BDO Corporate Tax News

E-invoicing is being implemented in Malaysia in stages, with the first guidelines issued by the Inland Revenue Board of Malaysia in July 2023 and subsequently updated in September and October 2023. The phased-in approach is expected to enhance the efficiency of tax administration management.

To facilitate the implementation of e-invoicing, enabling provisions have been inserted into the Income Tax Act 1967, the Petroleum (Income Tax) Act 1967 and the Labuan Business Activity Tax Act 1990 through Finance (No. 2) Act 2023. These provisions came into operation on 1 January 2024.

An e-invoice is an invoice or any document approved by the Director General of Inland Revenue (DGIR) that is issued by a person in respect of goods sold or services performed, in accordance with regulatory requirements. E-invoices are required to be transmitted electronically and validated by the DGIR. The requirement for e-invoicing will apply to all taxpayers undertaking commercial activities in Malaysia and will cover business-to-business (B2B), business-to-consumer (B2C) and business-to-government (B2G) transactions.

Penalties will be imposed for failure to comply with the e-invoicing requirements. For example, a fine of not less than MYR 200 and no more than MYR 20,000 and/or imprisonment not exceeding six months will be imposed for failure to issue an e-invoice in respect of any goods sold or services performed.

The timeline for implementation of e-invoicing in Malaysia is as follows:
 

David Lai
BDO in Malaysia