A Step-by-Step Guide To Generate E-Invoicing for Malaysian Businesses

Malaysian companies increasingly recognise the importance of adopting innovative solutions to streamline their financial processes in today's fast-paced business landscape. Electronic Invoicing, or e-invoicing, emerges as a transformative tool in this digital era, offering businesses an efficient and secure method for managing invoicing operations. As Malaysia continues its journey towards digitalisation, understanding the intricacies of e-invoicing becomes imperative for companies seeking to remain competitive and compliant.

This comprehensive guide presents a step-by-step approach explicitly tailored for Malaysian businesses looking to embrace e-invoicing seamlessly. From understanding the legal framework to practical implementation strategies, each section will provide actionable insights to navigate the e-invoicing landscape effectively. By following this guide, Malaysian businesses can unlock the benefits of e-invoicing, streamlining their invoicing processes, reducing errors, and ultimately fostering growth in an increasingly digital economy. You may also check out E-Invoicing in Malaysia: A Comprehensive Guide for 2024 for more information. 

1. What Are The Process Flow of E-Invoices in Malaysia

Understanding the process flow from the Inland Revenue Board of Malaysia (IRBM) facilitates a seamless transition to e-invoicing. When dispatching e-invoices to IRBM, businesses can select the transmission method that best suits their needs and circumstances.

Businesses are presented with a choice between two distinct options:

a. The MyInvois Portal
It is managed by the Inland Revenue Board of Malaysia (IRBM). This platform offers a hassle-free and no-cost solution for businesses of all sizes. As a central hub for e-Invoicing activities, it streamlines tasks like generating, submitting, viewing, cancelling, or rejecting invoices. Even without an Application Programming Interface (API) connection, the MyInvois Portal provides a user-friendly alternative for managing e-Invoices processes efficiently. While it's perfect for small businesses, larger transactions may require more processing time.

b. Application Programming Interface (API)
The Application Programming Interface from IRBM enables direct data transmission between the business and MyInvois systems. However, implementing this option requires an initial investment in technology and adjustments to existing systems. It is especially well-suited for large businesses dealing with substantial transaction volumes.

The figure below outlines the LHDN e-invoice workflow, from sale or transaction initiation to e-invoice issuance via the MyInvois Portal or API. It concludes with validated e-invoices stored on IRBM's database for businesses' access to historical records.

2. What Are The Mandatory Fields for E-Invoicing That Businesses Must Take Note of Before Issuance of an E-Invoice? 

To be considered a valid e-invoice in Malaysia, an e-invoice must adhere to specific guidelines comprising mandatory fields. These fields encompass crucial information such as seller and buyer details, item descriptions, quantities, prices, taxes, total amounts, and payment particulars, ensuring comprehensive transaction documentation. For more information, refer to e-invoicing guidelines for Appendix 1 – List Of Required Fields For E-Invoice and Appendix 2 – List of Mandatory and Optional Fields under Annexure to the E-invoice.

3. How Can Taxpayer Identification Numbers (TINs) Be Retrieved and Verified?

The retrieval and verification of Taxpayer Identification Numbers (TINs) are essential steps in the pre-submission process for e-invoice submission. There are two primary avenues to accomplish this:

• Utilising the MyTax Portal
  This platform allows businesses to check their TIN conveniently.

• e-Daftar Platform
  If the TIN cannot be retrieved via the MyTax Portal, taxpayers can register and acquire TINs on the e-Daftar platform. The process involves:

a. Logging in to MyTax Portal 

b. Selecting the e-Daftar option

c. Providing necessary information, such as the type of taxpayer, email, and phone number

d. Clicking "Search" to register the taxpayer's TIN.

4. How Do Malaysian Businesses Generate E-Invoices Using MyInvois Portal?

The MyInvois Portal offers a convenient platform for Malaysian businesses to generate and view e-invoices. However, accessing the MyInvois Portal for e-invoice creation requires logging in to the MyTax Portal. For more information, refer to the latest e-Invoicing guideline from IRBM.

Step 1: Creation and Submission

When a transaction is completed, suppliers initiate the e-invoice creation process on the MyInvois Portal for validation by the Inland Revenue Board of Malaysia (IRBM). This process offers two options:

• Individual Creation
  Businesses can manually input invoice details via a form provided on the portal.

• Batch Generation
  Businesses can upload batch files containing multiple invoices with predefined layouts.

Step 2: E-Invoice Validation

Upon submission, the IRBM validates the e-invoice Malaysia. Suppliers receive a PDF version of the validated e-invoice if validated successfully via the MyInvois Portal. This validated e-invoice includes essential details such as the IRBM Unique Identifier Number, validation date, and time, ensuring traceability and minimising tampering risks.

Step 3: Notification

IRBM notifies the supplier and buyer through the MyInvois Portal and emails them upon successful validation. Notifications encompass invoice in Malaysia clearance status and any buyer rejection requests.

Step 4: Sharing of E-Invoices

Suppliers must share the validated e-invoice, embedded with a QR code provided by IRBM, with the buyer upon validation. This QR code facilitates validation and tracking via the MyInvois Portal.

Step 5: Rejection or Cancellation

Both the supplier and buyer retain the option to reject or cancel the e-invoice within a specified timeframe:

• Buyer Initiated Rejection
  Buyers can request rejection within 72 hours if errors are detected, initiating a notification to the supplier.

• Supplier-Initiated Cancellation
  Suppliers can cancel the e-invoice within 72 hours if proper justifications accompany errors or erroneous issuances.

If neither rejection nor cancellation occurs within the stipulated timeframe, any subsequent adjustments necessitate new e-invoices, such as credit notes or refund notes.

Step 6: Storing E-Invoices

Accepted and validated e-invoices submitted via the MyInvois Portal are securely stored in IRBM's database. Businesses are advised to maintain adequate records related to transactions for compliance purposes.

Step 7: Reporting and Dashboard Services for Businesses

The MyInvois Portal offers reporting and dashboard services. It enables suppliers and buyers to retrieve e-invoices in various formats, including XML/JSON, metadata, CSV reports, grids, and PDF files, facilitating streamlined record-keeping and reporting processes.

5. How Do Malaysian Businesses Generate E-Invoices Using API?

Generating Malaysian e-invoices through the API model provides taxpayers with a direct avenue for submission to the Inland Revenue Board of Malaysia (IRBM). Utilising API integration, businesses can seamlessly transmit e-invoices through various channels, including direct ERP system integration, Peppol service providers, or non-Peppol technology providers. This method is particularly advantageous for businesses with high transaction volumes, offering flexibility and efficiency in e-invoice management.

Step 1: Submission Process

Following the conclusion of a sale or transaction, the Supplier or designated technology provider generates an e-invoice in XML or JSON format. This e-invoice is then submitted to IRBM via API for validation.

Step 2: Validation and Notification

Upon validation by the MyInvois System, the Supplier or technology provider receives a validated e-invoice containing crucial information such as the IRBM Unique Identifier Number, validation date, and time. Any errors detected during validation prompt the display of an error message, with a validated e-invoice provided upon successful resolution.

Step 3: Notification

This website hosts documentation outlining the API available for integrating taxpayer ERP systems. It enables seamless document processing automation within the MyInvois System to submit their issued documents to the Tax Authority and receive notifications regarding document-related events. You may refer to the Software Development Kit (SDK) for the Inland Revenue Board of Malaysia (IRBM) MyInvois System. 

API integration allows taxpayers to receive notifications directly from IRBM or their chosen Malaysia e-Invoicing software provider. These notifications encompass e-invoice clearance status and any Buyer rejection requests, facilitating efficient communication and timely actions.

Step 4: Sharing the E-Invoices

The Supplier incorporates a QR code Malaysia with a validated link onto the e-invoice before sharing it with the Buyer. This QR code enables validation via the MyInvois Portal.

Step 5: Rejection and Cancellation

Buyers and Suppliers can request rejection or cancellation of the e-invoice in Malaysia within specified time frames, ensuring flexibility and responsiveness in transaction management.

Step 6: Storing E-Invoices

All e-invoices submitted via API are securely stored in IRBM's database. Taxpayers are advised to maintain relevant records for compliance purposes.

Step 7: Reporting and Dashboard Services for Taxpayers

API integration facilitates the retrieval of e-invoices in various formats, enhancing transparency and efficiency in e-invoice management for Suppliers and Buyers.

Conclusion

In conclusion, adopting e-invoicing solutions allows Malaysian businesses to streamline financial processes, improve efficiency, and ensure compliance with regulatory standards. Following the step-by-step guide outlined above, which aligns with digital invoicing, businesses can navigate the e-invoicing journey seamlessly, from understanding the legal framework to implementing practical strategies. Whether utilising the MyInvois Portal or API integration, businesses can access tailored e-invoicing solutions catering to their needs and circumstances for better system readiness of e-invoicing. Furthermore, by adhering to pre-submission requirements such as retrieving and verifying Taxpayer Identification Numbers (TINs) for data validations, businesses can ensure the accuracy and completeness of their e-invoices as part of data integrity. Malaysia continues its digital transformation journey, embracing a secure framework for e-invoicing, which is necessary and a strategic move towards sustainable growth and competitiveness in the evolving business landscape.