Along with the rapid pace of the digital revolution, businesses need an easier way to exchange information and trade transactions both domestically and globally. In order to ensure the efficiency of the national taxation administration management in line with current technological developments, the government through the presentation of the 2023 Budget has introduced the implementation of e-invoicing as a new mechanism to achieve this goal.
The implementation of this e-invoice will be held in stages from the end of 2023 by focusing on system development and pilot projects with selected taxpayers. Its use is mandatory for businesses according to the sales threshold value in stages starting in June 2024. The details of the proposed implementation of this e-invoice are as follows:
January 2024 / Launching a pilot project for selected companies. Other companies can also implement it voluntarily.
Jun 2024 / Mandatory implementation for businesses that reach a sales threshold of RM100 million per year.
January 2025 / Mandatory implementation for businesses that reach a sales threshold of RM50 million per year
January 2026 / Mandatory implementation for businesses that reach a sales threshold of RM25 million per year.
January 2027 / Mandatory implementation for all businesses.
LHDN CEO Datuk Dr Mohd Nizom Sairi in his speech stated that the implementation of e-invoicing is not only able to improve the quality of services offered by tax administrators, but it also provides many benefits to taxpayers in terms of increasing the efficiency of business operations, simplifying record keeping and reducing tax compliance costs. He added that the implementation of e-invoicing can also create more transparent business transactions thus helping the government overcome the problem of the shadow economy in transactions.
Regarding the process of the e-invoicing, the buyer and seller must be registered with LHDN and will need to have a tax identification number. The e-invoice shall be sent to LHDN via Application Programming Interface (API), and LHDN shall go through the process of verification to ensure that all requirements are met.
LHDN will check the tax payer authentication and provide a URL data invoice that has been verified to the taxpayer who has given out the e-invoice.
LHDN then sends out the data e-invoice which has been verified through the API. The seller or issuer, upon receiving the verification from LHDN has to enter the URL data e-invoice to create a QR code for the invoice that has been sent to the buyer. At the same time, the buyer and seller shall receive a verification notification from LHDN with regards to the status of the e-invoice.
