Malaysia's e-Invoicing Mandate
The e-invoicing mandate introduced by the Inland Revenue Board of Malaysia (LHDN) is part of the government's broader effort to digitize and streamline tax administration in the country.
This initiative aligns with Malaysia’s Twelfth Plan to enhance digital services and improve tax compliance.
Implementation Timeline
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1 August 2024 — Mandatory for taxpayers with an annual revenue of more than RM100 million.
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1 January 2025 — Mandatory for taxpayers with an annual revenue of more than RM25 million and up to RM100 million.
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1 July 2025 — Mandatory for all other taxpayers.
Scope
The mandate covers all domestic and cross-border transactions, including B2B, B2C, and B2G transactions. It requires electronic issuance of sales invoices, credit and debit notes, receipts, and cancellations
Process
Malaysia's e-invoicing follows a Continuous Transaction Controls (CTC) model, where invoices must be sent to LHDN for real-time verification before being delivered to the customer. This process involves submitting a structured XML invoice file via API to the MyInvois platform. After verification, the invoice is returned to the seller and can then be exchanged with the buyer.
Technology and Integration
Large taxpayers are expected to integrate their systems with the MyInvois platform using APIs, which allows for automated handling of large transaction volumes. Smaller businesses may use the MyInvois portal for manual submissions.
How automation and AI can help
Robotic Process Automation (RPA) can be a powerful tool for companies to fulfill the e-invoicing mandate in Malaysia. Here's how RPA can be leveraged:
Automated Data Extraction and Entry
Invoice Data Collection: RPA bots can automatically extract relevant data from various sources such as ERP systems, accounting software, or even emails. This data includes invoice details, client information, and transaction specifics.
Data Validation: RPA can validate this extracted data against predefined rules to ensure accuracy before submission, reducing the risk of errors that could lead to non-compliance.
Seamless Integration with the MyInvois Platform
API Integration: RPA bots can be configured to interface directly with the MyInvois API. They can automatically submit the structured XML invoice files to the LHDN for real-time verification. This integration ensures that invoices are submitted in the correct format and within the required timeframe.
Handling Large Volumes: For companies dealing with large volumes of invoices, RPA can automate the entire submission process, handling thousands of transactions simultaneously without human intervention.
End-to-End Process Automation
From Creation to Submission: RPA can automate the entire invoicing lifecycle—from generating the invoice in the company’s system, through to submitting it to LHDN, and finally delivering it to the customer. This not only ensures compliance but also streamlines operations.
Monitoring and Alerts: RPA bots can monitor the status of each invoice submission and provide alerts or notifications if any issues arise (e.g., if an invoice is rejected by LHDN). This helps businesses take prompt corrective action.
Compliance and Reporting
Audit Trail: RPA ensures that every action taken during the invoicing process is logged, providing a clear audit trail. This is crucial for compliance purposes and can be easily reviewed during audits.
Automated Reporting: Bots can generate and submit the necessary reports to LHDN, summarizing all invoicing activities within the required periods. This minimizes manual effort and ensures timely compliance.
Scalability and Flexibility
Scalability: RPA can easily scale with the business. As the company grows and the volume of transactions increases, additional bots can be deployed to handle the load without significant additional costs.
Adaptability: RPA systems can be adapted to handle new regulations or changes in the e-invoicing process, ensuring that the business remains compliant without needing to overhaul its entire invoicing system.
Cost Reduction and Efficiency
Reduced Manual Labor: By automating repetitive and time-consuming tasks, companies can reduce the need for manual labor, leading to cost savings.
Increased Accuracy: Automation minimizes the likelihood of human errors, which can lead to penalties or issues with compliance.
