Malaysia’s manufacturing industry showed a resilient 1.9% year-on-year growth in 1Q2024, according to the FMM’s BCI survey in September. 

However, challenges remain in adopting e-Invoicing, due to its perceived complexity and high upfront costs. 

Notably, the survey revealed only 12% of manufacturers investing over 10% of their revenue in software automation, with 36% investing 5-10%.

Hence, educating manufacturers on e-Invoicing's benefits can ease adoption. 

“e-Invoicing enables manufacturers to boost their exports, especially with a forecasted 15-point increase in export sales over the next six months.

“Our Peppol e-Invoicing enables seamless exchange of globally standardised document, speeding up approvals from foreign customers.

“Beyond that, e-Invoicing also unlocks ESG value-chain opportunities by slashing paperwork. 

“This is a game changer as 47% of manufacturers worry about rising competition from the global shift to sustainability,” said Clement Loh, Group CEO of Finexus, citing the survey.

Despite the perceived complexities, Loh is confident that the company's automation and customisation will ease manufacturers' concerns for e-Invoicing.

For example, several clients required addition of supplemental information (e.g. signatories, ECCN, machine number, etc.) in PDF-formatted e-Invoices. In response, Finexus developed a customised template to meet these needs.

An additional layer of complexity is the mapping of the client’s invoice details, import and export details, system codes, product listings, etc. with IRBM. Finexus resolved this by conducting an in-depth requirement discussion to fully understand a client’s key operational details. 

In some cases, the client data did not fully meet IRBM compliance (i.e. contact numbers, etc.). Finexus assisted by automatically identifying faulty data patterns for conversion, thus automating the compliance process. 

Although the latest IRBM Malaysia FAQ provided significant guidance, manufacturing clients wish to seek clarification on reporting import and export details in the e-Invoice, including excise duty, withholding tax, taxes in free trade zone, and types of custom form to include.

The general rule is that all IRBM and RMCD (Royal Malaysia Customs Department) requirements must be adhered to. 

“With manufactured goods making up 85.5% total exports in the first seven months of 2024, manufacturer participation in e-Invoicing is imperative.

“Hence, with our sizable base of manufacturing e-Invoicing clients and a team of 400 developers and IT support, we are fully prepared to help manufacturers comply with IRBM without affecting their daily business,” said Loh. 

Here are the top 20 areas addressed by IRBM Malaysia FAQ relevant to the manufacturing industry to date. 

1. Until further notice, IRBM allows taxpayers to share either the validated e-Invoice (in the form of XML / JSON file) or a visual representation of the validated e-Invoice, or both.

2. Validated e-Invoice is not editable. The supplier needs to cancel the e-Invoice within 72 hours from the time of validation and reissue a new e-Invoice.

3. Taxpayers can continue to claim tax deductions or personal tax relief using existing documentation until such time the legislation has been amended.

4. e-Invoices can be displayed in any currency including RM. Unless there are legal or tax requirements to include the RM-equivalent, taxpayers can issue the e-Invoice in foreign currency. 

5. For taxpayers that are registered with other authority or body and not registered with SSM, the taxpayers are required to input the relevant registration number. 

6. A separate self-billed e-Invoice must be issued for each individual transaction, save for exceptions listed under section 3.6.5 of the e-Invoice Specific Guideline.

7. There is no specific requirement on the timing of e-Invoice issuance except in specific cases such as below:

• Consolidated e-Invoices: Supplier to issue within 7 calendar days after the month end

• Self-billed e-Invoices for goods imports: Malaysian Purchaser to issue latest by the end of the month, following the month of obtaining customs clearance

• Self-billed e-Invoices for services imports: Malaysian Purchaser to issue latest by end of the month, following the month upon payment made by the Malaysian purchaser or receipt of invoice from foreign supplier, whichever earlier – according to the prevailing rules applicable for imported taxable service

• e-Invoices for foreign income: Supplier (i.e. income recipient) to issue latest by the end of the month, following the month of receipt of the said foreign income

• Self-billed e-Invoices for drop shipment transactions where goods are not physically imported into Malaysia: Malaysian Taxpayer to issue upon the foreign e-Invoice being recorded in the Malaysian taxpayer’s accounting system

8. For self-billed e-Invoice for goods imports, taxpayer is required to input the actual transaction value incurred as stated in foreign supplier’s invoice for e-Invoice purposes. Extra charges may also be included as per the agreed incoterms (if applicable) under “Details of other charges” field.

9. Taxpayers are allowed to adopt any format for the visual representation of the e-Invoice as per current practice, provided the QR code is embedded accordingly. 

10. Taxpayers are required to verify details from the foreign suppliers or buyers for the purpose of e-Invoice issuance. For foreign suppliers or buyers without TIN, taxpayers may use the general TIN provided by IRBM.

11. Taxpayers can make adjustments to multiple original e-Invoices by issuing one single credit note, debit note, or refund note e-Invoice. 

12. Rural suppliers or businesses that face poor internet connectivity and lack infrastructure to issue e-Invoice are advised to approach the nearest IRBM state office for further discussions.

13. During the transitional period till the full implementation of e-Invoice, taxpayers will be allowed to provide either normal bill, receipt, or invoice (if the supplier has yet to implement e-Invoice according to implementation timeline) or validated e-Invoice to substantiate a transaction for tax purposes. 

14. To harmonise with Royal Malaysian Customs Department (RMCD), taxpayers are required to input the C3 details when issuing e-Invoice or self-billed e-Invoice. 

15. The field “Reference Number of Customs Form No. 1, 9, etc.” can be excluded for:

• Low-value goods (LVG) under e-PAM when issuing self-billed e-Invoice (concession by IRBM to harmonise with RMCD)

• Importing goods via Loose Container Load (LCL) shipments when issuing self-billed e-Invoice (concession by IRBM to harmonise with RMCD)

• Drop shipment transactions where goods are not imported into Malaysia when issuing e-Invoice or self-billed e-Invoice

• Goods transported between Peninsular Malaysia, Wilayah Persekutuan, Labuan, Sabah, and Sarawak 

16. If there are more than one customs form reference number for imported goods, taxpayers can include multiple customs form reference number where applicable under the “Reference Number of Customs Form No. 1, 9, etc.” field.

17. Taxpayers may use both API and MyInvois Portal as transmission mechanisms but are recommended to perform reconciliation to ensure no duplication of e-Invoice submitted to IRBM. 

18. An e-Invoice is required for intercompany charges.

19. In cases where deposit is refundable, the issuance of e-Invoice is not required. However, if the deposit is non-refundable, issuance of e-Invoice is required. 

20. Manufacturers can issue self-billed e-Invoice on payment to agents, dealers, and distributors on either an accrual or paid basis as long as this is in line with the documentation provided to the agents, dealers, and distributors (e.g. statements) and following the current practice or frequency.

With the evolving e-Invoicing landscape for each industry, do visit https://www.finexusgroup.com/arema/ for the latest updates.

This content is provided by FINEXUS Sdn Bhd.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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