Committed to instituting clean tax practices and advancing digitization initiatives, the Malaysian Inland Revenue Board (IRB) has announced the mandatory implementation of e-invoicing for enterprises, contingent on their annual turnover. The current IRB implementation will primarily focus on direct taxes. To facilitate efficient execution and provide sufficient preparation time for businesses, the adoption of e-invoicing will occur in phases and is expected to be fully integrated by 2027. The Electronic Invoicing (e-invoicing) system embarked on its pilot implementation in the first half of 2023, followed by obligatory enforcement starting June 1st, 2024, for businesses with an annual sales turnover exceeding RM100 million.
Is your organization newly formed this year? If so, you have enough time to establish your organization’s systems and are not expected to implement e-invoicing before 2027. However, if your annual turnover in 2022 exceeded RM100 million, you need to start contemplating your organization’s readiness for adopting the e-invoicing mandates. During the pilot phase, you will have ample time to streamline and implement the systems required for e-invoicing adoption.
Here are some key e-invoicing details:
- The e-invoicing is applicable to all transaction types: B2B, B2C, and B2G.
- E-invoicing is mandatory for businesses with local and international transactions, including services, goods, and specific non-business transactions. These include property trusts, cooperative societies, corporations, etc.
- It is applicable for invoices, credit notes, debit notes, and refund notes.
Are you concerned that e-invoicing will burden you with compliance requirements? Fret not, as eventually-
The aim of the e-invoicing mandate is to provide numerous advantages for your enterprise and ensure a successful journey towards digitization. Apart from enhancing taxation compliance, it aids in improving business efficiency. According to a research report, companies can save up to 65% on invoicing processing cost and reduce average processing time by 12 days by adopting an e-invoicing system.
Some benefits include:
- The invoicing process is streamlined, allowing for the electronic submission of invoices, which saves time.
- Provides a streamlined channel for filing tax returns and facilitates accurate tax reporting.
- Aids in modernizing business processes and improving invoice management.
- Eventually, as we have seen across the globe, this integrated system will enable you to have more efficient working capital management processes.
Regardless of income bracket, the IRB provides organizations the option to volunteer for implementation. Early adoption and volunteering will not only reap the benefits of e-invoicing but also leverage the added advantages like improvements in working capital, enhanced cash flow, faster payment collections etc.
Usually, e-invoicing compliance is a comprehensive process in itself and requires systematic planning for efficient adoption. Onboarding seasoned service providers can assist organizations in effectively addressing potential challenges associated with e-invoicing implementation. Some of the benefits of adopting e-invoicing are:
- Alleviating resistance to change: E-invoicing can lead to changes in the way businesses handle invoicing. Early adoption provides ample time for the workforce to embrace the change and ensures better acceptance of the implementation.
- Better ROI: Workforce alignment with the requirement contributes to streamlined processes, providing better ROI, and positioning the organization ahead of the curve compared to competitors.
- Improved projections: The adoption of e-invoicing empowers organizations to better oversee their short-term risk management strategies through easy access to the accounts payable and receivable invoices.
Early adoption provides you with the opportunity to understand how your business currently operates and if your processes can keep up with e-invoicing procedures. With this knowledge, one can understand and enhance their long- and short-term investment strategies, including IT System investments, manpower investments, business process enhancements, and more.
Teams’ acceptance to the digitalization approach is a crucial element for the overall success of digital adoption. Adopting e-invoicing can surely help you swiftly progress towards your digitalization goals.
With years of implementation experience in multiple countries like the Kingdom of Saudi Arabia, India, France, and various countries within the European Union and Americas, we have witnessed an increase in speed and overall efficiency in the invoicing processes. With intelligent data extraction and recognition capabilities, streamlined and automatic data flow, and customized templates to meet customer and country-specific e-invoicing mandates, we have been able to address customer requirements for a hassle-free e-invoicing system powered by automation while delivering a faster ROI.
We have successfully changed the way companies cater to e-invoicing. You can read our customer success stories on our website.