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Expert advice on LHDN e-invoicing implementation

Publish date: Wed, 29 May 2024, 12:28 PM

KUALA LUMPUR: For Malaysian businesses aiming to comply with the incoming Inland Revenue Board (LHDN) e-invoicing regulations, using the LHDN API alone is sufficient, an industry specialist said.

Wavelet Solutions Sdn Bhd chief executive officer Vincent Lee said the LHDN API ensures that companies can generate, send and manage invoices electronically, adhering to local tax regulations and enhancing operational efficiency.

However, as the nationwide MyInvois system implementation approaches, Lee said businesses must decide whether to integrate with the Pan-European Public Procurement On-Line (Peppol) framework as well.

Lee said the inclusive nature of MyInvois means that it encompasses not just business-to-business (B2B) interactions but also extends to business-to-consumer (B2C) transactions.

"This is particularly crucial for comprehensive tax compliance and facilitates a smoother tax return process for all parties involved," he added.

Peppol is an international framework facilitating e-procurement and e-invoicing across different systems and borders. 

Originally developed in Europe, Peppol supports B2B and business-to-government (B2G) transactions, making it ideal for companies engaged in international trade.

"While MyInvois is set to become mandatory for compliance within Malaysia, Peppol offers interoperability, crucial for businesses with regional and global operations," said Lee.

"The mandatory adoption of the MyInvois system in Malaysia marks a significant step towards enhancing the nation's digital economy. Organisations must comply to streamline invoicing processes, adhere to local tax regulations, and ensure operational efficiency."

The government will implement e-invoicing in phases, starting in August 2024 with large companies having an annual turnover exceeding RM100 million. 

The second phase, beginning in January 2025, will involve companies with annual turnover between RM25 million and RM100 million.

The MyInvois system, accessible since April 2024 for leading companies, supports e-invoicing through a manual portal and a secure API for seamless data exchange.

"This initiative aims to transform how local businesses handle financial transactions, covering various transaction types including invoices, debit notes, credit notes and refund notes, ensuring comprehensive tax compliance and operational efficiency," said Lee.

"E-invoicing offers numerous benefits, such as improved business efficiency, transparency, reduced costs, and minimised errors. 

"By automating billing processes, e-invoicing enhances cash flow, reduces the overhead associated with physical paperwork, and expedites dispute resolution with clear audit trails," he added.

Additionally, it promotes environmental sustainability by reducing paper waste and enhances security against data loss and fraud.

"E-invoicing significantly enhances compliance and transparency, making it easier for businesses to streamline operations and achieve cost savings," said Lee.

For businesses with international dealings, integrating both MyInvois and Peppol can provide greater flexibility and streamline processes across different e-invoicing systems.

"While MyInvois ensures compliance within Malaysian borders, Peppol offers interoperability, essential for maintaining an edge in the competitive international market," said Lee.

"Adopting both frameworks could provide greater flexibility, allowing businesses to pivot between systems as necessary.

"This dual adoption equips Malaysian businesses to navigate the intricacies of a digitalised economy effectively," he added.

For organisations still navigating the complexities of e-invoicing, Wavelet Solutions offers top-tier guidance and support to ensure a smooth transition to digital invoicing.

"Wavelet Solutions, recognised by Amazon Web Services as its 'Software Partner of the Year for Asean 2023,' is committed to helping businesses leverage these technologies to their fullest potential," Lee said.

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