Ensuring Compliance with Malaysia’s E-Invoice System

The implementation of e-invoice is mandatory under Section 82C of the Income Tax Act, 1967.  Every business shall issue an e-invoice for each transaction in respect of goods sold or services performed as either a proof of income or proof of expense for the taxpayers.

The scope of e-invoice implementation covers all types of business transactions, namely:

• Business-to-Government (B2G)
• Business-to-Business (B2B)
• Business-to-Consumer (B2C)

The implementation dates are as follows:

Validation of e-invoice by the Inland Revenue Board Malaysia (IRBM)

Any e-invoice issued by a person shall be transmitted electronically to and validated by the IRBM. The workflow involved between the supplier, buyer and the IRBM are as follows:

1. Issuance of e-invoice by the supplier for sharing with IRBM’s MyInvois Portal or API for validation.
2. Near real time validation of e-invoice by the MyInvois Portal with a Unique Identifier Number given to the supplier.
3. Notification of validated e-invoice by the IRBM to both the supplier and the buyer.
4. Sharing of validated e-invoice in PDF format by the supplier to the buyer.
5. E-invoice may be cancelled by the supplier or rejected by the buyer within 72 hours from the time of validation
6. E-invoice is stored in the MyInvois Portal and the records are accessible by the supplier or the buyer.

Penalty for Non-compliance

Section 120(1) provides for a fine of not less than RM200 and not more than RM20,000 or imprisonment not exceeding 6 months or both, if a person fails to issue an e-invoice, a self-billed invoice or a consolidated transaction invoice.

Types of Documents

4 types of e-invoice documents for different transactional needs of a business:

1. Invoice 
   Records sales transactions, including self-issued invoice
2. Credit note 
   Records reduction in the value of the original e-invoice
3. Debit note 
   Records increase in the value of the original e-invoice
4. Refund note 
   Records refund of the overpayment by a buyer

Action Plan for businesses

Businesses must proactively acquire the necessary knowledge for a smooth transition to the new e-invoice system. Successfully implementing an e-invoice system requires a strategic approach:

1. Conduct a comprehensive gap analysis to understand the shortcomings of the current IT and accounting system in order to identify clear objectives for improvement
2. Reconfiguration of the IT and accounting systems
3. Execute a change management process
4. Revamp of business procedures
5. Undertake internal training and education

How Crowe Can Assist: Our 3-Phase Approach

We support businesses by working with your teams and IT consultants to identify key implementation issues that are required to be resolved for smooth adoption of the e-invoice system. 
Our comprehensive 3-Phase Approach from the discovery stage, moving on to the implementation stage and concluding with the review stage, helps our clients to systematically identify key issues and adopt solutions effectively.

Phase 1: Discovery

1. Project team formation
2. Understand the compliance requirements
3. Business model, transaction and process analysis
4. System review
5. Review of strategic issues
6. Gap analysis and proposed implementation plan

Phase 2: Implementation

7. Action plan on the system modification / integration and progress monitoring
8. Action plan on the process change, stakeholder communication and progress monitoring

Phase 3: Review

9. Final review, users’ acceptance test and trial run to ensure that the interface is working well and processes run smoothly
10. Staff manual and training