1.0 Introduction
The Covid-19 pandemic had accelerated the economic transformation into digitalisation, allowing the Government to ride on implementing the National e-Invoice system for businesses, taking effect from 1.8.2024. E-Invoice promotes business efficiency and cost effectiveness to the business. It expedites business process and transaction providing fair trading. The Inland Revenue Board (IRB) able to uncover black economy, allows tax harmonisation to formulate an effective and efficient tax administration system.
2.0 Phases of implementation
Companies with annual turnover > RM100 million would begin and lead the swift implementation of e-Invoice system on 1.8.2024, which is on Thursday. Companies with annual turnover between RM25 million to RM100 million would follow on 1.1.2025, which is on Wednesday.
New businesses commence operation on 2023 and thereafter; micro, small and medium enterprises (MSME) and other entities would have to complete and execute the e-Invoice system latest by 1.7.2025, which is on Tuesday. GST 2.0 is most likely taking its momentum sometime September 2025.
During the transitional period between 1.8.2024 to 30.6.2025, new companies commence businesses in 2023 or thereafter; business entrepreneurs with turnover < RM 25 million must take proactive actions, identifying the existing business process; review and refine the accounting system adding in the new data fields to fulfil the e-Invoice system requirement.
The IRB has developed MyInvois Portal with MyInvois System Application provides the MSME on the issuance and validation of the e-Invoice prior sending to its trade customers. This improves the existing accounting records on income reporting, reduces the routine administrative works on manual accounting records.
Business entities required to diligently analyse and review business transactions to identify e-Invoice element, contentious issues arising that need to be revamped, refined or new formulated to accommodate the smooth implementation of e-Invoice system. The first hand experiments and experience to apply and use with MyInvois System by the IRB is precious and cannot be ignored.
2.1 Scope of turnover
Turnover refers to gross business income from the sales of goods or provision of services in the course of carrying on business. It excludes investment income, such as interest income, dividend income, rental income and other income.
However, in the case of investment holding company or listed investment holding company, the turnover comprises of gross investment income be it interest income, dividend income, rental income and other income as reported in the annual financial statements.
3.0 Threshold assessment
E-Invoice implementation takes three phases, that is 1.8.2024, 1.1.2025 and 1.7.2025. The timeline set is by reference to annual turnover of the year 2022.
The annual turnover threshold is by reference to a 12-month period in the financial year ended 2022. A proportionate to 12-month would apply in the event the financial year ended 2022 exceeded 12-month.
Audited financial statements or the tax return submitted for YA 2022 would be the basis to ascertain the revenue of the 12-month period.
4.0 Business entity
The e-Invoice system applies to every commercial entity carrying on business in Malaysia. The entities include company, partnership, individual sole proprietor, LLP, trust, co-operative society, club or charitable institution having business activity. It would not apply to Government, State Government or Statutory Authority or local authority.
E-Invoice requires to be used in all business transactions, validated by IRB prior to sending to customers.
There is no exception or application of de minimis limit to be excluded from e-Invoicing implementation.
4.1 Exception
Petty traders, pasar malam hawkers, mini fruit stalls operating on a small scaled that provide F&B to individuals for daily consumption, private purposes are not required to issue e-Invoice to the customers. These business operators are required to issue cash receipt on point of sales system to account the revenue for tax purposes.
On a monthly basis, a consolidated e-Invoice has to be submitted to IRB for validation on gross revenue for that month.
5.0 Benefits and advantages
The familiarisation of e-transactions in the digitalisation economy, in particularly the wide use of e-wallet on living affairs daily had somewhat promote and support the swift and smooth implementation of e-Invoice system in Malaysia.
E-Invoice means automated invoice from supplier system in digital file structure of JSON/XML, send to customers upon validated by IRB in electronic format. It promotes complete transparency of business transaction. The sales of goods or the provision of services would be concurrently accounted for as revenue and trade debts with the issuance of e-Invoice. The payment of goods or services not supported by e-Invoice would result in no deduction of expenses and prompted that the supplier of business embarks on an inaccurate reporting resulting in tax evasion.
The implementation of e-Invoice system would mean automation of the accounting transaction using the ICT equipment and software, facilitating real-time data process and analysis, allowing informed business decisions to be made.
6.0 Conclusion
The e-Invoice mechanism allows business transactions to be carried out effectively and cost efficiently. The inclusion of data analytic application embedded with the A.I technology elements able to ensure accuracy of data to aid business decision. It is business friendly and inevitable in this e-revolution era.
