Electronic Invoicing in Malaysia

[Mervyn]

What is electronic invoicing in Malaysia?

Electronic invoicing, also known as e-invoicing, is gradually gaining acceptance worldwide, including Malaysia.

In Malaysia, e-invoicing is part of the Malaysian government's initiative to promote digital transformation and a paperless environment among businesses. It's an electronic method of billing your clients for goods sold or services rendered, and it's achieved through email or any other electronic medium.

One key advantage of e-invoicing is that it supports the country's move towards digital tax monitoring. The Malaysia Royal Customs Department introduced the Sales and Service Tax (SST) in 2018. E-invoicing makes it easier for businesses to calculate, track, and pay this tax in real time.

Malaysia plans to implement a mandatory e-invoicing system for all taxpayers, regardless of their sales turnover, from July 2025. This will be a gradual implementation, with the first phase beginning in August 2024 for taxpayers with an annual turnover of MYR 100 million or more.

The Malaysian Inland Revenue Board (IRB) has developed two mechanisms for taxpayers to transmit their e-invoices to the IRB:

• MyInvois Portal: A web-based portal that allows taxpayers to create and submit e-invoices manually or in batches

• API integration: This allows taxpayers to integrate their e-invoicing system with the IRB's system to automate e-invoice transmission.

Taxpayers can choose the mechanism that suits their business requirements better.

Image from the website of LHDN (Lembaga Hasil Dalam Negeri)

The increasing adoption of e-invoicing in Malaysia is expected to help enhance efficiency, reduce costs, speed up payment cycles, improve financial management, and minimize errors and fraud. Businesses also get to contribute to environmental sustainability as e-invoicing reduces paper use.

Malaysian businesses will join a nationwide e-invoicing framework that adheres to international Peppol standards. This framework allows businesses to send and receive invoices over the Peppol network, regardless of their accounting solution.

How to prepare for e-invoicing?

Businesses can start preparing for e-invoicing by carrying out the following activities:

• Assess their current invoicing process to identify the areas where they can improve efficiency and reduce costs.
• Choose an e-invoicing solution that meets their specific needs and budget.
• Integrate their e-invoicing system with their ERP system to automate e-invoice transmission.
• Educate their staff on the new e-invoicing process.
• Check with your tax internal team or tax consultant to procure the digital certificate , please refer to the MCMC website.

As the Malaysian government continues to promote digitalization, further milestones for e-invoicing can be anticipated in the coming years.
SAP’s go-to solution to support electronic documents and statutory reporting requirements globally is SAP Document and Reporting Compliance. This would be the strategic choice to support electronic invoicing in Malaysia too.
SAP is currently analyzing the electronic invoicing requirements available. In the meantime, we are analysing the SDK version 1.0 which is released on 6 April 2024. If you’d like to explore the SAP Document and Reporting Compliance Cloud Edition solution, please visit SAP Document and Reporting Compliance

According to the guidance , taxpayer is required to have the Digital certificates for signing to submit MY e-Invoice. 

To procure digital certificates, you may refer to the MCMC website for a list of Certificate Authority (CA) in Malaysia.  https://www.mcmc.gov.my/en/sectors/digital-signature/list-of-licensees

For upcoming legal changes, the recommendation is to use our Regulatory Change Manager where you can find the latest status of upcoming regulations, including Malaysia. 

For more details information about Malaysia E-Invoicing , you may refer to SAP Note no.3459968 - Electronic Invoice Processing for Malaysia: Pre-Implementation Guidance  

- SAP Business Network  :
B2B electronic invoices in 2024

UPDATE Nov 1, 2023: SAP has confirmed roadmap for e-invoices in MY. Scope and timeline detailed in the links above.

UPDATE Feb 8, 2024: SAP has updated the roadmap for e-invoices in MY. Scope and timeline detailed in the links as per our Regulatory Change Manager. 

UPDATE April 22, 2024: SAP has updated the information about the digital certificate that refer to the MCMC website for a list of Certificate Authority (CA) in Malaysia.

[Mukesh1]

Thanks Mervyn for sharing the update.

[violet24]

Has SAP Planned any field in  Customer master to Store the TIN Number or it would be left to the company ?

[TehKH]

Hi Mervyn,

Thanks for the informative post. But I do have some questions.

1) Is SAP DRC available in both S4H and ECC systems, or is it exclusive to S4H?
2) If SAP DRC is not available for ECC, is eDocument the alternative solution?
3) What are the differences between SAP DRC and eDocument?

[martinlitalin]

@TehKH - please see below:

1) Yes, the solution will be available to both S/4 and ECC. For details please check the link to the Regulatory Change Manager above. On-premise unless stated otherwise denotes ECC.

2) See point 1)

3) SAP DRC is comprised of two former solutions - Advanced Compliance Reporting (ACR) and Document Compliance, formerly known as DC or eDocument(s). DRC came into effect in October 2021. So the E-Invoicing portio of DRC is former eDocument, so to speak. 

[violet24]

Hi SAP Team,

Are you planning to have a pre- workshop for Malaysia E-invoice To-be solution ?

As we are all aware that SAP solution will come pretty late and we will have very little time to implement and perform all the testing. So! we need to understand, what is the proposed solution and which scenarios are not covered, so that we can at least plan for a customized solution.

Thanks!

[martinlitalin]

We are indeed planning a Malaysia webinar, please stay tuned for any updates!

[shengshyan_lim]

hi @martinlitalin 

any tentative date for the Malaysia webinar?

or where can I check on the updates for the webinar?

thank you!

[martinlitalin]

Hi, we should have a date soon. Please check this site under events for the scheduled date:

https://pages.community.sap.com/topics/document-reporting-compliance

[violet24]

Hi All,

Do we have a basic Self Billing Process Already available for the Malaysia requirement or is it a completely new Solution which we are waiting from SAP ? 

[Mervyn]

Hello everyone , I just want to add regarding the MY E-Invoicing workshop.

We've already conducted the MY E-Invoicing workshop - 2 series of the SAP E-Invoicing workshop on Dec 2023 and February 2024. Recordings and materials are now available upon request. for SAP Customers only [Registration | MY SAP e-Invoicing Workshop].

Please stay tune and check this site under events for the next workshop / scheduled date:

https://pages.community.sap.com/topics/document-reporting-compliance

Thank you

[AT98]

Hi @Mervyn,

I have a question, does SAP support in the creation of QR code its customers for implementing the Malaysian E-Invoicing?

Thanks,

[martin_banasiak]

Hi @Mervyn, Hi @martinlitalin 

According to E-INVOICE GUIDELINE (VERSION 2.3) - DATE OF PUBLICATION: 6 APRIL 2024

It's clear that each and every invoice would require official digital signature.

"A digital certificate is a document (i.e., .cer or .pfx) that helps to verify the identity of the issuer issuing the e-Invoice. The digital signature will verify that the submitted e-Invoice originates from a specific taxpayer. The hashed value of the digital signature will be part of the e-Invoice API submission request body. "

"23. Issuer’s Digital Signature An electronic signature to ensure integrity and non-repudiation of documents. The e-Invoice shall be signed using issuer’s digital certificate. In the event where taxpayers utilise the services of service provider, the e-Invoice shall be signed using service provider’s digital certificate. Please refer to the SDK for more details on digital certificate."

What digital certificate/signature mechanism is offered by SAP to fulfil this legal requirement?

Thanks,

Marcin

[violet24]

Hi SAP Team,

Ref. to Appendix 2 Page 47 of the Guidelines. Additional Mandatory fields to be included in  Annexure to E-invoice.

Can you guide on where & when this Number is stored in SAP ? (Form K9)

[nickzhou]

@martinlitalin  @violet24 

Is there the recording of Malaysia E-Invoicing workshop session? 

[martinlitalin]

Hi nickzhou,

we had this link but it seems to be broken under events here: https://pages.community.sap.com/topics/document-reporting-compliance

We are working on getting it back working, please keep checking.

Martin

[Bernhard]

Thanks a lot, very useful!!