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E-invoice: What is e-invoicing?

Introduction

As e-invoicing implementation starts drawing near, a common question would pops up in the mind of those who uses AutoCount: What is E-Invoicing in Malaysia?

So, let us take a look at some fundamental knowledge about e-invoice in Malaysia.

E-Invoicing VS LHDN E-Invoice

Benefits of E-Invoicing

The adoption of LHDN e-invoice offers a range of advantages, benefiting taxpayers, businesses, and tax authorities. Here are the key benefits:

Enhanced Efficiency for Larger Businesses

Firstly, it simplifies invoicing by streamlining document creation and automating data entry. Thus, reducing manual efforts and errors.

Facilitated Tax Return Filing

Secondly, it enables efficient tax reporting through system integration. Thus, making tax return filing smoother and more accurate.

Enhanced Efficiency for Larger Businesses

Thirdly, large enterprises benefit from streamlined operations, automated processes, and cost savings.

Progressive Transition for MSMEs

Finally, small and medium-sized businesses can transition gradually, aligning their processes with industry standards over time and reducing disruptions. Thus, allowing them to ensure a smooth shift to digital operations.

Overall, e-invoicing enhances efficiency, ensures tax compliance, and supports businesses in their digitization journey, offering a seamless experience for taxpayers.

Common e-invoicing Formats and Standards

E-invoicing relies on standardized formats and standards to ensure the consistent structure and content of invoices, enabling seamless data exchange between different systems. Some widely used e-invoicing formats and standards include:

JSON (JavaScript Object Notation)

Lightweight data format for easy human and machine readability. Growing popularity in e-invoicing due to simplicity and compatibility.

XML (eXtensible Markup Language)

A versatile markup language for defining data structure in a human-readable format. Widely used in e-invoicing for its flexibility and ease of interpretation.

Peppol BIS (Business Interoperability Specifications)

Standardized formats for electronic procurement-related documents, including invoices within the Peppol network. Promotes interoperability and cross-border communication in procurement processes.

EDIFACT (Electronic Data Interchange for Administration, Commerce, and Transport)

Global standard for electronic data interchange (EDI) across industries. Originally for paperless exchange of business documents, now adapted for modern e-invoicing processes.

FAQs

Users can continue their billing as usual, where any invoice billed should submit e-Invoice if the buyer requests it. Otherwise, you can consolidate before the 7th of the following month. However, pawn shops may be classified under luxury goods, where consolidated e-Invoices are not allowed. Users must stay updated with LHDN’s future announcements or guidelines regarding what is considered luxury goods.

A trade-in phone is considered a purchase. The user must perform a self-bill e-Invoice for this activity. Currently, there is no copy function from POS transactions. If the user is using POS, the details must be manually keyed into the Self-Bill function.

Any refundable deposit does not require an e-Invoice. Rental deposits are typically considered refundable.

Yes, societies (organizations) are generally required to implement e-invoices for donations or contributions, with a few exceptions:

  1. E-invoices are required for donations or contributions, whether individual or consolidated, unless:
    • Religious institutions focused on religious worship or advancement.
    • Organizations not approved for tax exemption under the Income Tax Act 1967.
  1. Monetary donations: An e-invoice must be issued, either as an individual or consolidated one, depending on the donor’s request.
  2. Donations-in-kind: No e-invoice is needed for non-monetary donations.
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