KUALA LUMPUR (May 22): The Inland Revenue Board of Malaysia (IRB) will introduce mandatory e-invoicing for companies with revenue of RM100 million and above, starting June next year, according to its chief executive officer Datuk Mohd Nizom Sairi. 

“We are still in the process of developing the e-invoicing structure and expect to implement the pilot project (an initial test for selected companies) as early as next year. 

“We hope to start the first phase in June, which will require companies with a turnover of RM100 million and above to use e-invoicing. The number of targeted customers [for this phase] will be around 4,000,” Nizom said after a media engagement session on Monday (May 22). 

Meanwhile, the next phase, which affects companies with an annual revenue of RM50 million, will begin in January 2025.

Companies with an annual revenue of around RM25 million will be required to use e-invoicing in January 2026, followed by all companies from 2027.

E-invoicing or electronic tax invoice is a form of electronic billing used by trading partners, such as customers and their suppliers, to present and monitor transactional documents between one another and to ensure the terms of their trading agreements are being met. 

The introduction of e-invoicing is based on two main principles: to improve business operations or to increase the efficiency of tax administrations, either through direct or indirect taxes, in order to close the tax gap and the shadow economy.

Globally, it is estimated that the tax gap and shadow economy account for 20% to 30% of government revenues, said Nizom. Citing the Ministry of Finance’s 2021 economic report, he said the calculation of total tax in Malaysia is around 18% of the country’s gross domestic product. 

“[At present], e-invoicing will cover business-to-businesses (B2B); then, we will think about business-to-consumer (B2C). I know there are many millions of transactions in the B2C area, and we are still studying this,” Nizom said.

To recall, then finance minister Tengku Datuk Seri Zafrul Abdul Aziz announced in his 2023 budget speech, a plan to phase-in e-invoicing in 2023 to improve the efficiency of the tax system and support the implementation of a sustainable e-commerce ecosystem.

“We see that the introduction of e-invoicing is something positive that will increase the efficiency of businesses, provide cost savings in doing business, and strengthen the tax system in our country by making it fairer and more equitable,” Nizom added.