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Malaysia e-Invoicing FAQs for Mid-Market & Large Corporations

July 10, 2024

<strong>Malaysia e-Invoicing FAQs for Mid-Market & Large Corporations</strong>

The Malaysian government is rolling out a mandatory e-Invoicing system in phases. This initiative aims to modernise the invoicing landscape across Malaysia. The government expects it will improve transparency and streamline tax administration.

E-Invoicing also offers significant benefits for mid and large-sized corporations alike. These include:

  • Streamlined Processes: Electronic invoices cut manual data entry, reducing errors and processing times.
  • Cost Reduction: E-Invoicing drives automation lowering the cost to process and send invoices.
  • Improved Efficiency: Faster invoicing cycles can lead to quicker payments from suppliers.
  • Enhanced Visibility: Real-time invoice tracking provides better financial oversight.

Malaysia E-Invoice – Frequently Asked Questions

Businesses wanting to navigate the e-Invoicing transition have lots of questions. To help, we’ve compiled answers to the most frequently asked questions. For ease of reading we have categorised the questions into sections.

General FAQs

What is e-Invoicing?

E-Invoicing refers to the electronic exchange of invoices between trading partners. This could be business to business or business to government. The transmission of these invoices are standardised ensuring authenticity and data integrity. E-Invoicing is already used in many countries across the globe.

Is e-Invoicing mandatory for my company?

Yes, e-invoicing will become mandatory for your company depending on your annual turnover. The government has implemented a phased approach:

  • Phase 1 (August 1, 2024). Mandatory for businesses with annual revenue over RM100 million.
  • Phase 2 (January 1, 2025). Mandatory for businesses with annual revenue between RM25 million and RM100 million.
  • Phase 3 (July 1, 2025). Mandatory for all other businesses, regardless of revenue.

Check your company’s most recent annual turnover figures which date you fall into. We recommend getting familiar with the process of e-Invoicing well before the deadline. This will help you prepare for exploring e-invoicing software options also.

Implementation FAQs

How do I get started with e-Invoicing?

When implementing e-Invoice, what are the three (3) primary factors to consider?

  • Human resources: Businesses are advised to assemble a dedicated team equipped with the necessary expertise and capabilities to prepare for the implementation.
  • Business processes: Conduct a comprehensive review of the current process and procedures in issuing invoice transaction documents.
  • Technology and systems: Confirm the availability of the necessary resources, data structures and existing IT capabilities to ensure the systems in place comply with the e-Invoice requirements.

How do I choose an e-Invoice service provider?

Selecting an e-invoice service provider is a big decision. You want to be confident to select the right partner and ensure compliance and value for money. We recommend undertaking the following steps to ensure a successful selection process. The first step is to contact MDEC-accredited Peppol Acccess Point or Peppol-Ready e-Invoice service provider (PRSP). A value-driven service provider, like Valtatech, can guide you through the whole process, from setup to launch.

1. Understand Your Business Needs

Before diving into software options, take time to analyse your current invoicing processes. This involves:

  • Process Mapping. Map out your entire invoicing workflow to identify strengths, weaknesses, and bottlenecks.
  • Stakeholder Engagement. Discuss invoicing pain points with internal teams and external partners.
  • Identifying Goal. Be clear on what you want to achieve with e-Invoicing. This could be compliance, faster processing, lower costs or a combination of all three.

This step gives you valuable insights to make a choice that aligns with your specific needs.

2. Essential Software Features

When evaluating service providers, focus on features that address your needs identified above.

  • LHDN Compliance. Ensure the e-Invoice middleware adheres to LHDN’s e-invoicing requirements. This includes things like data formats and file structure format to LHDN.
  • Seamless Integration. Look for solutions that integrate with your existing accounting system/ERP using API option to the middleware.
  • User-Friendly Interface. Focus on an easy-to-use solution for smooth adoption and minimal training time.
  • Security Measures. Ensure they have robust data encryption, access controls and audit trails.

3. Cost Considerations

E-invoicing software pricing structures vary. Explore different models, considering factors like:

  • Features Offered: The features included in the pricing plan.
  • Invoice Volume Tiers: Pricing may be based on the number of invoices you process.
  • Hidden Fees: Double check about any extra costs beyond the base price.

Look for providers with clear pricing structures and consider a total cost-of-ownership analysis. This should factor in implementation, ongoing fees, and potential cost savings from e-invoicing. Many providers can assist with this analysis.

4. Vendor Reputation and Support

Select a reputable vendor with a proven track record in e-invoicing solutions. Here’s what to look for:

  • Experience. Choose a vendor with extensive regional e-invoicing knowledge and expertise.
  • Strong Support Team. Reliable technical support is essential, especially with fixed adoption deadlines looming.
  • Proven Track Record: Research the vendor’s reputation

What are the different e-Invoicing models?

There are two primary e-Invoicing models: Self-billing and Managed Service Provider (MSP). In the self-billing model, you manage the entire e-Invoicing process internally. The MSP model involves outsourcing operations to a service provider.

Technical FAQs

What considerations are there for integrating e-Invoicing with existing (ERP) systems?

Integrating e-Invoicing with your ERP system is the preferred option to drive automation. Look for providers who can connect with your systems. This could be through pre-built connectors or APIs to connect with ERP systems. They can also assess your specific ERP and recommend the most efficient approach. Valtatech will connect with any legacy system you have to ensure automation.

How can we handle high volumes of e-Invoices?

Many e-Invoicing solutions are designed to manage large volumes. Look for providers with robust infrastructure and features like:

  • Automated processing. Automating tasks like data validation, invoice routing and transmission.
  • Scalability. The solution should be able to scale up to handle more invoices as your business grows.

What file formats are compatible with IRBM for e-Invoice submission?

IRBM accepts e-Invoices in XML or JSON file formats.

Can we use a combination of MyInvois Portal and API for e-Invoice submission?

Yes, you can use both methods. But, it’s recommended to put in place reconciliation processes to avoid duplicate submissions.

What happens if the MyInvois Portal is unavailable?

The system uptime is targeted at 99.97%. But, you have a 72-hour grace period to submit e-Invoices once the system is back online. Put in place mechanisms in your system for automatic submission upon system recovery.

Can we leverage Peppol for e-Invoice transmission?

Yes, you can choose any transmission method that complies with IRBM’s API requirements. This includes certified Peppol Service Providers like Valtatech. Refer to the e-Invoice Guideline for details.

Is e-Invoice applicable to transactions in Malaysia only?

No, the issuance of e-Invoice is not limited to only transactions within Malaysia. It is also
applicable for cross-border transactions. r

Compliance FAQs

What are the penalties for non-compliance with e-Invoicing?

There are significant penalties for failing to follow e-invoicing mandates in Malaysia. Section 120(1)(d) of the Income Tax Act 1967 applies. Here’s a breakdown of the consequences:

  • Offence. Issuing invoices without following the e-invoicing regulations is considered an offence.
  • Fines. Non-compliance can lead to fines ranging from RM200 to RM20,000 for each instance.
  • Imprisonment: Also, offenders may face imprisonment not exceeding 6 months.

It’s crucial to adhere to the deadlines to avoid these penalties. Ensure you understand your specific compliance date based on your business’s annual turnover. Note this information is for general awareness. You should consult with a tax professional for specific legal advice.

How can I ensure my e-Invoicing system is secure?

Choosing the right e-invoicing provider is key. They will partner with you through the whole process and ensure compliance. Providers should have security measures like data encryption, access controls and regular audits.

What data security measures are in place to protect e-Invoice confidentiality?

IRBM adheres to industry standards and implements security measures. This includes encryption, access controls, firewalls, and regular audits to safeguard data. Additionally, the system is expected to comply with ISO 27001 standards.

Where to Next?

  • Understand your current invoicing processes. Identify areas for improvement and assess your e-Invoice processing needs.
  • Research e-Invoice service providers. Compare features, pricing models, and integration capabilities. Make sure the solution aligns with your specific requirements.
  • Consult with an e-Invoicing expert. Discuss your business needs and ensure a smooth transition to e-Invoicing compliance.

You could also find updated General and SDK related FAQs from IRBM’s website as well as Industry specific related FAQs on healthcare, construction, petroleum operations, telecommunication, e-Commerce, Insurance & Takaful, aviation, tourism and financial services

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.

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