E-Invoice Malaysia Penalties: Non-compliance can result in fines from RM200 to RM20,000, imprisonment up to 6 months, or both.
Table of Contents
Penalties for E-Invoicing Non-Compliance in Malaysia
Introduction
The implementation of e-invoice in Malaysia has been a significant step towards modernizing and streamlining business transactions. However, compliance with this system is not just a matter of convenience; it's a legal obligation with clear penalties for non-compliance.
Penalties for Non-Compliance with E-invoicing Rules
Failure to issue an e-invoice constitutes an offence under Section 120(1)(d) of the Income Tax Act 1967. Penalties include fines ranging from RM200 to RM20,000 or imprisonment for up to 6 months, or both, for each instance of non-compliance
Applicability of E-Invoicing in Malaysia
E-invoicing is applicable to various types of transactions and entities:
Type of Transactions: E-invoicing is mandatory for all B2B, B2C, and B2G transactions.
Cross-Border Transactions: E-Invoicing is required for both domestic and international transactions.
All Industries: No industry exemptions; all businesses must comply, subject to periodic reviews. Government authorities, rulers, ruling chiefs, etc., are exempt from e-invoicing. For details, visit Who is Exempt from Issuing E-Invoices?.
Phased Implementation: E-invoicing implementation follows a phased timeline based on turnover thresholds:
Annual Turnover > RM 100 million: From 1 August 2024
Annual Turnover > RM 25 million and up to RM 100 million: From 1 January 2025
All taxpayers: From 1 July 2025
Other Consequences of Not Generating E-Invoices
In addition to direct penalties, several other significant consequences can arise from failing to generate an e-invoice:
Non-recognition of Revenue and Expense: Without e-invoices, sales may not be recognized in the books, and expenses cannot be claimed.
Revenue Loss: Businesses may refuse traditional invoices, leading to potential revenue losses.
Unavailability of Bill Discounting: Without e-invoices, businesses may be ineligible for bill discounting facilities.
Lower Legal Validity: E-invoices carry higher legal validity than traditional invoices, reducing the risk of disputes
Penalty for Not Issuing Tax Invoice
While e-invoicing compliance hasn't started yet, businesses registered under SST must furnish tax invoices to their buyers. Failure to do so may incur a penalty of up to RM30,000, imprisonment for a maximum of 2 years, or both.
Steps to Take for Avoiding Penalties
Understand the Mandate and Implementation Timeline: Identify the phase applicable to your business and the associated deadlines.
Assess Your Requirements: Evaluate transaction types, frequency, and delivery channels.
Choose the Right E-Invoicing Model: Select a suitable e-invoicing model for your business needs, whether it's the MyInvois Portal or API integration.
Prepare Your System: Update your IT infrastructure to accommodate e-invoicing requirements. Partner with a trusted solution provider like Complyance for seamless integration.
Train Employees: Ensure comprehensive training on the e-invoicing process and compliance requirements.
Checklist for E-invoicing in Malaysia
Assess IT Infrastructure: Ensure your systems are ready for e-invoicing.
Integration: Choose between MyInvois Portal or API integration.
Compliance: Regularly check for updates from IRBM and ensure continuous compliance.
Documentation: Maintain thorough records and documentation.
Conclusion
It is crucial for businesses in Malaysia to recognize the importance of e-invoicing and embrace it as a part of modern business practices. Even before it becomes mandatory, adopting e-invoicing voluntarily can offer numerous benefits, including streamlined processes, enhanced efficiency, and improved compliance with tax regulations. Participating in pilot programs and adhering to guidelines set by the Inland Revenue Board of Malaysia (IRBM) ensures a smooth transition and avoids potential penalties for non-compliance.
Late generation of e-invoices is considered non-compliance and may result in penalties.
Both the buyer and seller have 72 hours to recall, accept, or reject the invoice after submission.
About the Author
Ajith Kumar
Im a skilled content writer and SEO expert crafting engaging articles that rank.
Passionate about making complex topics clear, discoverable, and valuable to readers.Dedicated to driving organic growth through high-quality, search-optimized content
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