Business owners can make errors – ones that are common mistakes in e-invoicing – when creating invoices, which will result in rejection or cancellation. But what happens if you’ve already issued an invoice with an error?
Malaysia’s new electronic invoicing mandate has transformed the country’s invoicing and taxation processes and enhanced the efficiency of business transactions. As businesses transition to the new system, they must understand the e-invoicing procedure to avoid mistakes that could lead to rejections and cancellations.
Malaysia’s E-Invoicing System Overview
The new invoicing process will be implemented starting in June 2024. By July 2025, all Malaysian taxpayers must comply with the upcoming standards and transmit invoices through the new system.
The Inland Revenue Board of Malaysia (IRBM) has developed two ways of transmitting invoices: the MyInvois portal for manual data entry or an API (Application Programming Interface) that uses Tax Identification Number (TIN) for automated invoicing.
Learn More: Guide to Navigate Through E-Invoicing in Malaysia
The E-Invoicing Process in Malaysia
E-invoicing in Malaysia is a straightforward process outlined in the guidelines released by the Inland Revenue Board of Malaysia. The process is available through two modes of transmission. Companies can use the MyInvois portal or integrate an API.
1. Creating an invoice
The first step in the electronic invoicing process is to generate an invoice. The MyInvois portal can manually enter e-invoice data into the system.
The portal is free for all Malaysian taxpayers, which makes it suitable for small business owners. Larger organisations would benefit from integrating an API to automate the processing of extensive invoice data.
2. Sending The Invoice To The IRBM For Validation
After creating your invoice, you must submit it to the IRBM via their portal for immediate validation. The system verifies the invoice details, including the TIN, to ensure they comply with the required criteria.
Once validated, the invoice will be returned to the supplier. The IRBM will also provide the sender and recipient with a code to verify and monitor the invoice’s status.
3. Submitting The Invoice To The Recipient/Buyer
When the sender receives the invoice, they embed the accompanying code and issue it to the buyer. This QR code provides a direct link to all the invoice details, facilitating the recipient’s verification process under the new regulations.
4. Retention And Archiving
When both parties agree on the invoice and payment, the document must be archived for at least seven years.
5. Rejection Or Cancellation
After receiving the invoice, the buyer has 72 hours to request rejection if there is an error, and the supplier also has 72 hours to cancel the invoice if needed. This allows both parties enough time to verify the details of the goods or services sold.
Common Mistakes In E-Invoicing Implementation
The e-invoicing process in Malaysia provides two instances where an invoice can be cancelled or rejected. The IRBM system can flag it due to errors, or the buyer and supplier may cancel or reject it after it is issued.
Common Reasons For The Rejection Of E-Invoices By The Myinvois Portal
Invoices can be rejected initially through the MyInvois portal. The system verifies the details of every invoice before generating a QR code to aid in tracking.
Structural Non-Compliance
All invoices sent in Malaysia through the IRBM system should be in XML or JSON format. The document’s structure, including hierarchy and format, must adhere to the standards.
Missing Or Inaccurate Information
Ensure that the information on the invoice, including the Tax Identification Number (TIN), addresses, amount, and other critical details, is accurate. The MyInvois portal will reject inaccurate information or omit details.
Invalid Digital Signature (QR Code)
After the invoice is validated, the IRBM system generates a QR code. The sender should embed this code on the document before issuing it. The system also sends the code to the recipient to help them verify the invoice’s validity and track its progress.
If you mistakenly embed the wrong digital signature, the system will reject your request to complete the issuance process.
Incorrect Code Usage
When conducting international transactions, it’s essential to be mindful of currency and tax type codes. The IRBM system will reject any invoice with incorrect or missing code fields.
Duplication
The MyInvois portal can detect and reject invoices containing duplicate information, such as the invoice number and digital signature, to prevent suppliers from accidentally sending the same invoice multiple times.
How To Avoid The Common Mistakes In E-Invoicing Implementation In Malaysia
It is impossible to generate and deliver electronic invoices without making any errors. However, there are specific steps you can take to help minimise the chance of mistakes.
Effective Training
All personnel involved in billing, accounting, and e-invoice issuance must be trained with the new regulations, utilise the new system, and adopt best practices for e-invoicing in Malaysia.
Powerful Billing And ERP (Enterprise Resource Planning) System
Does your company have a robust system that allows buyers to access and input data? An ideal e-invoicing system helps ensure compliance, as modern systems can quickly generate documents accepted by the Malaysian tax administration.
Eliminate Manual Data Entry
mplementing an API e-invoicing model in your system helps automate data sharing between systems. This makes it easier to generate an invoice if transaction data is already in the system.
Confirm With The Buyer
It doesn’t hurt to double-check the invoice details with the recipient to confirm everything is correct. This ensures accuracy and helps address any concerns.
Partner With Reliable Service Providers To Avoid Common Mistakes in E-Invoicing Implementation
E-invoicing implementation in Malaysia may pose some challenges, but businesses can find ways to transition while minimising errors in invoice processing. In some instances, companies may encounter rejections or cancellations of their invoices. Overcoming these mistakes can improve business operations and boost cash flow.
One of Malaysia’s most effective ways to start issuing compliant invoices is to partner with a reliable software provider like Info-Tech. Info-Tech’s e-invoicing software is equipped with invoicing functions that will ease the burdens of businesses to stay compliant with IRBM’s standards. As Peppol-Ready Solution Provider, the software can provide you with accurate calculations and information.