(Tax Update) New e-Invoicing Rules in Malaysia: Are You Ready?

The Malaysian government has introduced the Income Tax (Issuance of Electronic Invoice) Rules 2024, published on 30 September 2024, and effective from 1 October 2024. Here’s everything you need to know to stay ahead in the game.

1. Purpose of the Rules

These new rules establish the legal framework and requirements for electronic invoicing (e-invoicing) in Malaysia, ensuring businesses transition smoothly into the digital tax era.

2. Implementation Timeline

Key dates for businesses based on their annual sales:

Over RM100 million: Implementation starts 1 October 2024
Between RM25 million – RM100 million: 1 January 2025
Below RM25 million: 1 July 2025

3. How to Determine Annual Sales

Based on the 2022 financial year audited statements or tax returns.
If there was a change in the accounting period in 2022, a specific formula must be used.

4. E-Invoice Requirements

The rules outline mandatory and optional fields for e-invoices:

Mandatory Details:
- Seller and Buyer Information
- Invoice Number and Date
- Product/Service Description and Quantity
- Tax-related Information
Optional Details: Payment information or other buyer-seller-specific data.

5. Who is Exempted?

The following are not required to issue e-invoices:

Foreign diplomatic offices
Individuals not engaged in business
Certain transactions by statutory bodies, local authorities, and international organizations until 1 July 2025.

6. Special Provisions to Note

Businesses involved in import/export must follow additional e-invoicing requirements.
If your company had a change in the financial year during 2022, you must adjust annual sales calculations accordingly.

7. Key Takeaways – Important Update on Timeline Discrepancy

The Income Tax (Issuance of Electronic Invoice) Rules 2024 (P.U. (A) 265) differ slightly from earlier e-invoicing guidelines:

Previous Guideline: Start date for businesses with over RM100 million annual sales was 1 August 2024.
Official Rules: Now set the start date as 1 October 2024.

What This Means for Business :

Legally Binding Date: 1 October 2024 is the official deadline.
Additional Time: Businesses in the first batch now have two extra months (August and September) to fine-tune their e-invoice systems.
Action Required:
- Use this time to ensure compliance with all mandatory e-invoice requirements.
- Review internal systems and processes to avoid non-compliance penalties.

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