E-Invoice
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What is e-Invoice?
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The Malaysian Inland Revenue Board (IRB) has introduced the usage of e-Invoice and set to kick off starting 1 August 2024, while the nation is currently moving more and more towards digitalisation, local SMEs owners might wonder, what is the real purpose of e-Invoice and how does e-Invoice benefits SMEs?
While some of the SMEs has been preparing invoices digitally and share to customers or receive from suppliers in digital form, often via email and in pdf or excel files, this single-sided operation requiring your recipient to re-enter the details of the invoice into their own accounting system (e.g. accounts payable), but the e-Invoice IRB introduce is something totally different. With e-Invoice, the e-Invoice is prepared and shared within a standardized system, using format such as XML and JSON, and when both sender and receiver are on a same platform, the data can be shared and transmitted among each other in a faster, standardized, and uniformed structure. The e-Invoice system will enable validation and storage of transactions, accommodating Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Government (B2G) transactions. |
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Types of Transmitting Mechanisms
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| There are two mechanisms for supplier to create e-invoice and share to IRBM for validation, which is MyInvois Portal and API. |
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- MyInvois Portal
- Developed by IRBM for taxpayers especially MSMEs
- To generate, submit, manage & access e-invoice in compliance with IRBM's rules
- Streamline e-invoicing for those without advanced technical capabilities or with lower invoice volumes
- Key features: digital cert integration, bulk upload capabilities, in-portal validations, notifications, rejection/cancellation workflow & reporting
- API
- A set of rules for linking different applications
- Enables businesses to transmit a high-volume of transactions directly to IRBM
- Requires technology investment and adjustments to existing systems
- Key methods: direct integrations of taxpayers' ERP; via Peppol/non-Peppol service providers
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| MyInvois Portal |
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API |
| Enter 1 by 1 or bulk upload in template |
Creation |
System auto-generated in XML or JSON |
| Low volume of e-Invoices |
Compatibility |
High volume of e-Invoices |
| None |
Integration |
Yes, between 3rd party system and IRBM |
| Low |
Cost |
Yes, due to integration |
| Download PDF from portal |
Sharing e-Invoice |
Embed QR code in e-Invoice |
| Download reports from portal |
Data Access |
Retrieve data from API |
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How to Choose Between MyInvois Portal and API?
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Based on current information, MyInvois is a better choice for businesses with small number of invoices, limited funds, or those unable to use API. However, it is anticipated that MyInvois may not be too flexible to perform actions like invoice customisation etc.
API is ideal for SMEs handling high invoice volumes, given the requirement for suppliers to issue invoices within 7 days. API saves SMEs' time on manual invoice creation. SMEs also need to evaluate if API can seamlessly integrate with their existing accounting systems to ensure effective efficiency. |
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The e-Invoice Workflow
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So how does the whole process of sending and receiving of e-Invoice is like and how long does it take for the validation process?
While it involves a series of complex procedures to ensure a safe digital transaction between supplier and buyer, most of the processes will be conducted within the system, and does not require user’s intervention, and for the validation process, according to LHDN, it will be conducted electronically, which can be done instantly or near-instantly. |
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Step 1: Issuance of e-Invoice. |
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| The whole e-invoice process begins when a sale and or transaction is made (including e-invoice adjustments), which the supplier or sender create and e-Invoice to share to IRBM via Myinvoice Portal or API for validation. For accounting solution such as AutoCount, this feature is connected through API, by including e-Invoice within our system, users can have a more complete and automated invoicing process, without the need of accessing portal often to send and receive invoices. |
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Step 2: Validation of e-Invoice. |
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As the submitted data needs to be validate before release, to ensure the e-Invoice meets the necessary standards and criteria, and according to info provided by LHDN, the validation process by IRBM is in real time or near-instantly.
After the validation process, the supplier will receive a Unique Identifier Number from IRBM within the platform they operates on, and the number will allow IRBM to trace as to reduce instances of tampering with e-Invoice, further strengthen the transaction’s safety and transparency. |
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Step 3: Notification of validated e-Invoice. |
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| After e-Invoice validation, IRBM will notify both supplier and buyer, either in MyInvoice Portal or APIs. |
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Step 4: Sharing of e-Invoice. |
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| Upon validation, the supplier is obliqued to share the cleared e-Invoice with the buyer, with a QR code embedded within, which the purpose is to validate the existence of the e-invoice by enablling checking or view in official MyInvois portal. |
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Step 5: Rejection/Cancellation of e-Invoice. |
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| After the e-Invoice has been issued, a stipulated period of time is given, to allow buyer to request for rejection of the invoice or supplier to cancel the e-Invoice in the process. In this stage, any rejection or cancellation request must be accompanied by justifications. |
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Step 6: MyInvois Portal. |
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| While there might seems like there are a series of complex procedures involved to send and share invoices, but worry not, with solution such as AutoCount, the e-Invoice feature will be embedded within the system, which users only have to select or enter some basic detail to generate invoices, and let the system automates the rest while keeping you updated, integrating official e-Invoicing within the system also maintain a better data integrity, accuraccy and safety. |
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Benefits
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When invoices are transmitted in a uniformed and standardized format, it speeds up document preparation and transmission time, improve efficiency, and ensuring tax compliancy. What another benefits e-Invoice delivers?
- Simplifying invoicing process, by electronically creating and submitting transaction documents to the tax authorities, reducing manual work and errors.
- Streamlining tax return filing, through seamless system integration, ensuring efficient and accurate tax reporting.
- Enhancing efficiency and saving time and costs for larger businesses by adopting e-Invoice, thanks to automated processes, seamless data integration, and improved invoice management.
- Digitalize financial reporting for micro, small, and medium-sized enterprises (MSMEs) to adapt e-invoice, and align their financial reporting with industry standards, reducing potential disruptions.
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| With the earlier full-scale implementation of e-Invoicing, businesses or taxpayers are urged to prepare early to ensure full compliance with the requirements and to get through the acclimation period smoothly and, at the same time, transact easily among suppliers and buyers. |
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