Malaysia e-Invoice
Malaysia's LHDN e-Invoice Compliance
The government is moving forward with the implementation of e-Invoice for Malaysian businesses according to Datuk Dr. Mohd. Nizom. The crux behind this initiative is tax compliance besides the benefits of digitalization of business processes. According to Datuk Nizom, the e-Invoicing initiative will help to stem leakages in taxes arising out of the shadow economy.
This was further reaffirmed by our Deputy Finance Minister Steven Sim who confirmed that the e-invoicing service will begin as early as January 2024 as a pilot project and businesses with annual sales exceeding RM 100 million will be required to utilize the service by June 2024.
Benefits of e-Invoice
UNIFIED INVOICING PROCESSING
FACILITATED TAX RETURN FILLING
ENABLES STREAMLINING OF OPERATIONS
DIGITALIZED FINANCIAL REPORTS
Malaysia e-Invoice Guideline
The much awaited guideline from LHDN was released on the 21st of July 2023. There is a page on LHDN’s website that is dedicated to the e-Invoice initiative. You can obtain updates and news from LHDN from this site as illustrated.
If you do not have access to the guide, please download from the link that is highlighted. It is anticipates that further updates to the guide in the near future; such as more information as to how retail related invoices will be treated as compared to B2B transactions.
e-Invoice will be implemented in phases to ensure smooth transition. The roll-out of e-Invoice has been planned with careful consideration, taking into account the turnover or revenue thresholds, providing businesses with sufficient time to adapt. The chart on the right is the e-Invoice implementation timeline. Please refer and act accordingly.
Phase 1 (>100MIL) - June 1st, 2024 - Go Live
Phase 2 (>50MIL) - January 1st 2025
Phase 3 (>25MIL) - January 1st 2026
Phase 4 (All) - January 1st 2027
How does e-Invoice Compliance Works
This is an overview of the e-Invoice workflow from the point a sale is made or transaction undertaken, and an e-Invoice is issued by the supplier via MyInvois Portal or API, up to the point of storing cleared e-Invoices on LHDNM’s database for taxpayers to view their respective historical e-Invoices.
The focus of our solutioning is the e-Invoice model via API.
API allows taxpayers to submit e-Invoices directly to LHDNM. Taxpayers would need to configure the API integration by setting up call-backs (specific taxpayers system addresses) and log into the available LHDNM APIs via the Digital Certificate issued by LHDNM (authentication mechanisms).
The e-Invoice structure has been specifically designed to cater to B2B, B2G and B2C transactions to ease e-Invoice procedures for businesses and individual taxpayers. The following formats will be available for transmission of e-Invoice data:
The first is Extensible Markup Language (XML): XML is defined as a simple text-based format for representing structured information. It is one of the most widely used formats for sharing field structured information today. The syntax rules for XML are strict. It will not process files that contain errors and error messages will be sent to inform that rectification is required. Almost all XML documents can be processed reliably by computer software.
The second is JavaScript Object Notation (JSON): JSON is a lightweight text-based data interchange format that is simpler to read and write as compared to XML. Though it is derived from a subset of JavaScript, it is language independent. Therefore, the code for generating and parsing JSON data can be written in any other programming language.
There are 53 data fields that are required to issue an e-Invoice. These fields are grouped into nine (9) categories:
1. Address
2. Business Details
3. Contact Number
4. Invoice Details
5. Parties
6. Party Details
7. Payment Info
8. Products / Services
9. Unique ID Number
In addition, for specific circumstances, an annex will be required to be submitted as part of the e-Invoice to LHDNM.
GET STARTED WITH E-INVOICING TODAY
You can begin your E-invoicing journey with us. We are a leading one-stop financial digital transformation consultancy with over 20 years of experience in helping businesses seamlessly integrate different solutions and automating workflows across their organisations.
Explore our solutions to your Malaysia e-Invoice Compliance
MountainTop e-Invoice Solution
MountainTop e-Invoicing solution is compatible with any standard ERP.
MountainTop e-Invoicing solution has been successfully deployed globally compliant with each country’s requirements or with peppol standard.
In Malaysia, as long as MountainTop e-Invoicing solution able to obtain data from any ERP, MountainTop e-Invoice solution works as a middleware to integrate your current ERP with LHDN through API.
PRONTO ERP e-Invoice Ready
Pronto ERP system already has e-Invoicing module build in and ready to use. But of course we need to fine tune according to Malaysia’s LHDN SDK (Software Development Kit) guidelines
In order to comply with LHDN’s requirement, Pronto already has e-Invoicing features build in such as additional configurations and master fields.
