As a business owner, you’re always looking for ways to streamline operations and stay ahead. One area that’s essential for your business moving forward is e-invoicing. If you’re wondering what it’s all about, don’t worry—let us guide you through what it is, why it matters, and how to get started with ease. Think of this as your quick guide to embracing e-invoicing, so you can focus on growing your business.
Why E-Invoicing Matters?
E-invoicing, or electronic invoicing, is the process of creating, sending, and storing invoices digitally. It’s becoming mandatory in Malaysia as part of a government initiative aimed at improving tax collection and reducing tax evasion.
Here’s the deadline to keep in mind for e-invoicing implementation:
By 1st August 2024: Businesses with an annual turnover of more than RM100 million
By 1st January 2025: Businesses with an annual turnover between RM25 million and RM100 million
By 1st July 2025: All businesses, big or small
Switching to e-invoicing won’t just help you stay compliant—it'll also streamline your invoicing process, cut down on errors, and help you stay aligned with the Sales and Service Tax (SST) system.
How to Get Started with E-Invoicing?
Transitioning to e-invoicing might seem like a big task, but it doesn’t have to be. Here’s a simple step-by-step approach:
Choose the Right Platform: Pick an e-invoicing system that works for your business. Make sure it’s accredited by MDEC (Malaysia Digital Economy Corporation) and compatible with the PEPPOL network. A few popular options include:
ClearTax: An MDEC-accredited solution provider
Xero: A well-known accounting software for small businesses
Info-Tech: Affordable e-invoicing options
Ensure Compliance: Your chosen platform should meet government requirements, such as adding digital signatures and QR codes to your invoices.
Get the Team Ready: Train your team to use the new system. Make sure everyone is comfortable with generating and sending e-invoices.
Test the System: Before going live, test the system to ensure everything works smoothly, from integration with your accounting software to generating compliant invoices.
Stay Updated: Rules can change, so make sure to keep an eye on any new updates and adjust your system as needed.
How does the E-Invoicing Process Work?
Here’s a simplified guide to the e-invoicing process:
Not ALL transactions need e-invoices
When it comes to B2C transactions, not every purchase needs an e-invoice. For smaller transactions, like those at your favourite cafe or retail shop, a regular receipt usually does the job—unless the customer specifically asks for an e-invoice.
And here's the catch: the buyer has 30 days to make that request. After that? You’re free to politely decline.
Here’s a simplified guide on handling buyers who do and don’t need e-invoices:
Don’t Forget Internal Expenses
E-invoicing isn’t just about what’s happening outside the company—it’s just as important for what’s happening inside. Whether it’s treating your team to lunch or covering other staff benefits, you’ll need an e-invoice to keep things tax-deductible.
A quick tip: Make sure the invoice has your company name listed as the buyer, not the employee who swiped their card.
Why E-Invoicing is a Game-Changer?
E-invoicing isn’t just a box to check. It’s a way to streamline your operations and improve your bottom line. Here’s why you’ll want to embrace it:
Save Time: No more manually entering invoice details or chasing down missing payments. E-Invoice is generated and sent instantly and automated.
Lower Costs: No need for paper, printing, or postage, and there’s no need to allocate people to do manual invoice. E-invoicing helps you save money in the long run.
Boost Accuracy: Automatic checks reduce the chance of mistakes and help keep everything tax-compliant.
Go Green: Less paper means less waste, making e-invoicing a win for the environment.
FAQs
What is the grace period for e-invoice in Malaysia?
The Malaysian government offers a six-month grace period for e-invoicing fines.
What are the incentives for e-invoicing in Malaysia?
Absolutely! The government has rolled out some perks to make the transition smoother:
Tax Deduction: MSMEs can claim up to RM50,000 per year (2024–2027) in tax deductions for e-invoicing consultation fees.
Capital Allowance: Up to 60% of costs for ICT equipment and software can be claimed as a capital allowance for the 2024 and 2025 assessment years.
Who needs to comply with e-invoicing, and when?
E-invoicing becomes mandatory on these key dates:
By 1st August 2024: Businesses with an annual turnover of more than RM100 million
By 1st January 2025: Businesses with an annual turnover between RM25 million and RM100 million
By 1st July 2025: All businesses, big or small
Who should we reach out to if there are any queries or concerns?
If you need help, here are your go-to resources:
Email: myinvois@hasil.gov.my
Help Desk: Call the MyInvois Help Desk Line at 03-8682 8000 (available 24/7, Monday to Sunday).
Live Chat: Use the MyInvois Live Chat on the LHDN website.
What Are the Penalties for Non-Compliance?
Missing the e-invoicing requirements can lead to some hefty consequences:
Fines ranging from RM200 to RM20,000.
Imprisonment up to 6 months for serious cases.
Can I still claim deductions if I help the boss buys pizza for the team?
Yes, you can claim deductions for team-related expenses like pizza. However, for the deduction to be valid, the invoice must list the company’s name and details as the buyer. If the invoice is under an individual’s name, it won’t qualify for tax deductions. Always ensure purchases are made and documented under the company to avoid any issues.
The Future of E-Invoicing for SMEs in Malaysia
E-invoicing isn’t just a trend—it’s the future. By getting on board early, you’ll gain a competitive edge, streamline operations, and set your business up for long-term growth. Don’t wait until the deadline; start now to make your transition seamless and stay ahead of the curve.
Simplifying your tax reporting and reducing admin tasks is just the beginning. E-invoicing is your key to building a smarter, more efficient, and more transparent business in the digital age.
