Malaysia: IRBM releases Software Development Kit (SDK) for e-Invoicing

IRBM releases Software Development Kit (SDK) for e-Invoicing

On February 9, 2024, the Inland Revenue Board of Malaysia (IRBM) introduced the Software Development Kit (SDK) for e-Invoicing. This toolkit comprises various tools, libraries, and resources designed to facilitate businesses in integrating their existing systems with the MyInvois System via API.

Key updates include:

  1. Individuals not engaged in business activities (e.g., landlords earning passive rental income) are exempt from the requirement to issue self-billed e-Invoices. However, if the tenant is a business operator, the self-billed e-Invoice requirement applies.
  2. For staff claims (e.g., F&B receipts) and staff perquisites (e.g., gym membership), the guideline now permits the use of 'existing supporting documents' to substantiate expenses instead of e-Invoices, as previously required.
  3. Self-billed e-Invoices are not eligible for the consolidation approach.
  4. The mandatory requirement for MSIC code in self-billed e-Invoices has been removed, simplifying the process for invoices issued for goods or services purchased from foreign vendors.
  5. Self-billed e-Invoices for imported goods must now be issued 'upon obtaining Customs clearance,' without any specified grace period, considering the lead time between Customs clearance and Accounts Payable (AP) posting.
  6. For payments to foreign vendors for services, self-billed e-Invoices are required upon receipt of the vendor’s invoice or, if earlier, upon payment. Unlike the Service Tax Act, there is no grace period provided for compliance.
  7. The scope of self-billed e-Invoices now includes interest payments and rebates granted by businesses issuing monthly statements adopted as e-Invoices (e.g., corporate credit card statements inclusive of rebates recognized as income).
  8. Additional guidance is provided for self-billed e-Invoices in e-commerce transactions.

Best practices for e-Invoicing in Malaysia

Embracing e-Invoicing leads to significant changes in Accounts Receivable (AR) and Accounts Payable (AP) functions. In the Accounts Receivable (AR) domain, invoice validation through the MyInvois portal is a new requirement. Meanwhile, buyers receiving foreign invoices must self-issue e-Invoices. To facilitate a seamless e-Invoicing process, here are a few best practices for e-Invoicing in Malaysia:

Assess e-Invoicing Readiness:

  • Does e-Invoicing apply to your company, or would your company like to voluntarily opt for e- invoicing?
  • Will e-invoicing apply in future?
  • Evaluate your current ERP system's compatibility and if it can be retained and integrated with e-invoicing software?
  • Are my employees trained in handling the aspects of e-invoicing? 
  • Have the requirements been communicated with various stakeholders, and are they on board with the implementation?

Understand E-Invoice guidelines: 

Familiarize your organization with the e-invoicing requirements, format and other guidelines.

Choosing the Right Integration and experienced vendor: 

As discussed earlier, the IRBM offers two mechanisms for transmitting e-Invoices: The MyInvois Portal and API (Direct Integration). One advantage of direct integration is the seamless generation of e-Invoices within the ERP system in real time, with few or no changes to the ERP/billing system. Direct integration (API) enables a real-time generation and direct submission of e-Invoices. 

In case of any changes in the regulations, the middleware will be updated to meet compliance requirements. It offers diverse user-friendly and interactive options, such as desktop and cloud-based applications, with certain options allowing additional customization for individual preferences like printing QR codes on invoices etc. DespaQ is one of the most experienced vendors and offers seamless integration capabilities besides 99.99% success rate.

Prepare for E-Invoicing Launch: 

Drawing from our experience in other regions, it's evident that initiating the right steps from the outset can pave the way for a prompt and seamless implementation process. Irrespective of your choice regarding API integration, it's vital to consider various non-technical factors:

  • Diverse Project Team: Ensure a well-rounded team with IT, tax, finance, and project management expertise to drive the e-Invoice rollout seamlessly.
  • AR Billing Processes: Are you fully acquainted with your current Accounts Receivable (AR) billing procedures? Assess whether the timing of e-Invoice issuance aligns with the submission of e-Invoice data to the IRB.
  • Foreign Customer Invoices: If you deal with foreign customers, what's your plan for self-issuing e-Invoices for international transactions? Review how your system handles them.
  • Mandatory Data Fields: Plan for collecting essential e-Invoice data, like buyers' tax identification numbers.
  • Review: Conduct regular reviews to assess performance and prevent errors.

How can DespaQ help with e-Invoicing in Malaysia?

DespaQ offers one of the best e-Invoicing solutions in Malaysia. DespaQ offers comprehensive support for e-Invoicing, acting as a middleware to seamlessly connect your ERP system with the IRBM cloud, ensuring 100% IRBM compliance. The key features of DespaQ e-invoicing include:

  • Dedicated Account Manager: Each customer is assigned a dedicated account manager who provides expert guidance on compliance and technical aspects of e-invoicing with DespaQ.
  • Extensive Data Validations: DespaQ conducts over 150 data validations before transmitting information to IRBM, ensuring 99.99% success rate in e-invoice generation.
  • Rapid ERP Integration: DespaQ offers quick integration with over 50 ERPs. You can seamlessly incorporate DespaQ web APIs within 4-6 weeks to achieve compliance efficiently.
  • Data Archival: DespaQ ensures secure e-invoice data archival for up to seven years on SLA-based cloud servers, guaranteeing data retention and accessibility.
  • Value-Added Services: DespaQ goes beyond basic e-invoicing support by offering various value-added services to simplify the e-invoicing process for clients. 

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