Malaysia is about to take a significant step in modernizing its tax system with the implementation of mandatory electronic invoicing for all transactions, including B2B, B2C, and B2G, starting from August 1, 2024. This initiative will be carried out in phases so that all taxpayers can gradually adapt to the new system.
Implementation Phases
The obligation to use e-invoicing will be implemented in the following stages:
- August 1, 2024: all taxpayers with an annual turnover equal to or greater than 100 million MYR (approximately €19.8 million) will be required to use electronic invoicing.
- January 1, 2025: taxpayers with an annual turnover between 25 million MYR (approximately €4.9 million) and 100 million MYR (approximately €19.8 million) will be required to use e-invoicing.
- July 1, 2025: the obligation will extend to all taxpayers, regardless of their annual turnover.
Electronic invoice model
The electronic invoice model that Malaysia will apply is the Continuous Transaction Control (CTC) system. The CTC involves real-time validation for all credit notes, debit notes, and refund invoices, both domestic and cross-border. This system ensures transparency and accuracy in the invoicing process, offering benefits for both taxpayers and tax authorities.
How will the electronic invoicing process work?
The tax agency in Malaysia is called the Inland Revenue Board (IRBM), and it is the driving administration behind this project. To make it a reality, the IRBM has created a platform where all electronic invoices must be sent for validation and registration.
The electronic invoicing process in Malaysia will follow these steps:
- Submission to the public platform: the invoice will be sent to the IRBM platform.
- Validation and assignment of an ID: the platform will validate the invoice and send a unique ID to the supplier.
- Incorporation of the ID and QR code: the supplier must embed the ID and a QR code in the invoice before sending it to the final recipient.
The implementation of electronic invoicing in Malaysia is a crucial step towards the modernization and efficiency of the country’s tax system. With a gradual approach and a robust continuous transaction control system, Malaysia is positioning itself at the forefront of digital transformation in the region. Companies must prepare to adapt to these changes, taking advantage of the benefits that electronic invoicing brings.
