How e-Invoices are created in Malaysia?

Malaysia has made a commitment to enhance efficiency and embrace digital transformation. As part of this it has introduced e-invoicing as a key component of its tax administration system. For businesses in Malaysia, understanding how to create and send e-invoices is essential. This guide covers the basics of how to create and send an e-invoices in Malaysia.

Overview of E-Invoicing in Malaysia

The Inland Revenue Board of Malaysia (IRBM) manages e-Invoicing across the country. It defines e-invoicing as a digital representation of transactions between suppliers and buyers. It replaces paper/electronic documents such as invoices, credit notes and debit notes. E-Invoicing is being mandated across all businesses. IRBM believes it will streamline tax administration and provide real-time validation of transactions.

Assessing Your Readiness for Making an E-Invoice

The change to e-invoicing is a big one for organisations. As such, you need to make sure you are as prepared as possible. This involves an evaluation of your organisation to check alignment with e-invoice requirements.

First, businesses should educate themselves on e-invoicing requirements so they understand their obligations. E-invoicing providers, like Valtatech, can help with this. You need to ensure you understand the new digital procedures and compliance standards.

Second, businesses should review their current processes in issuing transaction documents. This should cover all document types such as invoices, debit notes and credit notes. This helps identify any discrepancies between current practices and e-invoice obligations. Identifying this early allows for adjustments to align with the new invoicing standards. It’s also a great opportunity to improve your overall invoicing process. As part of the adoption of e-invoicing, businesses can enhance efficiency and accuracy.

Finally, businesses should assess their current IT capabilities to support e-invoicing. This involves evaluating the compatibility of existing systems with e-invoice requirements. This will help identify any gaps or areas for improvement. It should also highlight integration requirements to ensure seamless data transmission.

Through evaluating these key areas, businesses can prepare for the adoption of e-invoicing. This should ensure a successful transition and compliance with regulatory requirements.

E-Invoice Data Structure and Formats:

The design of the e-invoice structure is tailored to accommodate different business models. This includes Business-to-Business (B2B), Business-to-Government (B2G), and Business-to-Consumer (B2C) transactions. This allows businesses to generate and exchange electronic invoices efficiently across different sectors. The design promotes interoperability and ease of transaction processing.

To drive standardisation, IRBM have decided on a set data structure for e-invoices. They must adhere to the data structure defined by the Universal Business Language Version 2.1 (UBL2.1). UBL is an open library of standard electronic XML business documents. They are designed to facilitate the digital exchange of business information. Using the UBL2.1 data structure, e-invoices generated conform to a common set of schemas. The schemas define the essential data elements required for accurate and consistent e-invoicing.

The adoption of this standard data structure offers several benefits to businesses, including:

• Interoperability. UBL2.1 provides a comprehensive suite of schemas that define common business documents. This includes purchase orders, invoices, dispatch advice, and receipts. This promotes interoperability and seamless integration between different systems.
• Consistency. With a standardised structure, businesses can ensure consistency in the format of e-invoices. This reduces errors, discrepancies and misinterpretations during invoice processing and reconciliation.
• Efficiency. The use of UBL2.1 simplifies the generation, transmission, and interpretation of e-invoices. This streamlines the invoicing workflow and enhances operational efficiency for businesses.

Key Steps to Create E-Invoices in Malaysia

With a shared understanding about e-Invoicing, the next question is how to do it. There are two ways to create an e-invoice:

1. Through the MyInvois Portal. The MyInvois Portal is an online platform hosted by the IRBM. It facilitates the electronic issuance, submission and management of e-invoices.
2. Through IRBMs API. IRBM offers an API as a mechanism to send e-invoices to the tax authority’s system. The API enables businesses to submit a high volume of e-invoices.

Creating E-Invoices via MyInvois Portal:

1. Access MyInvois Portal. Log in to the MyInvois Portal.
2. Pre-Submission Requirements. Ensure you have all necessary information and documents required for e-invoice submission.
3. Creation and Submission. Enter the transaction details. This includes supplier and buyer information, item description, quantity, price, taxes and totals.
4. E-Invoice Validation. Verify the accuracy of the e-invoice details before submission.
5. Notification. Receive confirmation and notification once the e-invoice is successfully submitted and validated.

The MyInvois Portal offers an easy-to-use, intuitive interface that simplifies navigation. One of its key advantages is that you don’t have to worry about intricate system integrations. This allows businesses to quickly adopt e-invoicing without extensive setup requirements. This feature makes the portal particularly well-suited for businesses with moderate e-invoice volumes.

A drawback of the portal is that manual data entry can become time-consuming. This is especially true for large-scale operations with high transaction volumes. Additionally, the portal may have limited automation features compared to API integration options. This can impact efficiency and scalability for businesses seeking more advanced automation capabilities.

Creating E-Invoices via API:

1. Get a Digital Certificate. The first step in creating e-invoices via the IRBM API is to get a digital certificate. This certificate verifies your identity as the issuer of the e-invoice. Follow these steps:
2. Understand the Data Structure and Formats. Familiarise yourself with the data structure and formats as specified by IRBM. Refer to Appendix 1 of the e-Invoice Guideline for the list of mandatory and optional fields.
3. Choose an API Integration Option. Select the API integration option that best suits your business needs:

• Direct ERP Integration. Integrate your Enterprise Resource Planning (ERP) system directly with the IRBM’s MyInvois System.
• Third-Party Technology Providers. Engage with MDEC-accredited Peppol Access Point provider such as Valtatech or non-Peppol technology providers to help the integration process.

4. Leverage the Software Development Kit (SDK). Use the SDK provided by the IRBM. This includes the API integration and configuration guide.
5. Configure Your Systems for API Integration. Configure your systems to ensure integration with the IRBM’s API.
6. Test in the Sandbox Environment. Before going live, test your integration in the IRBM’s sandbox or testing environment. This controlled environment allows you to identify and resolve any potential issues.
7. Generate and Submit E-Invoices via API. Once your systems are integrated and tested, you can submit e-invoices via the API. Follow these steps:

• Create e-invoices in the required format, adhering to the IRBM’s data requirements.
• Include your digital signature in the e-invoice submission request body for authentication and non-repudiation.
• Submit the e-invoice to the IRBM’s API for validation and processing.

8. Monitor and Manage E-Invoices. Leverage the IRBM’s API to monitor and manage your e-invoices effectively. Put in place error handling mechanisms to address any issues. Use the API to retrieve e-invoice details for your records and reporting purposes.
9. Ensure Compliance and Data Security. Adhere to the IRBM’s guidelines and regulations about compliance, data security, and privacy. Put in place measures to protect sensitive data and maintain the integrity of your data.

The API integration enables a streamlined and automated e-invoice generation process. This is an ideal solution for businesses with high volumes of transactions. Also the real-time validation and processing capabilities ensure timely compliance and error handling. This minimises the manual effort required and delays.

Integrating your systems with the API can be a complex undertaking. As you can see from the steps above, particularly without extensive technical expertise. The setup and customisation required to align your existing systems with the API can be high. This can involve time and resource investment for a business up against a deadline. Businesses may need to assign dedicated personnel or teams to navigate the process.

For businesses, partnering with an e-invoice service provider is a better option. It’s a cost-effective and efficient way to leverage the power of the API. All without shouldering the full burden of technical complexities. These specialised service providers, like Valtatech, have extensive experience in e-invoicing. Coupled with extensive experience with API integrations to your existing systems. This allows them to streamline the onboarding process to get setup for e-Invoicing.

In Summary

As Malaysia continues its journey towards digitalization, e-invoicing will play a pivotal role. Businesses will need to stay informed and stay compliant. Contact us today for a confidential discussion about your e-invoicing needs. We can help you develop an e-Invoicing implementation plan tailored to your business. Our experts can help you navigate the e-Invoicing process ensuring a smooth transition.