Malaysia E-Invoicing Mandate & Self-Billed Invoices

Electronic Invoicing in Malaysia for Phase 1 went live from August 1, 2024, for taxpayers with an annual turnover or revenue of more than RM100 million. It includes invoice of a transaction between buyer and seller, debit note, credit note and refund note.

To foster the implementation of e-invoicing the Malaysian government in its 2024 budget introduced tax incentives for implementing e-Invoicing. MSMEs can receive a tax deduction of up to RM50,000 per assessment year for expenses related to environmental, social, and governance activities.

Transition from traditional to e-invoicing for businesses has challenges such as different format requirements, validation checks, data privacy & security, and many more. One of the complexities in e-invoicing process is the understanding of self-billed invoice.

What is a self-billed invoice?

When a sale or transaction happens, the supplier sends an e-invoice to record their income and to show that they?ve been paid (proof of income). This e-invoice also serves as a record for the buyer, showing what they?ve bought and how much they?ve spent (proof of expense). But there are circumstances where supplier is not able to issue an e-invoice, in these cases anyone other than issues an invoice.

A self-billed invoice is a type of invoice that is issued by a buyer or customer on behalf of a supplier or seller. When a buyer is obligated to issue a self-billed e-invoice, they assume the role of the supplier, generating and submitting the e-invoice to the Inland Revenue Board of Malaysia (IRBM) for validation. After the buyer gets a validation from IRBM, he or she can use that self-billed e-invoice as proof of expense. Since the Buyer takes on the role of the Supplier by issuing a self-billed e-Invoice, they must provide the Supplier with a copy of the validated self-billed e-Invoice once it has been approved. IRBM offers a concession that lets the Buyer share either the approved self-billed e-Invoice or a visual copy of the approved self-billed e-Invoice with the Supplier.

Example of a self-billed e-invoice:

Company ?A? in Malaysia purchases goods or supplies from a Company ?B? in India. Goods are received in Malysia by company ?A?, but company ?B? is a foreign supplier for company ?A?. Company ?B? does not use Malaysia?s MyInvois system. So here, Company ?A? as a taxpayer in Malaysia would issue a self-billed e-invoice and get it validated from IRBM. After validation from IRBM, this self-billed e-invoice can be used by taxpayer as a proof of expense for tax purpose.

Transactions included for self-billed e-invoice in Malaysia

According IRBM, for e-invoice purpose, buyer shall issue self-billed invoices for the below mentioned transactions:

• Payments made to agents or dealers or distributors
• Foreign suppliers
• Distribution of profits such as dividends
• E-commerce transactions
• Pay-out to all betting and gaming winners
• Transactions made with individuals who are not doing any business
• Interest payments barring some exceptions

Please be aware that consolidation does not apply to self-billed e-invoices, except in the following scenarios:

(a) Transactions with individuals who are not engaged in business activities.

(b) Interest payments made to the public, regardless of whether they are businesses or individuals.

(c) Claims, compensation, or benefit payments from an insurer?s insurance business to individuals.

Specifications and process of a self-billed e-invoice

The generation of a self-billed e-invoice is same as a normal e-invoice. But there is a change in the visual representation of QR code and sharing it with the supplier.

• For self-billed e-invoices related to the importation of goods, Malaysian purchasers must issue the self-billed e-invoice by the end of the month following the month in which customs clearance was obtained.
• For self-billed e-invoices related to the importation of services, Malaysian purchasers must issue the e-invoice by the end of the month following either (1) the payment date by the Malaysian purchaser or (2) the receipt of the invoice from the foreign supplier, whichever occurs first.
• The issuance of self-billed e-Invoices on payments to agents, dealers, and distributors can be done on either an accrual basis or paid basis, if this is consistently applied and in line with the documentation provided to the agents (e.g., statements).
• If employees incur expenses overseas, neither the employer nor the employee is required to issue a self-billed e-invoice. Instead, IRBM will accept foreign bills, receipts, invoices, or existing supporting documentation as proof of the expense. This exception applies only if the employer can demonstrate that the employee incurred these expenses on behalf of the employer.
• Submission via MyInvois Portal: When the Buyer submits the self-billed e-Invoice for validation through the MyInvois Portal, the visual version of the e-Invoice generated will feature a QR code. This QR code can be used to check the e-Invoice's existence and status on the MyInvois Portal.
• Submission via API transmission: When buyer share the visual representation of the self-billed e-invoice to supplier, there is requirement to make sure that QR code is incorporated on it before sharing the same with supplier. 

How can Taxilla help?

Taxilla is a global leader in e-invoicing solutions, offering a robust and scalable platform designed to transform your e-invoicing process. Our advanced software ensures that your business remains compliant with the latest regulations, including the recent updates from IRBM in Malaysia. We integrate these updates seamlessly into your operations, ensuring both efficiency and adherence to all requirements.

By choosing Taxilla, you access a powerful platform built to manage the complexities of e-invoicing with accuracy and reliability. Our user-friendly and adaptable software supports businesses of all sizes and across various industries. We also provide extensive customer support and training to ensure a smooth transition to the e-invoicing system.

Taxilla is dedicated to helping Malaysian businesses adapt to the evolving e-invoicing landscape. Our team stays informed about the latest changes from IRBM and other regulatory bodies, ensuring that our software remains up-to-date and compliant. Embrace the future of e-invoicing with Taxilla and enjoy seamless, efficient, and compliant business operations.