Change Manager where you can find the latest status of upcoming regulations, including Malaysia. 

For more details information about Malaysia E-Invoicing , you may refer to SAP Note no.3459968 - Electronic Invoice Processing for Malaysia: Pre-Implementation Guidance  

SAP Document and Reporting Compliance | SAP Community. Link is here

Electronic Invoices in Malaysia with SAP Document and Reporting Compliance >> Youtube link is here. 

- SAP Business Network  :
B2B electronic invoices in 2024

UPDATE Nov 1, 2023: SAP has confirmed roadmap for e-invoices in MY. Scope and timeline detailed in the links above.

UPDATE Feb 8, 2024: SAP has updated the roadmap for e-invoices in MY. Scope and timeline detailed in the links as per our Regulatory Change Manager. 

UPDATE April 22, 2024: SAP has updated the information about the digital certificate that refer to the MCMC website for a list of Certificate Authority (CA) in Malaysia.

UPDATE May 8, 2024 : SAP has released Note No.3459968 - Electronic Invoice Processing for Malaysia: Pre-Implementation Guidance

UPDATE May 29, 2024 : There is an upcoming SAP e-invoicing webinar on June 11th, 2024 at 4PM Malaysia Time (10AM CEST) that you might find helpful: Please register. Link is here . Thank you. 

UPDATE May 31, 2024 : Kindly be informed that SAP DRC for Malaysia eInvoicing is released for customers (generally available).  Please refer to SAP Note - 3456090 - Electronic Invoice Processing for Malaysia: Implementation Overview

July 26th 2024: Inland Revenue Board Malaysia (IRBM) announced a six-month grace period

The Inland Revenue Board Malaysia (IRBM) announced a six-month grace period to aid taxpayers in transitioning smoothly to the mandatory e-invoicing system.More details: https://theedgemalaysia.com/node/720588

The Inland Revenue Board Malaysia (IRBM) has updated its guidance as of 30 July 2024. For more details, please refer to the new guidelines here.

Update 08/08/2024 : The IRBM has released two document type versions: 1.0 and 1.1. The validation of digital signatures is supported by version 1.1 only. To have your digital signatures validated, you need to enter the version number 1.1. - Please refer to SAP Help Portal. 

Update 23/08/2024 : SAP have just published the guidance for communication setting : Electronic Invoices for Malaysia: A Guide for Communication Settings