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Executive Summary:
This document provides a comprehensive overview of the e-invoicing mandate in Malaysia, consolidating information from Pagero updates, a study guide, and various FAQs. The Inland Revenue Board of Malaysia (IRBM) is implementing mandatory e-invoicing in phases. Key aspects include a phased implementation timeline, grace periods with consolidated e-invoicing allowances, specific rules for self-billed invoices, technical specifications, exemptions, and the involvement of key players like Peppol and MDEC. This briefing covers the regulatory framework, technical requirements, and practical considerations for businesses in Malaysia.
1. Implementation Timeline and Phased Rollout:
The e-invoicing mandate is being rolled out in stages, determined by a company’s annual turnover. This approach is designed to allow businesses sufficient time to prepare.
- Phase 1 (August 2024): Businesses with annual turnover exceeding RM 100 million (approx. EUR 20 million).
- Phase 2 (January 2025): Businesses with annual turnover between RM 25 million (approx. EUR 5 million) and RM 100 million.
- Phase 3 (July 1, 2025): Businesses with annual turnover between RM 500,000 (approx. EUR 110,000) and RM 25 million (approx. EUR 5 million).
- Phase 4 (January 1, 2026): Businesses with annual turnover between RM 150,000 (approx. EUR 35,000) and RM 500,000 (approx. EUR 110,000).
- Exemption: Businesses earning below RM 150,000 (approx. EUR 35,000) annually are fully exempt. “Taxpayers with an annual turnover or revenue of less than RM150,000 (ca. 30,450 EUR) are exempted from issuing e-invoices (including self-billed e-invoices ).“
2. Grace Periods (“Relaxation Periods”):
To ease the transition, the IRBM provides a six-month grace period for each implementation phase. During this time, penalties for non-compliance are waived if businesses adhere to consolidated e-invoicing rules. “As previously reported by Pagero, the IRBM introduced a six-month grace period for each implementation phase, allowing businesses to issue consolidated e-invoices for all transactions.”
- The third phase’s grace period extends from July 1, 2025, through December 31, 2025, while the fourth phase’s grace period runs from January 1, 2026, through June 30, 2026.
- “Taxpayers may issue consolidated e-invoices for all transactions with the following allowances: Allowing all activities/industries to issue consolidated e-invoices , including self-billed e-invoices.“
3. Technical Requirements and Formats:
E-invoices must be submitted electronically, adhering to specific formats:
- Format: UBL 2.1 in XML or JSON. “Under the second phase, e-invoices must be submitted in electronic formats, using the Universal Business Language (UBL2.1) in XML or JSON formats.“
- Document Types Covered: Standard e-invoices (including consolidated and self-billing), credit note e-invoices, debit note e-invoices, and refund e-invoices.
- Submission Methods:MyInvois Portal: Suitable for lower transaction volumes.
- MyInvois System (API): Designed for larger enterprises, requiring system integration and potential investment.
4. Self-Billed Invoices:
Self-billed e-invoices are issued by the buyer to the supplier in specific scenarios.
- Required For: Payments related to capital reduction, share/capital/unit redemption, share buybacks, return of capital, or liquidation proceeds. “Buyers must issue self-billed e-invoices for transactions involving payments related to capital reduction, share/capital/unit redemption, share buybacks, return of capital, or liquidation proceeds.“
- Consolidation Rules: Consolidation is generally not permitted for self-billed invoices, except in limited circumstances such as insurance claims or transactions involving overseas branches.
- Exceptions to Self-Billed Invoice Issuance: Exceptions exist for certain interest payments, such as those charged to the public by financial institutions or payments made by employees to employers.
5. Exemptions:
Certain entities are exempt from issuing e-invoices, though suppliers to these entities are still required to issue e-invoices.
- Taxpayers with annual turnover or revenue less than RM 150,000 (approx. EUR 35,000).
- Foreign diplomatic offices.
- Individuals who are not conducting business.
- Statutory bodies, statutory authorities, and local authorities for specific transactions until July 1, 2025.
- International organisations for certain transactions until July 1, 2025.
6. Key Players and Organisations:
- Inland Revenue Board of Malaysia (IRBM): The tax authority responsible for implementing and enforcing e-invoicing regulations. They provide guidelines, updates, and the MyInvois Portal/API infrastructure.
- Malaysian Digital Economy Corporation (MDEC): Facilitates e-invoicing compliance and collaborates with service providers.
- Peppol: An international e-delivery network providing standards and specifications for secure document exchange. “As part of the national e-invoicing initiative, Pagero, a Peppol-accredited service provider, has been approved by the Malaysian Digital Economy Corporation (MDEC) to facilitate e-invoicing compliance.“
- Pagero: A Peppol-accredited service provider offering e-invoicing solutions and compliance services.
7. Penalties:
- Penalties for non-compliance are being imposed according to the phased implementation.
- During the grace periods, penalties are waived if consolidated e-invoicing rules are followed. “For the taxpayers in the scope of the e-invoicing implementation first phase, penalties for non-compliance are imposed from 1 October 2024.“
8. Peppol Specifications and Implementation:
Malaysia is implementing e-invoicing compliant with the Peppol International Invoicing Model (PINT) methodology. This aims to streamline invoicing processes and improve interoperability. Peppol BIS Malaysia Billing process 1.1.0 incorporates invoice and credit note transactions.
9. Software Development Kit (SDK):
The IRBM provides a Software Development Kit (SDK) for the MyInvois System (API) to assist developers with integration.
10. Archiving:
The required archiving period for e-invoices in Malaysia is seven years.
11. Benefit for Early Adopters:
Taxpayers who implement e-invoicing within the stipulated timeline without using the grace period benefit from a reduced capital allowance claim period for ICT equipment and software packages (from 3 years to 2, applicable from the 2024 to 2025 assessment years). This is a financial incentive for businesses to adopt e-invoicing early.
12. Timeline of Key Events (Condensed):
- 2024-02: Peppol releases PINT BIS Malaysia e-invoicing specifications (version 1.0).
- 2024-04: IRBM updates e-invoice guidelines (version 2.3 and 2.1) and releases SDK 1.0.
- 2024-06: IRBM updates e-invoice guidelines (version 3.0 and 2.2) and SDK 1.0.
- 2024-07: IRBM announces a 6-month grace period starting 1 August 2024.
- 2024-08: Phase 1 of mandatory e-invoicing begins.
- 2024-10: Penalties for non-compliance imposed for Phase 1. IRBM updates e-invoice guidelines (version 4.0 and 3.1).
- 2024-10: Announcement of Phase 2, starting Jan 1, 2025.
- 2025-01: Phase 2 of e-invoicing implementation begins. IRBM updates e-invoice guidelines (version 4.1 and 4.0).
- 2025-02: Malaysian government delays the mandate for MSMEs to 1 January 2026.
- 2025-07: Revised Phase 3 commences.
- 2026-01: Revised Phase 4 commences.
Recommendations:
- Determine which implementation phase applies to your business based on annual turnover.
- Develop a compliance plan, choosing a submission method (Portal or API) and ensuring adherence to the required formats.
- Utilise the grace period to implement e-invoicing and leverage consolidated e-invoicing where possible.
- Thoroughly review the updated e-invoice Guidelines and Specific Guidelines published by the IRBM.
- Explore Peppol-accredited service providers to assist with compliance.
- Stay updated on the latest regulations and guidance from the IRBM.
- See also
- Join the Linkedin Group on Global E-Invoicing/E-Reporting/SAF-T Developments, click HERE
