You can’t run away from this – beginning 1st August 2024, businesses must incorporate E-INVOICE into their operations. In a nutshell, every bill and invoice you issue, must be sent to LHDN servers for verification and approval. It is basically a data collection – big data of all commercial activity in the country. This system will effectively:
- Ensure your tax filing is accurate.
- Reduce human error as you will automate your processes.
- Eradicate problems associated with lost documentation, as everything is uploaded to LHDN.
- Management reporting and audit of businesses as a whole will be very much simplified.
E-invoice, together with the future introduction of E-Payment and PEPPOL, will ensure businesses run much more efficiently as everything becomes centralised and digitalised, changing the landscape of doing business in the country.
You may ask, what if I’m a small business making a profit of RM10,000 a month. Must I really do this? The answer is – YES. The implementation covers ALL businesses big and small, apart from a few exceptions such as government bodies, rulers, and diplomatic entities.
To help companies ease into it, LHDN is rolling it out in stages according to your revenue in YA 2022:
- 1 Aug 2024 Revenue of more than RM100 million
- 1 Jan 2025 Revenue of more than RM25 million
- 1 July 2025 Everyone else
How do we go about it?
There are two ways prescribed to do this:
- Myinvois portal – you will enter your invoices into this website. Take note that there are 55 required data fields, and every invoice must be in detail – e.g. item code, description, quantity, price per unit, etc. This is a heavy load to do manually, believe me.
- API (Application Programming Interface) – this means having a system that will do the E-invoice submission automatically when you are doing your billing.
Good news is, SQL Accounting is ready to help you with this new requirement by LHDN. Note that SQL is on the advisory committee for E-invoice implementation.
What will happen in the future is:
- You will issue invoices in the system.
- When ready, click on the option to post to LHDN servers.
- On approval of the invoice, LHDN will assign a Unique Identifier Number (UID) specific to this invoice.
- The system will auto-generate a QR code to be affixed to the invoice to enable your customers to verify this invoice.
With regards to SQL Accounting system, we have several milestones to ensure that our users are ready when their time comes:
- 1 June : TIN (Tax Identification Number) is auto-updated in your customer records as the system is linked to LHDN servers.
- 14 June : E-invoice compliance functions launch.
- 30 June : Transactions testing via LHDN Myinvois portal.
At that point, for companies starting on 1 August 2024, you may begin to use the system to post transactions to a sandbox server (for testing purpose), and commencing 1/8/24, your transactions will go to the LHDN server automatically.
Please keep in mind that you are only obligated to do E-invoice from the implementation date as prescribed by LHDN (following the implementation dates stated above). However you may begin to submit E-invoice voluntarily.
Note that your implementation date does not have to follow that of your customers or suppliers. An example of this:
Your client’s start date is 1/1/2025
Your company’s is 1/7/2025
You are not obligated to give an E-invoice until that date (1/7/2025).
What about suppliers/vendors who are not registered for E-invoice? The individual who comes over to fix your leaky toilet at the office, for example. In this case, you will do what is called a Self-billed invoice, basically declaring to LHDN that you have paid for such a service to the individual.
The long-term implication is that all individuals should register their businesses or risk losing jobs, as companies will want an E-invoice validated by LHDN to ensure that it is an allowed expense.
In any case, as your service provider, we will ensure you have a system that covers all these requirements, so you can carry on your business without fear of falling foul of the LHDN E-invoice regulations. Contact us now to discuss how we can assist you get over this hurdle. Don’t wait til the last minute!