Introduction
The Malaysian government is all set to introduce the electronic invoicing system in the country and necessary procedures are being put in place. While e-invoicing in Malaysia is not exactly a radically new concept, after 1 July 2025, it will be made compulsory for all taxpayers in the country. First introduced in Malaysia in 2015, the system had been kept optional. The economic experts opine that the deployment of advanced electronic invoicing systems will transform the business scene in a big way.
The electronic invoicing system will be implemented in the country in phases. However, a delay of 2 months was proposed in the 2024 budget. As per the revised rollout timetable, the system will be made effective in 3 phases. Taxpayers having a yearly turnover worth MYR 100 million will come under its ambit. That’s when jewellery billing software comes in handy. By using this Gold Jewellery Billing Software, jewellery business owners can integrate the e-invoicing process through the official MyInvois portal. This further allows in having smooth transactions submitted for e-invoice registration.
The key idea behind the implementation of the upcoming e-invoicing system in Malaysia is enhancing the tax administration management of the country. After the deployment of the e-invoicing norms, enhancing service quality will become easier. Besides, diminishing compliance costs for taxpaying citizens will become possible.
What is an E-Invoice in Malaysia?
An e-invoice is a document generated using the specified format of IRBM. This is made in such a way that a related system can process it easily. It contains a digital transaction proof involving a buyer and the seller.
Once implemented, electronic Invoicing in Malaysia will replace other modes of invoicing. As of now, businesses in the country resort to using both paper and electronic documents for invoicing. These include modes like paper invoices, credit notes, and digital formats like PDF, Excel documents, or even image formats. As per the updates, a proper electronic invoice will have 53 mandatory fields. These fields will be useful for populating data covering nuances like buyer and seller information, payment details, item description, quantity, and so on. If you deal with bulk gold jewelry orders, billing software for jewellery shops is the right purchase to make.
Is E-invoice Mandatory in Malaysia?
As of now, using electronic invoicing is not compulsory in Malaysia but the government is moving in that direction. Starting from 1 August 2024, e-Invoicing in Malaysia will become a mandatory requirement for businesses and taxpayers. All taxpayers with a yearly turnover of $21 million or MYR 100 million will have to use the upcoming Continuous Transaction Control model for e-invoicing. As per the new CTC model, businesses in the country will have to send all invoices to the relevant tax authority prior to sending those to their recipients/buyers.
The 2nd phase of e-invoicing rollout is going to commence on 1 January 2025. From that day, the official e-invoicing portal of Malaysia, the MyInvois portal will accept e-invoices from the mandatory taxpayers. To make the shift to the upcoming system easier, the Malaysian tax authority has given an alternative to taxpayers. They can use an API to process and send invoices in JSON or XML format. Incidentally, a beta version of this application made its appearance on 9 February 2024.
Norms have been tweaked to implement the upcoming e-invoicing system and there will be penalties for businesses not complying with the system in the future. Gold jewellery businesses in Malaysia seeking proper compliance with the upcoming e-invoicing system should select the right e-invoice software providers.
Overview of Different Types of E-invoices in Malaysia
Once the e-invoicing in Malaysia becomes fully functional, taxpayers will be able to use different types of electronic invoices.
The Inland Revenue Board has defined the categories as:
The fundamental document detailing the transactions taking place between the suppliers and buyers. In some instances, this may also include self-billed electronic invoices.
1) Credit Note:
Through Credit notes, suppliers can correct flaws, apply for discounts, process cancellations, etc. It reduces the original e-invoice value eventually.
2) Debit Note:
Think of Debit notes as the opposite of credit notes. These enable suppliers to include additional charges on an already issued e-invoice.
3) Refund:
In situations when the buyers have to be reimbursed, the supplier uses a refund invoice.
What are the Types of Transactions Covered under E-Invoice Malaysia?
As per the updated information on the upcoming Malaysian e-invoicing system, transactions of varying types will be recorded.
These types are:
- Business to Government (B2G)
- Business to Customer (B2C)
- Business to Business (B2B)
For both B2B and B2G, the e-invoicing process will be identical. Those involved in B2C transactions, including business owners, need not issue e-invoices to the buyers. They will issue regular invoices or receipts instead. However, after a certain period, the sellers have to add all such regular invoices and receipts so that these are sent to the IRBM as a consolidated invoice.
What is the Process of E-invoice in Malaysia?
Businesses can use 2 methods to execute e-Invoicing in Malaysia.
These are:
- Automated Process through an API in formats like XML or JSON.
- Using the MyInvois platform through manual input.
Both methods involve similar steps.
1) Generating and issuing E-invoice:
Businesses can use either of the 2 methods to generate invoices and submit them to the IRBM. Those using traditional POS systems may have to tweak the technology used for seamless API integration.
2) E-invoice Validation:
The tax authority, IRBM, will assess e-invoices in real time to check for compliance. Post validation, it will send a Unique Identifier number to the invoice issuer.
3) Notification of Validation:
Then, the IRBM will notify the supplier about the invoice validation.
4) Sharing of Invoice:
The supplier has to send the validated invoice to the buyer after embedding the QR code. Both parties can deploy it to check the status of the invoice on the MyInvois portal.
5) Cancellation of Invoice:
After sharing an e-invoice, the IRBM specifies a timeframe within which buyers and sellers can request rejection and cancellation, respectively. The reasons for canceling or rejecting an invoice must be valid.
Learn more about WinGold’s E-invoice Feature
What are the Benefits of E-invoicing in Malaysia?
Post the implementation of e-Invoicing in Malaysia, businesses will obtain several benefits. They will gain from enhanced performance and reduced bottlenecks.
1) Streamlined Business Operations:
The real-time validation system of IRBM helps simplify and expedite the invoicing process.
2) Better Transparency:
As businesses embrace the same e-invoicing system, transactions will be more transparent and less prone to tampering.
3) Enhanced Security:
The Unique Identifier Number helps improve data security in transaction recording and access.
4) Better communication:
The transparency involved in the upcoming e-invoicing system ensures better communication between the buyers and sellers.
How is WinGold Software Helping Jewellery Businesses Integrate E-Invoice
WinGold Jewellery Software in Malaysia offers a direct integration with e-Invoicing API. This helps jewellery business owners experience automated invoicing via WinGold software.
With WinGold software, when the supplier or vendor generates a sales receipt that receipt is automatically shared with Malaysia’s official MyInvois portal. Here, each of these receipts is verified by IRBM (also known as LHDN) for e-invoice generation.
Next, the supplier/vendor can share the E-invoice with the buyer for tax return purposes.
Challenges in E-invoicing for Businesses in Malaysia
Most businesses in Malaysia are expected to adapt to the upcoming e-invoicing system, but there will be a few challenges during the deployment phase.
1) Data Security:
Some businesses have worries about the repercussions of financial data leaks and theft during the transition. They may be skeptical about the efficacy of the new system that is yet to be deployed countrywide.
2) Technological Transition:
Businesses may find it difficult to train their workforce to learn and switch to the electronic invoicing processes and software used for that.
3) Resistance To Change:
In some instances, employees using traditional POS systems may be skeptical about adapting to technological changes for handling invoicing procedures.
Conclusion
The Malaysian government is going to deploy the e-invoicing system nationwide. Businesses can prepare themselves for the changes and smoothen the transition process in the meantime. Those who are in the business of gold jewellery entities based in Malaysia seeking full and proper implementation of the new e-invoicing system should hire the best e-invoicing software providers. They can, for example, evaluate their existing digital transaction infrastructure, including POS solutions. It is also prudent for them to get well-versed with the IBRM portal and the nuances of the MyInvois portal. Signing up with the right entities to upgrade the digital transaction and invoicing system is recommended for Malaysian businesses.
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