In Malaysia, an electronic or e-invoice is a digital invoice used to request payment for goods or services. It is a legally recognized document that complies with the specific regulations set by the Malaysian authorities, specifically the Lembaga Hasil Dalam Negeri (LHDN). This efficient system allows for the creation, sending, and storage of invoices in a structured digital format, empowering businesses to streamline their financial processes.

Key Features of Electronic Invoicing in Malaysia

1. Digital format: E-invoices are produced in a structured format, such as XML or UBL (Universal Business Language), allowing easy integration into accounting and ERP (Enterprise Resource Planning) systems. This format facilitates automating invoice processing, reducing manual data entry requirements and reducing errors.
2. Compliance with LHDN requirements: The Malaysian government has introduced specific guidelines and standards on e-invoicing to ensure compliance with local tax laws. These standards ensure that e-invoices contain all necessary information, such as supplier and customer information, product or service descriptions, amounts due, SST (sales and service tax), and other relevant taxes. Compliance with these rules is critical for businesses to avoid penalties and ensure the proper filing of tax returns.
3. Secure Transmission: The e-invoice is transmitted electronically through a secure channel, ensuring the data is encrypted and protected from unauthorized access. This secure transmission reduces the risk of invoice fraud and data breaches associated with traditional invoices.
4. Real-time processing and faster payment: One of the most essential advantages of e-invoicing is the speed of processing invoices. E-invoices are sent and received instantly, enabling businesses to make payments quickly. This is especially beneficial for cash management, reducing the time between invoices and collections.
5. Environmental Benefits: E-invoicing helps sustain the environment by eliminating unnecessary paper. It aligns with broader corporate social responsibility (CSR) goals and reduces the carbon footprint associated with printing, mailing and storing invoices
6. Accounting and Reporting: E-invoicing provides a transparent and straightforward accounting process, streamlining the financial reporting and tax accounting process. The digital nature of these invoices means they can be collected and received quickly, improving transparency and reducing the administrative burden associated with traditional paper-based accounting on

Types of Electronic Invoices

Adopting digital invoices has become a fundamental tool for large and small companies. These invoices allow for significant savings in time and resources and greater efficiency in business management.

This type of invoice allows companies to generate invoices more efficiently and quickly. Companies can use various digital invoices, each with its features and benefits.

These are the most common types of invoices:

1. Electronic invoice: The electronic invoice is the most common type of digital invoice. It is an electronic document that meets the legal requirements for tax use. The electronic invoice is generated and sent through an electronic invoicing system and can be digitally signed to ensure its authenticity.
2. Simplified invoice: A simplified invoice is a type of electronic invoice used to invoice amounts under 400 euros. It does not need to include all the details of the invoice, such as the recipient’s tax identification number, which simplifies its issuance. The simplified invoice is mainly used in retail transactions.
3. Credit note: This is a type of digital invoice that is used to correct errors in a previously issued invoice. For example, if an amount greater than the actual amount has been invoiced by mistake, a credit note is issued to correct the error.
4. Rectifying invoice: A corrective invoice is a digital invoice used to correct errors in a previously issued invoice. Unlike a credit note, a corrective invoice is valid for tax purposes and must meet the exact requirements of the original invoice.
5. Recurring invoice: An invoice issued periodically, monthly, quarterly or annually for a service or product provided regularly, such as subscriptions or maintenance contracts.