Malaysia e-Invoicing Guideline Version 2.2

The Malaysia e-Invoicing Guideline represents a pivotal step towards modernizing and streamlining the invoicing processes within the Malaysian business landscape. Developed in response to the evolving digital economy and the government’s commitment to fostering efficiency and transparency in financial transactions, this guideline outlines the framework and standards for electronic invoicing practices across various sectors.

In this regard, on the 9th of February 2024, the Inland Revenue Board of Malaysia released an updated e-Invoice Guideline Version 2.2 replacing version 2.1 and e-Invoice Specific Guidelines Version 2.0 replacing version 1.1 under Section 134A of the ITA.

In this blog, we have noted down all major updates with the aim to keep businesses posted and maintain regulatory compliance.

1. Phased Implementation Timeline

Version 2.2 of the e-Invoice Guideline further clarifies the implementation timeline, placing the compliance obligation of issuing e-Invoice with the Supplier (or the Buyer for self-billed e-Invoice). During the time, taxpayers can receive either a normal receipt (if cases where the Supplier has yet not started e-Invoice per the implementation timeline) or a validated e-Invoice unless the full implementation is completed.

2. Persons Exempted from e-Invoice Issuing

Persons who do not run a business are included in the list of exempted persons in the updated e invoicing guideline (version 2.2). As a result, there are currently twelve (12) people on the list who are exempt from issuing electronic invoicing even if they are self-billed. Only receipts issued by these exempt individuals would be accepted as proof of expenditure for tax purposes.

For transactions involving the following exempt persons, suppliers may enter a General TIN (ie, EI00000000040) in the Buyer’s Taxpayer Identification Number (TIN) field:

• Government Authorities
• State Government and Authority
• Government Authority
• Local Administration
• Statutory Bodies and Authoritie
• Facilities (such as clinic, hospital, multi-purpose hall, etc.) supplied by the above government, authority or body

3. e-Invoice Representation Features via MyInvois Portal

The supplier will be provided with both a validated e-Invoice and a corresponding visual representation including QR code in PDF format by the Inland Revenue Board of Malaysia (IRBM) through the MyInvois Portal.This QR code enables users to authenticate the e-Invoice’s existence and current status directly through the MyInvois Portal.

4. Invoice Rejection/Cancellation

For the convenience of both parties, the e-Invoice Guideline (version 2.2) specifies a 72-hour period during which buyers can submit rejection requests and suppliers can cancel an e-Invoice. Credit notes, debit notes or return notification e-Invoices may still be issued if the supplier chooses not to use the cancellation/rejection feature.

5. API Integration and Data Structure Compatibility

The software development kit (SDK) contains a comprehensive guide on integrating and configuring APIs, complete with detailed information about the API endpoints. The e-Invoice structure has been specifically designed to cater to business-to-business (B2B), business-to-government (B2G), and business-to-consumer (B2C), streamlining the e-Invoicing process for all parties involved. Users can submit e-Invoices in XML and JSON formats, all while adhering to the standardized data structure outlined in the Universal Business Language Version 2.1 (UBL2.1).

6. Mandatory e-Invoice Fields

To issue an e-Invoice, 55 data fields are now needed, compared to the previous 51 field, divided into 8 groups (from the previous 9). The data fields have been updated and are listed below:

7. Consolidated e-Invoices

This guideline further stresses to guide Suppliers to take up one or a combination of the below mentioned processes for consolidated e-Invoices:

• When creating the consolidated e-Invoice, users would need to present the summary of each receipt/ statement/ bill as separate line items.
• Users would need to present the list of receipts, with continuous receipt/ statement/ bill numbers, as line items. If there is a break in the receipt statement/ bill number chain, the next chain would be included as a new line item.
• Each branch or location must submit a consolidated e-Invoice, choosing either option (a) or option (b) above for the receipts/ statement/ bill issued by that branch or location.

*Irrespective of the business method, for every transaction, only the receipt reference number is needed for inclusion under the Description of Product / Services data field for consolidated e-Invoice.

Please Note:

Certain regulated industries such as financial institutions, payment systems, and other relevant entities are exempt from disclosing the statement/bill reference number in the consolidated e-Invoice.

Self-billed e-Invoices do not require consolidation.

8. Activities Not Included for Consolidation of e-Invoices

• Luxury goods and jewellery industry/activity for the time being is paused until further details are provided.
• There’s uncertainty about the specific scope of luxury goods and jewellery that will be covered for e-Invoicing purposes.
• The Inland Revenue Board of Malaysia (IRBM) acknowledges potential challenges in issuing e-Invoices to individual buyers where consolidation isn’t permitted.
• A concession has been made for individual buyers, allowing Malaysian individuals to provide their Tax Identification Number (TIN) and/or MyKad/MyTentera identification number or both.
• Non-Malaysian individuals can provide either their TIN or both TIN and passport number/MyPR/MyKAS identification number. If a non-Malaysian individual lacks a TIN, the Supplier may use the General TIN “EI00000000020”.

9. Statement or bills on periodic basis

Suppliers must provide e-Invoices as evidence of income or expenditure for items listed in the statement

10. Self-billed e-Invoices

• Self-billed e-Invoices allow for three additional transactions: e-commerce (payment to merchant/service provider), payment/credit to taxpayers recorded in periodic statements/bills (e.g., rebates) and interest payments.
• In case of self-billed e-Invoice where the buyer is required to issue e-invoice, clarity is provided regarding the other party i.e. the supplier is no longer obligated to issue an e-Invoice for transactions covered by self-billed e-Invoices.

Further concessions are granted for required data fields:

• If the Supplier’s MSIC code is unavailable or not provided, the Buyer may input “00000.”
• If the Supplier’s Business Activity Description is unavailable or not provided, the Buyer may input “NA.”

11. Bill/Statement Frequency

• The updated e-Invoice Specific Guideline (Version 2.0) mandates Suppliers to issue e-Invoices as evidence of income and/or expense for items displayed in the statement.
• A concession is granted for cases where business registration numbers for foreign businesses are absent or not provided; Suppliers may input “NA” in the Buyer’s Tax Identification Number (TIN) data field.

12. Employment Benefits

The IRBM has clarified that businesses are permitted to utilize e-Invoices issued in the name of the employee or existing supporting documents issued by the Supplier to validate specific transactions as expense proof for tax purposes.

13. Payment Transactions to Agent/ Dealer/ Distributor

• The updated e-Invoice Specific Guideline (Version 2.0) further expands the scope of e-Invoicing to encompass any incentive, whether monetary or otherwise, that the Agent/Dealer/Distributor is entitled to receive from the Seller, not restricted solely to payments.
• It is obligatory for Malaysian Agent/Dealer/Distributor’s to furnish their Tax Identification Number (TIN) and business registration number for Malaysian businesses
• However, in case of foreign businesses where information is not available or not provided, the Seller may use “EI00000000030” for the Foreign Agent/Dealer/Distributor TIN and “NA” for the business registration number field.

14. International Transactions

Malaysian Purchasers should issue self-billed e-Invoices for importing goods upon obtaining customs clearance.

In case of services, a self-billed e-Invoice should be issued, whichever occurs earlier:

• Upon payment made by the Malaysian Purchaser.
• Upon receipt of the invoice from the foreign supplier.

In case of foreign purchaser there would not be any request for rejection from foreign purchaser. So, in case of any error on the validated e-Invoice, adjustment should be made by issuing of credit note/ debit note/ refund note e-Invoice by the Malaysian Seller.

15. Profit Distribution

For domestic distribution, with the rollout of e-Invoicing in Malaysia, taxpayers who are ineligible for tax deductions according to Section 108 of the Income Tax Act 1967, and those listed on Bursa Malaysia, will not be required to issue self-billed e-Invoices for dividend distribution.

16. Currency Exchange Rate

The currency exchange rate field in the e-Invoice allows for transactions conducted in foreign currencies (i.e., currencies other than Ringgit Malaysia – RM).

For e-Invoice issuance, the supplier has the following options:

1. Submit the e-Invoice in the relevant foreign currency along with the corresponding currency exchange rate, without including the RM-equivalent.
2. Submit the e-Invoice in the relevant foreign currency along with the RM-equivalent amount, without mentioning the currency exchange rate.
3. Submit the e-Invoice in the relevant foreign currency, along with both the RM-equivalent and the currency exchange rate.

17. Ecommerce

An e-commerce transaction refers to the sale or purchase of goods or services facilitated over any network using methods tailored for order placement or receipt. While the ordering process occurs online, the payment and actual delivery of goods or services are not necessarily conducted through online channels.

Such transactions involve different parties, including enterprises, households, individuals, governments, and various public or private organizations.

The IRBM has incorporated additional guidance for e-Commerce into the e-Invoice Specific Guideline (Version 2.0) in line with the FAQ published on 22 December 202.

1. For the sale of goods or provision of services on the e-Commerce platform, the responsibility for issuing:

• e-Invoices upon request from the Purchaser, or
• receipts if no e-Invoice is requested by the Purchaser, lies with the e-Commerce platform provider.

In cases where purchasers do not require an e-Invoice, the e-Commerce platform provider may prepare a consolidated e-Invoice monthly and submit it to the IRBM within 7 working days post the month end, excluding transactions/activities where consolidated e-Invoicing is not permitted.

• Merchants and/or service providers are not under any obligation to issue the e-Invoice or receipt to the Purchaser.

2. For goods/services payments from e-Commerce platform providers to merchant or service provider

• The e-Commerce platform provider bears the responsibility of issuing self-billed e-Invoices once the sale or transaction on the e-commerce platform concludes.
• The e-Commerce platform provider is permitted to generate and submit self-billed e-Invoices to merchants and/or service providers based on the current frequency of issuing statements (e.g., daily, weekly, monthly, bi-monthly).
• The e-Commerce platform provider is prohibited from issuing consolidated e-Invoices.
• In cases where information for foreign merchants and/or service providers is unavailable or not provided, the e-Commerce platform provider may use “EI00000000030” for the Tax Identification Number (TIN) and “NA” for the business registration number.

3. Charges for using e-Commerce platforms imposed by e-Commerce providers to service providers/merchants

• The e-Commerce platform provider is tasked with issuing e-Invoices for charges imposed on merchants and/or service providers for the use of the platform.
• In cases where information for foreign merchants and/or service providers is unavailable or not provided, the e-Commerce platform provider may input “EI00000000020” for the Tax Identification Number (TIN) and “NA” for the business registration number as a concession.

18. Cybersecurity

The IRBM has further stated that it will comply with the certification of the MyInvois System with ISO/IEC 27001 Information Security Management System (ISMS) and ISO 22301 Business Continuity Management System (BCMS) Audit Certification.