Checklist to implement IRBM e-Invoicing in Malaysia

The economy, along with technology, is constantly evolving, which brings in the need for solutions that facilitate smoother business transactions. With the adoption of e-invoicing in many countries, the Inland Revenue Board of Malaysia (IRBM) has announced e-invoicing will be compulsory for Malaysia, too, from 1^st August 2024. In the article, we give a brief checklist to implement IRBM e-invoicing in Malaysia.

e-Invoicing in Malaysia Checklists

Requirements Checklist

1. Determine if e-invoicing rules are applicable to your business. Check for any exemptions or special considerations that may apply.
2. Identify the phase in which e-invoicing rules would become applicable to your business.
3. Determine your specific requirements for e-invoicing implementation. 
   1. Assess the number of invoices generated by your business on a regular basis. 
   2. Identify the types of transactions your business engages in, such as B2B, B2C, B2G, or self-invoicing.
4. Review sector coverage to determine if your business operates in sectors mandated for e-invoicing, such as healthcare, construction, Telecommunication, e-commerce, or petroleum operations for additional compliances.

E-invoicing Model Checklist

1. Assess your business needs to determine the suitable e-invoicing model: MyInvois Portal or API integration. 
2. MyInvois Portal: a. MyInvois Portal: Suitable for businesses with low transaction volumes, offline billing software usage, a single sales channel, limited resources, and sporadic e-invoice requirements. 
3. API Integration: Recommended for businesses with high transaction volumes, integration with ERP systems, multiple sales channels and billing systems, and handling all B2B, B2C, and B2H transactions where buyers request e-invoices.

2. If uncertain, seek assistance from ClearTax e-invoice consultants for expert advice. If opting for API integration, consider partnering with a reliable e-invoice solution provider such as ClearTax.

Software, Systems, and Tools Checklist:

1. Evaluate the feasibility of integrating internal systems such as billing, POS software, ERP, and e-commerce platforms with multiple sales channels for e-invoicing.
2. Explore options to integrate with the MyInvois platform or utilize specific APIs provided by the IRBM for seamless e-invoicing.
3. Verify if the invoicing software collects and feeds all 55 mandatory fields as outlined in the e-Invoicing Guidelines by the IRBM.
4. Assess if your current invoicing software supports the creation and submission of e-invoices in XML or JSON format, particularly for API models.
5. Determine if the software can consolidate bills according to e-invoicing requirements, such as generating a single e-invoice for B2C sales per month as per guidelines for the MyInvois Portal Model.
6. Ensure the validity of digital signatures for each e-invoice, as digital signing is a mandatory requirement for compliance.

Technical Requirements and Internal Control Setup Checklist

1. Ensure there are proper internal controls with authorized personnel to issue and reject e-invoices.
2. Establish protocols for rejecting issued and received e-invoices within time limits.
3. Ensure seamless internet connectivity and bandwidth across all billing counters, branches and outlets.
4. Implement a secure storage system for retaining issued and received e-invoices.

Staff Training

• Conduct training sessions to familiarize employees with compliance standards and obligations.
• Conduct hands-on training sessions to ensure they can navigate the system effectively.
• Provide guidelines to ensure essential details for generating e-invoices are collected effectively.
• Provide clear guidelines on initiating cancellation or rejection requests within the specified timeframe.

Testing and Quality Assurance

• Test functionalities such as invoice generation, submission, validation, and retrieval.
• Ensure seamless data transfer between systems without loss or corruption.
• Conduct UAT (User Acceptance Testing)  with representative users to assess usability and functionality.
• Test data encryption, access controls, authentication mechanisms, and audit trails.
• Assess the performance of the e-invoice system under various load conditions.
• Validate error messages, notifications, and logging mechanisms.

Apart from the above checklist for e-invoice implementation in Malaysia. A few points which should be kept in mind are

• Essential details of vendors required for the generation of e-Invoices should be collected by the businesses and stored in their system. IRBM would validate mandatory fields.
• A digital certificate, which would be used for signing, is a mandatory requirement for e-invoicing. IRBM will issue the same based on the taxpayer’s TIN and related information. Hence, that should be adequately collected by the businesses.
• QR codes should be generated in e-Invoices, and the invoice details should be embedded. QR codes should be scannable.

Conclusion

The above checklist for implementation of e-Invoicing in Malaysia is perfect for the organizations. Further, post all the above points, Organizations should be updated with e-Invoicing regular updates by IRBM. They should evaluate It too, that the e-Invoicing system which they implemented is regularly updated with those points.