KUALA LUMPUR: With Malaysia currently embarking on the national e-invoicing initiative known as MyInvois, businesses across the nation are preparing for a significant shift in their invoicing and taxation submission processes with the Inland Revenue Board of Malaysia (‘IRBM’ or ‘LHDNM’). Starting this year, this initiative mandates all businesses to transition to electronic invoicing, aiming to enhance tax efficiency and support the country’s digital economy growth.
According to LHDNM Deputy CEO (Tax Operations) Tuan Shaharrudy bin Othman, e-Invoice serves to modernise the invoicing process by digitalising and automating tax operations through the implementation of Continuous Transaction Controls (CTC) electronic invoicing model.
“E-invoicing offers a range of benefits, including reduced paperwork, faster processing times, automation, improved accuracy and enhanced tax compliance. By digitising the invoicing process, businesses can streamline their operations, reduce costs and ensure timely payments,” said Tuan Shaharrudy.
These benefits are substantial, providing businesses with the opportunity to improve their financial processes significantly. Reduced paperwork not only helps in saving physical storage space but also minimises the environmental impact. Faster processing times mean quicker turnarounds on payments and transactions, directly benefiting cash flow and financial planning.
“Enhanced accuracy in invoicing reduces the likelihood of errors, which can lead to disputes and delays, ensuring that businesses maintain better relationships with their clients and suppliers. Lastly, improved tax compliance helps businesses avoid costly penalties and audits, fostering a more transparent and efficient tax system,” added Tuan Shaharrudy.
e-Invoice will be implemented in phases:
1 August 2024: Mandatory for taxpayers with an annual income or sales exceeding RM100 million.1 January 2025: Mandatory for taxpayers with annual income or sales between RM25 million and RM100 million.
1 July 2025: Mandatory for all taxpayers
With e-Invoice implementation, businesses must issue e-Invoices for all transactions, which must be created in machine readable formats specified by the LHDNM, which is XML or JSON. These e-invoices include various mandatory fields covering seller and buyer information, item descriptions, quantities, prices, taxes, total amounts, payment details and Tax Identification Numbers (TIN).
The Cybersecurity Aspect of E-Invoicing
The digital nature of e-invoicing means that sensitive financial data is transmitted electronically, making it susceptible to cyber threats if systems are compromised, more so for businesses which may not have paid enough attention to the importance of cybersecurity.
LGMS’ Executive Chairman Fong Choong Fook said that the digital nature of e-invoicing means that sensitive financial data is transmitted electronically, making it susceptible to cyber threats, more so for businesses that may have neglected their cybersecurity.
“Cybersecurity vulnerabilities may lead to unauthorised access to financial information, fraud, and operational disruptions. As businesses transition to this new system, ensuring the security of their e-invoicing processes becomes paramount to protect against data breaches and maintain the integrity of their financial transactions,” said Fong. Some of the key risks for compromised systems include:
Data Breaches: Unauthorised access to sensitive financial data, such as invoice details and payment information, can lead to financial losses and reputational damage.
Fraudulent Activities: Cybercriminals can exploit vulnerabilities to create or alter invoices, resulting in unauthorised payments and financial discrepancies.
Operational Disruptions: Cyberattacks can disrupt the invoicing process, causing delays in payments and affecting cash flow.
Regulatory Penalties: Failure to secure e-invoicing systems can result in non-compliance with regulatory standards, leading to penalties and legal repercussions.
“The e-Invoice implementation rightfully enhances tax efficiency and promote the digitalisation of financial transactions. However, while this transition promises numerous benefits, it also introduces cybersecurity challenges for compromised systems,” said Fong.
This is where the LGMS StarSentry, an advanced cybersecurity vulnerability scanner spearheaded by LGMS subsidiary Applied Security Intelligence, becomes crucial for ensuring secure and compliant e-invoicing systems.
Launched recently by Minister of Digital Tuan Gobind Singh Deo in the presence of some key industry players, StarSentry is an advanced cybersecurity vulnerability scanner designed to protect internal networks and systems from potential threats.
Said Minister Tuan Gobind at the launch: “I am informed that StarSentry was specifically developed to cater to the needs of small and medium enterprises (SMEs), which are essential to our economy but often find themselves most vulnerable to cyber threats.”
“This solution represents a significant advancement in making state-of-the-art cybersecurity accessible to all sectors, enabling our businesses to thrive without the burden of cyber risks.
“I am pleased that this innovative ‘plug and play’ system allows SMEs to effortlessly integrate advanced cybersecurity measures into their daily operations. With features like advanced vulnerability scanning and proactive threat detection, StarSentry empowers SMEs to not only comply with regulatory requirements but also to proactively advance their cybersecurity posture,” added the good minister.
At its end, LGMS has been involved in the Malaysia Digital (MD) GAIN programme initiated by Malaysia Digital Economy Corporation (MDEC) since 2018.
“Through interventions in Gateway, Amplification, Investment, and Nurture (GAIN), our Malaysian GAIN companies has effectively enhanced their strategic positioning and extended its reach across ASEAN,” said MDEC Senior Vice President Gopi Ganesalingam.
“MDEC remains committed to fostering global tech champions through initiatives like the Digital Export Office, which currently operates in 25 countries worldwide,” said Gopi.
LGMS’ Fong meanwhile said that StarSentry is a vital tool to ensure that businesses e-invoicing systems are robust and secure as this solution offers:
Comprehensive Security Assessments: StarSentry conducts thorough security assessments of your internal network, identifying vulnerabilities and potential entry points for cyber threats. This proactive approach helps businesses address security issues before they can be exploited.
Detailed Scan Reports: After conducting a scan, StarSentry provides detailed reports outlining the identified vulnerabilities and their potential impact. These reports include actionable recommendations, enabling businesses to take immediate steps to enhance their security posture.
Regulatory Compliance: With the rollout of MyInvois, compliance with LHDNM’s e-invoicing regulations is essential. StarSentry helps businesses ensure their systems meet the required security standards, reducing the risk of regulatory penalties.
Fraud Prevention: By identifying and mitigating vulnerabilities, StarSentry helps prevent fraudulent activities that could compromise the integrity of your e-invoicing process. This ensures that all transactions are legitimate and accurate.
Operational Continuity: Cyberattacks can disrupt business operations, leading to delays and financial losses. StarSentry’s robust security measures help maintain operational continuity by protecting your e-invoicing systems from disruptions.
Data Protection: Protecting sensitive financial data is paramount in the digital age. StarSentry ensures that your data is secure, safeguarding your business and your clients’ information from unauthorised access.
Expert Support: LGMS also offers expert support as ‘value added services’ to help businesses implement and maintain effective cybersecurity measures. This includes regular updates and ongoing monitoring to ensure your systems remain secure against evolving threats.
Preparing for the Transition
As the mandatory e-Invois implementation approaches, businesses must take proactive steps to ensure a smooth transition to e-invoicing. Here are some tips to prepare:
Understand E-Invoicing Guidelines: Familiarise yourself with LHDNM’s e-invoicing regulations and requirements. Ensure your systems and processes align with the specified formats and mandatory fields.
Adjust Processes: Train your personnel to adopt e-invoicing practices and update your standard operating procedures. Assess your IT capabilities and make necessary adjustments to support e-invoicing.
Choose the Right Integration Method: Depending on your business size and volume of transactions, choose between using the MyInvois Portal or integrating directly via API for real-time invoice creation.
Assemble a Capable Team: Form a team with expertise in IT, finance, tax and project management to oversee the e-invoicing implementation and ensure all aspects are covered.
Evaluate Existing Procedures: Streamline your current billing procedures to optimise efficiency and accuracy in e-invoice submission.
Plan for International Transactions: Develop a strategy to handle e-invoices for international transactions, ensuring compliance with global invoicing standards and regulations.
At the end of the day, the MyInvois initiative marks a significant step towards digital transformation in Malaysia. While it offers numerous benefits, it also underscores the need for robust cybersecurity measures.
LGMS’ StarSentry provides comprehensive protection for your e-invoicing systems, ensuring compliance, preventing fraud and safeguarding sensitive data. As SMEs navigate this transition, StarSentry stands as a crucial tool in securing businesses’ digital future.
This content is provided by LGMS Berhad.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
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