Knowledge & Iqra’ Series (09/2023)

LHDN confirms phased mandatory e-invoicing

Introduction starting June 2024
To improve and strengthen the efficiency of the government’s tax system, LHDN confirms the
implementation of electronic invoicing in phases. A guideline addressing the scope of gradual
implementation of the e-Invoice for targeted taxpayers was issued by LHDN on 21 July 2023.

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 guidelines are accessible through the LHDN website or through:

https://www.hasil.gov.my/media/hsulrygk/irbm-e-invoice-guideline-version-10.pdf.

What is e-Invoice

An e-Invoice is a digital representation of a transaction between a supplier and a buyer

The format of e-Invoice is not a:

An e-Invoice is a file created in the format
specified by IRBM that can be automatically
processed by relevant systems:
PDF DOC JPG

PDF file DOC file JPG file

XML JSON

XML file JSON file

Hardcopy invoice Email Others

Types of e-Invoice

Invoice Credit Note

Commercial document that itemizes and
records a transaction between a supplier and
buyer, including self-issuance of e-invoice to
document and expense such as foreign supplier.
Commercial document issued by a supplier to
connect errors, apply discounts or account for
returns in previously issued e-invoice with the
purpose of reducing the value of the original
e-invoice.

Debit Note Refund Note

Commercial document issued to indicate Commercial issued by a supplier to confirm the
additional charges on a previously issued refund of the buyer’s payment.
invoice.
 Knowledge & Iqra’ Series (09/2023)

Who are required to comply with e-Invoice?

Companies, individuals and legal entities are required to comply with e-Invoice requirement, including:

Association Partnership
Body of persons Property trust fund
Branch Property trust
Business trust Real estate investment trust
Co-operative societies Representative and regional office
Corporations Trust body
Limited liability partnership Unit trust

Implementation Timeline

Based on the guidelines, Companies with revenue of more than RM100 million set to become the first group
to implement the new electronic invoicing (e-invoice) system starting June 1 next year.

Further, January 2025 will see the mandatory adoption of the system by companies with revenue of more
than RM50 million annually.

This will be followed a year later, in 2026, mandatory adoption of the system by companies with revenue
of more than 25 million a year.

The final phase will see mandatory adoption by all businesses by 2027.

2023 2024 2025 2026 2027

Provide
June 2024 January 2025 January 2026 January 2027
infrastructure and
launch a pilot
project for Mandatory Mandatory Mandatory Mandatory
selected enforcement for enforcement for enforcement for enforcement for
companies businesses that businesses that businesses that all businesses
reach a sales reach a sales reach a sales
....................................
threshold of threshold of threshold of
Other companies RM100 mil RM50 mil RM25 mil
can implement per year per year per year
voluntarily

Note

Voluntary implementation
from January 2024, for
businesses other than those
categorised as mandatory
 Knowledge & Iqra’ Series (09/2023)

The annual turnover or revenue for the implementation of e-Invoice will be determined based on the
following:

Determination

Taxpayers
with audited Based on annual turnover or revenue stated in the audited
financial financial statements for financial year 2022.
statements

Taxpayers
without audited Based on annual revenue reported in the tax return for year
financial of assessment 2022.
statements

Change of
accounting year end The taxpayer’s turnover or revenue will be pro-rated to a
for financial year 12-month period for purposes of determining the e-Invoice
2022 implementation date.

For new businesses

or operations e-Invoice implementation date is 1 January 2027 and
commencing from
further guidance will be provided in due course.
the year 2023
onwards

e-Invoice Transmission Mechanisms

To facilitate taxpayers’ transition to e-Invoice, IRBM has developed two (2) distinct e-Invoice transmission
mechanisms;

1 2
MyInvois Portal Application Programming Interface (”API”)

A portal hosted by IRBM as an option that An API is a set of programming code that
is open to all taxpayers and most suitable enables direct data transmission between
for micro, small to medium-sized the taxpayer’s ERP system and IRBM’s
enterprises (”MSMEs”) validation platform

Accessible to all tax payers Requires upfront investment

in technology and adjustment
Suitable for MSMEs to existing systems

May not be efficient for large Ideal for large taxpayers or

volume of transactions businesses with substantial
transaction volume
Taxpayer that needs to issue
e-invoice but API connection
is unavailable Source:
LHDN presentation on e-Invoicing
Sesi Libat Urus Pelaksanaan e-Invois
 Knowledge & Iqra’ Series (09/2023)

Overview of e-Invoice workflow

1 Issuance of e-Invoice 4 Sharing e-Invoice

When a sale or transaction is made (including e-Invoice Upon validation, the supplier is obliged to share the
adjustment), the supplier creates an e-Invoice and cleared e-Invoice (embedded with a QR code) with the
shares it to IRBM via MyInvois Portal or API for validation. buyer.

The QR code can be used to validate the existence and

status of the e-Invoice via MyInvois Portal.

2 Validation of e-Invoice 5 Rejection of cancellation of e-Invoice

IRBM validation is performed in real-time, ensuring that Upon issuance of e-Invoice, a stipulated period of time
the e-Invoice meets the necessary standards and is given to:
criteria.
Buyer to request for rejection of the e-Invoice.
Once validated, the supplier will receive a Unique
Identifier Number from IRBM via MyInvois Portal or API. Supplier to perform cancellation of e-Invoice.
Rejection request or cancellation must be
The Unique Identifier Number will allow traceability by accompanied by justifications.
IRBM and will reduce instances of tempering with the
e-Invoice.

3 Notification of validated e-Invoice 6 MyInvoice Portal

IRBM will inform both the supplier and buyer once Supplier and buyer will be able to aobtain a summary of
e-Invoice has been validated via MyInvois Portal or APIs. the e-Invoice transaction via MyInvois Portal.

The e-Invoice introduction will bring a lot of changes to business. To face these changes and carry on with
achieving your business goals as well as to avoid penalties and maintain compliance, it is essential for
companies to be able to understand and adhered to these e-invoice regulations.

With that, Companies are recommended to get a head start on the e-invoicing strategy and
implementation. Here are some key aspects to consider:

Start assessing changes to your organisation to ensure readiness.

Determine availability of data sources and IT capabilities to support system readiness.

Initiate communication with relevant stakeholders.

Get in touch to know more about how SALIHIN can help you achieve and maintain compliance with the
e-invoicing regulations and requirements.

CONSULT US NOW !

Norzila Luqman Hakim Mohamad Hafizzul Aswad

Othman Hashim Mohd Idris
Executive Director, Tax Senior Manager, Tax Manager, Tax
norzila@salihin.com.my hakim@salihin.com.my aswad@salihin.com.my

@salihingroup