E-Invoicing
E-Invoicing System: Improving Efficiency and Compliance in Malaysia
The e-Invoicing system introduced by LHDN marks a significant advancement in Malaysia’s digitalization journey. This innovative solution is poised to revolutionize the invoicing landscape, promoting efficiency, transparency, and integrity within the tax system.
WHAT IS E-INVOICE?
Malaysia’s LHDN E-Invoicing system utilizes machine-readable formats like XML and JSON, ensuring data integrity and preventing tampering. Unlike traditional PDF invoices, e-invoices in Malaysia require government validation to be considered legally binding.
To obtain a verified e-invoice, businesses must submit their invoices to LHDN for approval. The Inland Revenue Board (IRB) will validate the invoice data, including the Tax Identification Number (TIN) and the e-invoice’s structure and format.
Once validated, the supplier must embed a QR code containing the LHDN-verified link onto the e-invoice. This QR code allows buyers to verify the invoice’s authenticity and status using the MyInvois Portal.
By adhering to these guidelines, businesses can ensure compliance with LHDN regulations and maintain a secure and transparent invoicing process.
How long does E-Invoice validation take?
Refer to the IRBM e-Invoice guideline version 1.0, IRBM will develop the Continuous Transaction Control (CTC) Model where the validation is done instantly (or near-instantly) by IRBM.
Who are required to implement E-Invoice?
Effective July 1, 2025, Malaysian businesses will be required to adopt E-Invoicing as mandated by the Inland Revenue Board (LHDN). This nationwide implementation aims to streamline business operations and enhance tax compliance.
Businesses with annual revenue exceeding RM 100 million will be subject to earlier adoption, commencing on August 1, 2024. This phased approach allows for a smoother transition and ensures that businesses have adequate time to prepare for the shift to electronic invoicing.
By embracing E-Invoicing, businesses can benefit from:
Improved efficiency and accuracy
Streamline invoicing processes and reduce errors.
Enhanced compliance
Ensure adherence to LHDN regulations and minimize audit risks.
Cost savings
Reduce administrative costs associated with paper-based invoicing.
Improved cash flow
Accelerate payment collection and improve cash flow management.
Businesses are encouraged to familiarize themselves with the LHDN E-Invoicing guidelines and begin their transition preparations well in advance.
What E-Invoice information will be store in IRBM Database?
Every invoice issued must include the following information, which will be stored in the IRBM Database. This information is required to ensure the authenticity, integrity, and traceability of e-Invoices. It possible also used by the tax authorities to verify the accuracy of tax returns.
General Information
This includes the invoice number, e-Invoice type, e-Invoice purpose, e-Invoice date (current date)
Supplier & Customer Information
This includes the supplier and customer’s TIN, name, address, email address, 5 digit MSIC code, MSIC description, website, contact person, and contact number, company registration number/individual myKad number/passport, SST registration number, currency, exchange rate
Item Information
This includes the description, quantity, UOM, unit price, discount rate, discount amount, tax type, tax code, tax rate, and tax amount, tariff code, subtotal, total excluding tax, total including tax for each item on the invoice
Validation Information
This includes the IRBM Unique Identifier Number, validation date and time, and validation status of the invoice
Digital Certificates / Signature
Digital Certificates will be issued to taxpayers to enable them to attach digital signatures to e-Invoices. The digital signature will verify that the submitted e-Invoice data originates from a specific taxpayer
Additional Information (Optional)
This may include payment mode, supplier bank account, payment terms, payment amount, payment date, payment reference number, bill reference number, and other relevant information
What is TIN number?
Malaysia’s Tax Identification Number (TIN), or Nombor Pengenalan Cukai, is a unique identifier assigned to individuals and businesses registered with the Inland Revenue Board (LHDN). This number serves as a crucial reference for tax-related matters, enabling LHDN to track taxpayer information, monitor compliance, and detect potential irregularities.
Effective January 1, 2023, LHDN implemented a new TIN format. The previous 12 or 13-digit format has been replaced with a standardized 13-digit structure. For individual taxpayers, the initial two digits now consist of “IG,” indicating their status as individual taxpayers. The remaining digits remain unchanged from the previous format.
To check your TIN number online, please follow these steps:
By understanding the new TIN format and knowing how to verify your number, you can ensure accurate and efficient tax-related transactions in Malaysia.
Simplify your accounting and embrace e-invoicing with SQL Accounting. As a user-friendly software compatible with Malaysia’s LHDN E-Invoicing system, SQL Accounting empowers businesses to effortlessly create, send, and track electronic invoices.
Key Benefits of SQL Accounting:
Streamlined e-invoicing
Effortlessly create, send, and track e-invoices.
LHDN compliance
Ensure adherence to Malaysia’s e-invoicing regulations.
Enhanced efficiency
Automate manual tasks and improve accuracy.
Cost savings
Reduce paper and printing costs associated with traditional invoicing.
Improved cash flow
Accelerate payment collection and optimize financial management.
Ready to experience the power of SQL Accounting? Contact us today for a free demo and learn how our software can transform your business operations.
