Navigating the Complexities of E-Invoicing Integration with Malaysian Tax Regulations

As per Inland Revenue Board of Malaysia’s announcement, businesses operating in Malaysia are required to generate e-invoices for B2B, B2C and B2G transactions. Eligible taxpayers are required to submit their e-invoices to IRBM in XML or JSON format (UBL 2.1) via My Invoice portal or direct API connection. Sustaining compliance throughout the process is complex to navigate through as it comprises numerous details and specifications. This blog focuses on challenges of integration with e-invoices systems and best practices to tackle them. 

About Malaysian E-invoicing Regulations

The IRBM being an authoritarian regulatory body of Malaysia supervising the mandatory e-invoicing compliance among covered businesses. The businesses are covered by each based on their annual revenue or turnover. The phased accumulation process enables precise operation and better compliance rate. Starting from 1 Aug, 2024 onwards, businesses with annual revenue or turnover equal or more than MYR 100 million must adhere to the e-invoicing mandate. The second phase is going to initiate from 1 Jan, 2025 onwards requiring businesses with annual revenue or turnover between MYR 25 million and MYR 100 million to issue their e-invoices. For the concluding phase, businesses regardless of size or scale must comply with the e-invoicing mandate. Also, businesses with annual revenue or turnover of less than MYR 150,000 are currently exempted from the e-invoice mandate. E-invoicing is a state authorized mandate with which businesses and taxpayers operating in Malaysian territory must comply. Non-compliance could lead to hefty penalties ranging from RM 200 to RM 20,000 or imprisonment for more than 6 months. Businesses must abide by key requirement standards while processing their e-invoices.

• LHDN approval - LHDN approval is essential before issuing invoices, post approval certified serial number will be shared with seller & buyer. 
• E-invoice format - invoices to be submitted in XML or JSON format. 
• Portal- businesses may use MyInvois portal or LHDN API to send or receive invoices.

E-invoicing System & Integration

Variety of e-invoicing solutions exist yet the question of choosing your suitable e-invoice medium depends on the scale of the businesses. Usually, SMEs opt for cloud based e-invoice integration due to numerous advantages associated with it. Whilst large scale businesses should opt for ERP integrated e-invoicing solutions as that perfectly accommodates the existing data and fasten up the process of invoicing with respect to standards set by e-invoicing authorities. Webtel has been a reputed comprehensive solution to the query of integrating ERPs with e-invoicing solutions coupled with friendly customer care support. Although the most common hurdle businesses witness is when they have to adjust their ERPs with respect to e-invoicing standards. The upgrading or replacing existing systems is disruptive and non-economical. Possible challenges could be:

• Regulatory Challenge- Malaysia has specific regulatory requirements for e-invoicing, including invoice structure, data elements, and submission processes. Ensuring compliance with these standards can be time-consuming and complex.
• Technical Challenge- Existing businesses with non e-invoicing supportive algorithms would require a separate technical team and effort to adjoin with the updates system. Integrating an e-invoicing solution with an ERP system requires technical expertise and can be time-consuming. Ensuring accurate data mapping between the two systems is crucial for seamless e-invoicing.
• The seamless integration of ERPs and e-invoicing offers profound significance for businesses seeking streamline operations, ensure compliance with regulatory requirements and improve efficiency. Webtel is an IRBM authorization solution provider to mediate e-invoicing solutions through integration with ERPs, tested and implemented in Malaysia. 

Summing Up

In conclusion, the implementation of e-invoicing in Malaysia presents both opportunities and challenges for businesses. While the transition to electronic invoicing can streamline operations and improve efficiency, it requires careful planning and attention to detail. By addressing regulatory compliance, technological readiness, data security, integration complexities, and resistance to change, businesses can successfully navigate the intricacies of e-invoicing and reap the benefits of this transformative technology. Webtel offers comprehensive e-invoicing solutions tailored to the specific needs of Malaysian businesses. With our expertise in ERP integration and deep understanding of the local regulatory landscape, we can help you navigate the complexities of e-invoicing and achieve a successful implementation.

Contact us today to learn more about how Webtel can support your e-invoicing journey.