B2C e-Invoicing in Malaysia: A Simple Guide for Businesses

IRBM has implemented e-invoicing in Malaysia starting from August 1, 2024 (first phase), covering all transactions, including B2B, B2C, and B2G. While the processes for B2B and B2G transactions are quite similar—both requiring the generation of e-invoices that are validated by the government portal and shared with the buyer—the approach for B2C transactions is distinctly different. 

In the B2C scenario, the process of generating an e-invoice depends on whether the buyer requests it or not.

This blog explores B2C e-invoicing in Malaysia, detailing the process of generating e-invoices and the complexities involved.

B2C Transaction and Invoicing

B2C (Business-to-Consumer) transactions involve the sale of goods or services directly from businesses to individual consumers. These transactions are common in retail, e-commerce, hospitality, and other industries where end consumers are the primary market.

Currently, stores, e-commerce platforms, and other retail channels generate invoices using computer systems or POS (Point of Sale) systems and share them either as hard copies or in digital format through email. The particulars contained in B2C e-invoices are usually less detailed compared to B2B (Business-to-Business) invoices, as they typically do not include extensive buyer information.

B2C e-Invoicing in Malaysia

B2C e-invoicing in Malaysia is now mandatory as part of the government's broader e-invoicing initiative. 

1. Scope: B2C e-invoicing covers transactions between businesses (Suppliers) and end consumers (Buyers). These transactions typically involve consumption supplies such as groceries, utility bills, e-commerce purchases and retail purchases.
2. Requirement: Suppliers are obligated to issue e-invoices for all B2C transactions. These e-invoices serve as proof of income for the supplier and should be used by buyers for claims and reimbursements as proof of expense.
3. Exemptions: Certain end consumers and specific businesses may not require e-invoices for B2C transactions if they don't need them as proof of expense. However, the obligation to issue e-invoices remains with the Suppliers.
4. Implementation Timeline: B2C e-invoicing, along with other transaction types, follows a phased implementation plan set by the Inland Revenue Board of Malaysia (IRBM). The first phase begins from 1^st August 2024.

B2C e-Invoicing Process

Currently, Suppliers issue receipts and invoices in hardcopy and/or softcopy (e.g., via email) to buyers to document transactions. Upon implementing e-invoicing, Suppliers are mandated to issue e-invoices for all transactions. 

To assist Suppliers in adhering to e-invoice requirements and ease the burden on both Suppliers and Buyers, the IRBM permits Suppliers to consolidate monthly transactions with Buyers who do not need an e-invoice into a consolidated e-invoice.

Therefore, there are two different processes for B2C e-invoice generation.

Scenario 1: Buyer Requests an e-Invoice.

When a buyer requests an e-invoice for a transaction conducted at the store or on an e-commerce platform

1. Supplier seeks confirmation from the Buyer if an e-invoice is required.
2. Upon confirmation, the Buyer provides the Supplier with the necessary information for the e-invoice issuance.
3. Required details include (detailed table added after this section)
   • Buyer's full name (as per official Documents)
   • Taxpayer Identification Number (TIN) or Buyer's registration/identification/passport number 
   • Buyer's residential address
   • Buyer's contact number
   • Buyer's SST registration number (if applicable)
4. The Supplier completes the remaining e-invoice fields, including shipping recipient details if necessary.
5. The Supplier issues the e-invoice following the general e-invoice workflow. Depending on the requirements, the supplier could use either the MyInvois Portal or API integration.
6. The buyer confirms the generated e-invoice.

The validated e-invoice serves as the Buyer's proof of expense for tax purposes.

Scenario 2: Buyer Does Not Require an e-Invoice.

When buyers don’t require an e-invoice, the supplies can consolidate all the transactions and generate one single e-invoice monthly. Here is how the process works.

1. Supplier issues a normal receipt to the Buyer, following current business practices.
2. These receipts are not required for submission to IRBM's validation as they are not e-invoices.
3. Supplier aggregates transactions with Buyers who do not require e-invoices monthly.
4. A consolidated e-invoice is submitted to IRBM within seven (7) calendar days after the month ends.

IRBM has provided further guidelines for consolidated e-invoices, including:

• Summarize each receipt as separate line items.
• Listing receipts in a continuous receipt number sequence.
• Allowing branch(es) or location(s) to submit consolidated e-Invoices.
• Suppliers can split receipts into several consolidated e-invoices to meet these requirements.

Note: The consolidation should be done in accordance with the format and rules specified by the IRBM. Below is an example of consolidation.

Exception
Please note that consolidation does not apply to self-billed e-invoices, except in the following instances of self-billing:

• Procurement of goods or services from individual taxpayers not engaged in business activities.
• Payment of interest to the public, irrespective of whether they are businesses or individuals.

To optimise the performance of the MyInvois System, limitations are imposed:

• Maximum size of 5MB per submission.
• Maximum of 100 e-invoices per submission.
• Maximum size of 300KB per e-invoice.

Buyer Details Required for E-Invoice Generation

When a buyer requests an e-invoice, the buyer needs to submit the following details for e-invoice generation.

Challenges with B2C e-Invoicing

Implementing Business-to-Consumer (B2C) e-Invoicing poses several challenges that businesses must ensure smooth operations and compliance. Here are some key challenges:

1. High Volume Transactions: B2C businesses often deal with a high volume of transactions, making it challenging to efficiently generate, validate, and manage e-invoices for each individual sale. The sheer number of transactions can strain resources and systems/
2. Over-the-Counter Billing Delays: In scenarios where customers make purchases over the counter, delays in issuing e-invoices can occur due required exchange of details and the validation process. 
3. Multiple Channels, Stores, and Terminals: Businesses operating across multiple channels, stores, and terminals face complexity in consolidating all sales and generating e-invoices for each. Each channel may have its own billing system or software, and consolidating data from disparate sources adds an extra layer of complexity.
4. Validation and Rejections by Buyers: Buyers may reject e-invoices after verifying them against their own records, leading to a longer cycle for e-invoice generation.

How Can ClearTax Help with B2C e-Invoicing in Malaysia?

ClearTax enables businesses to seamlessly integrate their systems with the MyInvois system for automated and error-free e-invoice generation.

ClearTax offers unique features tailored for Business-to-Consumer (B2C) e-invoicing

1. Integration of Multiple Sales Channels: ClearTax specialises in integrating various sales channels, stores, and terminals, ensuring 100% accuracy in e-invoicing. Whether your business operates across different platforms or physical locations, ClearTax can effectively consolidate every sale for accurate e-invoicing.
2. Buyer Portal: ClearTax provides a dedicated web portal and app for buyers, allowing them to input their details and generate e-invoices independently. This innovative feature accelerates over-the-counter billing processes, reduces queue times, and enhances the overall customer experience.