Important Terms in Malaysia e-Invoicing

Here are a few important technical terms used in Malaysia e-Invoicing:

1. API (Application Programming Interface):

An API, or Application Programming Interface, serves as a set of predefined rules and protocols facilitating seamless communication between diverse applications.

2. B2B (Business-to-Business):

B2B, short for "Business-to-Business," denotes transactions, interactions, or partnerships between two or more businesses. It is used to describe the exchange of goods, services, or information among businesses.

3. B2C (Business-to-Consumer):

B2C, or "Business-to-Consumer," characterises transactions and interactions from a business to the end consumer. It involves selling products or services directly to consumers for personal use.

4. B2G (Business-to-Government):

B2G, standing for "Business-to-Government," involves commercial transactions and interactions from businesses to government entities at various levels, such as local, state, or national governments.

5. Credit Note:

In cases where a customer returns a damaged item or adjustments are needed (e.g., discounts, incorrect amounts), a credit note is issued by the supplier to rectify the amount owed, ensuring precise billing. The original invoice details should be clearly mentioned on the credit note for easier reconciliation.

6. Debit Note:

A debit note increases the initially stipulated total. For instance, when a customer requests additional services or a supplier incurs extra costs, like expedited shipping, the overall invoice amount rises. The original invoice details should be clearly mentioned on the debit note for easier reconciliation.

7. ERP (Enterprise Resource Planning):

Enterprise Resource Planning (ERP) is a software system used by enterprises to automate and manage core their business operations.

8. Invoice:

An invoice contains essential details like supplier and buyer information, item descriptions, quantities, prices, taxes, and total amounts. It records transactional data from day-to-day business operations, including purchases and services from foreign suppliers and other instances of self-billed e-invoices.

9. MSME (Micro, Small and Medium-sized Enterprises):

Enterprises having revenue below a certain limit will be classified as MSME refers to Micro, Small, and Medium-sized Enterprises.

10. MyInvois Portal:

MyInvois Portal, a user-friendly web application developed by IRBM, offers taxpayers an intuitive interface for essential e-invoicing tasks.

11. MyInvois System:

Developed by IRBM, MyInvois System is an e-invoicing system designed to streamline the exchange and management of e-invoices in a structured electronic format between suppliers and buyers, ensuring a seamless process.

12. QR Code:

A Quick Response (QR) code is a code containing encoded data, typically including information for a locator or reference and an identifier.

13. Refund Note:

When a customer pays for a product or service and later returns or cancels it, the refund note e-invoice acknowledges the return and specifies the refund amount.

14. SGML (ISO 8879):

Standard Generalized Markup Language (SGML), specified by the International Organization for Standardization (ISO 8879), defines generalised markup languages for documents.

15. SST (Sales and Service Tax):

SST (Sales Tax and Service Tax), imposed under the Sales Tax Act 2018 or Service Tax Act 2018, is a single-stage tax levied on locally manufactured/imported taxable goods and prescribed taxable services.

16. Validation:

Validation refers to the MyInvois System's process of evaluating and verifying the submitted e-invoices to make sure all the data required by IRBM is presented.

17. XML (Extensible Markup Language):

Extensible Markup Language (XML) is a markup language that provides rules for defining and structuring data flexibly and extensible.

18. CTC (Continuous Transaction Controls)

A set of regulations or processes implemented by IRBM to monitor and control transactions in real-time or near real-time. These controls aim to minimize tax evasion, increase transparency, and improve compliance with tax laws.

19. Digital Signature

A digital signature is a cryptographic tool used to verify the authenticity, integrity, and non-repudiation of electronic invoices. It serves as the electronic equivalent of a handwritten signature, ensuring that the document has not been altered and confirming the identity of the signer. 

E-invoices must be signed using the issuer's digital certificate, or if a service provider is involved, the provider's certificate. The digital signature, generated with this certificate, validates the invoice's origin and integrity, with its hashed value included in the submission request for added security.

20. FTA (Free Trade Agreement)

A treaty between two or more countries that establishes a framework for reducing or eliminating trade barriers such as tariffs and quotas on goods and services exchanged between the signatory nations. FTAs aim to promote trade and economic cooperation among participating countries.

21. IRBM (Inland Revenue Board of Malaysia)

IRBM is the governmental agency in Malaysia responsible for administering and enforcing tax laws, including income tax, goods and services tax (GST), and other taxes.

22. ITA 1967 (Income Tax Act 1967)

The primary legislation governing income tax in Malaysia. It provides the legal framework for the assessment, collection, and enforcement of income tax laws in the country.

23. JSON (JavaScript Object Notation)

A lightweight data interchange format commonly used for transmitting data between a server and a web application. JSON is language-independent and easy for humans to read and write, making it popular for APIs and web services.

24. LLP (Limited Liability Partnership)

A legal structure that combines the features of a partnership and a corporation, providing limited liability protection to its partners while allowing them to participate in management and decision-making. LLPs are commonly used by professionals such as lawyers, accountants, and consultants.

25. MSIC (Malaysia Standard Industrial Classification)

MSIC system used to classify economic activities and industries in Malaysia based on a standardized coding scheme. MSIC codes are used for statistical reporting, economic analysis, and regulatory purposes.

26. SDK (Software Development Kit)

A set of tools, libraries, and documentation provided by software developers to facilitate the creation of applications for a specific platform or framework. Malaysia e-invoicing SDK (Version 1.0) includes resources such as code samples, APIs, and development environments.

27. SIT (System Integration Testing)

A phase of software testing where individual software modules or components are combined and tested as a group to ensure they work together as intended within the larger system or application.

28. TIN (Tax Identification Number)

A unique identification number assigned to individuals or businesses for tax purposes by tax authorities. Tax Identification Number in Malaysia are used to track taxpayers, process tax returns, and enforce tax laws.

29. UBL2.1 (Universal Business Language Version 2.1)

An open standard for defining XML-based business documents and data models. UBL provides a common syntax and semantics for electronic business documents such as invoices, purchase orders, and shipping notices.

30. XSD (XML Schema Definition)

A specification that defines the structure, content, and data types allowed in an XML document. XSDs are used to validate XML documents against a predefined schema to ensure they conform to the expected format and content.