Regulatory updates - Malaysia

On 6 April 2024, the Inland Revenue Board of Malaysia (IRBM) updated the previously published guidelines and Software Development Kit for MyInvois System (API), addressing the scope of gradual implementation of e-invoicing:

• Software Development Kit (SDK) 1.0; 
• The updated version 2.3. of the e-invoice Guideline; 
• The updated version 2.1. of the e-invoice Specific Guideline.  

SDK 1.0 considers updates to validations and documentation, updates to API documentation, new additions such as new code, tax exemption field in invoice and InvoiceLine, the guidance with Digital Signature Creation and Validation, as well as specific other updates concerning document types, currency exchange rate, file size limitations, and mathematical mapping.

The Guidelines include rephrasing and removal of certain provisions as well as editorial changes to the text to provide more clarifications for the implementation of the e-invoicing mandate.

On 26 February 2024, the following e-invoicing document specifications for use in Malaysia were published:

• PINT BIS Malaysia Billing process 1.0 - incorporating invoice and credit note transactions;
• PINT BIS Malaysia Self Billing process 1.0 – incorporating self-billing invoice and credit note transactions.

These specifications are structured in compliance with Peppol Business Interoperability Specifications (BIS) PINT methodology and requirements of the Inland Revenue Board of Malaysia (IRBM).

On 9 February 2024, the Inland Revenue Board of Malaysia (IRBM) published the Software Development Kit and updated the previously released guidelines: 

• Software Development Kit (SDK); 
• The updated version 2.2 of the e-invoice Guideline; 
• The updated version 2.0. of the e-invoice Specific Guideline.  

The SDK contains documentation of the APIs exposed to taxpayer ERP systems integrating with MyInvois System for document processing automation. 

The updated guidelines provide clarifications for the implementation of the upcoming e-invoicing mandate. 

On 28 October 2023, the Inland Revenue Board of Malaysia (IRBM) updated the previously published guidelines addressing the scope of gradual implementation of e-invoicing for targeted taxpayers.

- The updated version 2.1 of the e-invoice Guideline.

- E-invoice Specific Guideline version 1.1.

- E-invoice Catalogue.

The new mandatory e-invoicing implementation considers the gradual roll-out plan for targeted taxpayers from:

- 1 August 2024: Taxpayers with an annual turnover or revenue of more than RM 100 million (ca. EUR 20 000 000).

- 1 January 2025: Taxpayers with an annual turnover or revenue of more than RM 25 million (ca. EUR 5 000 000) and up to RM 100 million (ca. EUR 20 000 000).

- 1 July 2025: All other taxpayers.

Other amendments made to the guidelines clarify the current provisions and does not explicitly consider significant changes.

Pagero follows the developments closely and will inform our customers once further guidance is announced.

On 13 October 2023, the Prime Minister of Malaysia announced the delay in the implementation of the country-wide e-invoice implementation within Malaysia’s national Budget 2024 proposals.

Starting from 1 August 2024, taxpayers with an annual income or sales exceeding RM 100 million (ca. EUR 20 770 000) will be mandated to issue an electronic invoice.

The next steps in the gradual roll-out plan are yet to be announced, whereas the mandate for targeted taxpayers under other income categories is expected to be implemented starting from 1 July 2025.

In addition, the usage of Tax Identification Number (TIN) in Malaysia will be extended to support the implementation of e-invoicing.

Pagero closely follows the developments in Malaysia and will publish further updated information in the upcoming weeks.

On 29 September 2023, the Inland Revenue Board of Malaysia (IRBM) published the following guidelines addressing the scope of gradual implementation of e-invoicing for targeted taxpayers.

1. The updated version 2.0 of the e-invoice Guideline, which it previously published on 21 July 2023.
2. E-invoice issuance Specific Guideline version 1.0.
3. E-invoice Catalogue.

Overview of the e-invoice Guideline Version 2.0

The e-invoice Guideline version 2.0 contains the following considerations:

• Exempting certain parties (government bodies) from implementing e-invoicing.
• Clarifying methods of transmission via API.
• Defining near real-time e-invoice validation.
• Defining validated invoice content including IRBM Unique Identifier Number, date and time of validation, and validation link.
• Clarifying the consequences of the buyer’s request to reject e-invoice.
• Clarifying the definition of the Software Development Kit.

Overview of the e-invoice Specific Guideline Version 1.0

This Specific Guideline contains a better understanding of the e-invoice issuance process, covering:

• Transactions:
  • With Buyers.
  • Involving payments in monetary form to agents, dealers, or distributors.
  • Cross-border.
• Financial/monetary related:
  • Statements/bills periodically.
  • Disbursement and reimbursement.
  • Profit distribution.
  • Foreign income Currency exchange rate.
• Self-billed e-Invoice.
• Employment benefits and certain expenses incurred by the employee.
• API overview.

Overview of the E-invoice Catalogue

The e-invoice catalogue provides further guidance on technical specifications and contains Malaysia Standard Industrial Classification (MSIC) codes, invoice currency codes, frequency of billing, e-invoice classification, tax type, payment mode, and country of origin.

Pagero participated in the Service Provider (SP) Pilot Focus Group meeting organized by the Malaysian Digital Economy Corporation (MDEC) regarding the National e-invoicing initiative.

The Peppol pilot implementation objectives, timeline, eligibility criteria, and the process development for Peppol SP onboarding were introduced and discussed during the meeting.

The implementation model considers that businesses sending invoices via Peppol will automatically comply with the LHDNM requirements. Businesses will submit e-invoices to LHDNM for tax reporting and compliance and exchange invoices separately.

Pagero is in the accreditation process as a Service Provider for Peppol in Malaysia.

OpenPeppol announced that Malaysia’s Digital Economy Corporation (MDEC) has obtained the status of authorized Peppol Authority.

MDEC is the agency under the Ministry of Communications and Digital of Malaysia and will be responsible for setting local requirements and managing participants of Peppol within the country.

As MDEC becomes the Peppol Authority, Peppol will be part of the National e-invoicing framework.

After the MDEC’s approval as a Peppol Authority, the total number of Peppol Authorities has reached 20.

On 21 July 2023, the Inland Revenue Board of Malaysia (IRBM) introduced the Guideline addressing the scope of gradual implementation of the e-Invoice for targeted taxpayers.

The guideline presents e-Invoice concepts in a clear and accessible manner for taxpayers, introduces the ways of implementation, compliance, recordkeeping, and addresses common questions and concerns that taxpayers may have regarding e-Invoice.

The e-Invoice implementation plan

The mandatory e-invoicing implementation considers the gradual roll-out plan for targeted taxpayers from:

• 1 June 2024: Taxpayers with an annual turnover or revenue of more than RM 100 million (ca. EUR 20 000 000).
• 1 January 2025: Taxpayers with an annual turnover or revenue of more than RM 50 million (ca. EUR 10 000 000) and up to RM 100 million (ca. EUR 20 000 000).
• 1 January 2026: Taxpayers with an annual turnover or revenue of more than RM 25 million (ca. EUR 5 000 000) and up to RM 50 million (ca. EUR 10 000 000).
• 1 January 2027: All taxpayers and certain non-business transactions.

Types of e-invoices to be issued

The following documents must be issued in electronic format:

• Invoice;
• Credit/Debit note;
• Refund

Transmission of e-invoices

Two distinct e-Invoice transmission mechanisms will be available for taxpayers:

• A portal (MyInvois Portal) hosted by IRBM

The MyInvois Portal will be accessible to all taxpayers, nevertheless not efficient for large volumes of data and suitable for Micro, Small and Medium-sized Enterprises.

• Application Programming Interface (API)

The API connection may require an upfront investment in technology and adjustments to existing systems, nevertheless ideal for large taxpayers or businesses with substantial transaction volume.

Version 1.0 of the Guideline can be accessed here for more information. 

Today, Pagero participated in the Service Provider engagement session organized by the Inland Revenue Board of Malaysia (LHDNM) and the Malaysian Digital Economy Corporation (MDEC) on implementing the National e-Invoicing system in Malaysia.

LHDNM introduced a hybrid centralized CTC model combined with the Peppol network. Suppliers are obliged to submit invoices to the LHDNM for prior validation and approval before sending them to the buyers. LHDNM will provide a Certification Serial Number once the invoice is approved and send an email notifying both the issuer and recipient. Taxpayers can then choose the exchange method for their cleared invoices, where Peppol will be the preferred but not exclusive channel.

Furthermore, a QR code will be required for an image-based invoice presentation, so that the buyer can verify the invoice by scanning the QR.

This e-invoicing system obligation includes B2G, B2B, and B2C transactions; domestic and cross-border; in all industries and sizes of companies. LHDNM will start pilot projects with selected taxpayers at the beginning of 2024 and introduce the mandatory implementation gradually, based on the business revenue:

• June 2024: Businesses sales > RM 100 million (ca. EUR 20 770 000) per year;
• January 2025: Businesses sales > RM 50 million (ca. EUR 10 400 000) per year;
• January 2026: Businesses sales > RM 25 million (ca. EUR 5 200 000) per year;
• January 2027: Mandatory for all businesses.

The obligation will be extended to B2C transactions starting from 2027, for which e-Receipt instead of e-Invoice will be utilized. It is as well likely that B2C transactions will follow the real-time reporting model instead of pre-clearance.

Taxpayers can start making use of electronic invoices voluntarily from January 2024. A free portal, called myTax, will be provided by LHDNM for taxpayers to issue and receive e-invoices manually.