Malaysia e-Invoicing: Buyer Details & Consolidated Invoices

The e-invoicing mandate in Malaysia requires each sale to be documented with a separate e-invoice, generating consumer e-invoices for small transactions can be cumbersome due to the extensive details involved. To address this, consolidated e-invoicing allows suppliers and buyers to simplify the process by combining multiple transactions into a single e-invoice when individual e-invoices are not necessary.

This article provides a detailed overview of consolidated e-invoicing, the associated processes and mandates when you can or cannot issue e-invoice and the buyer details required for consolidated invoicing.

B2C Transaction and Consolidated e-Invoicing

B2C (Business-to-Consumer) transactions involve businesses selling goods or services directly to individual consumers, commonly seen in retail, e-commerce, and hospitality industries. 

In Malaysia, B2C e-invoicing is now mandatory as part of a broader government e-invoicing initiative, effective from 1st August 2024. Suppliers are required to issue e-invoices for all B2C transactions, which serve as proof of income for the supplier and as proof of expense for buyers for claims or reimbursements.

The B2C e-invoicing process includes two scenarios:

Scenario 1: Buyer Requests an E-Invoice

If a buyer requests an e-invoice, the supplier gathers the buyer's details (e.g., full name, TIN, address, etc.) and issues the e-invoice accordingly via the MyInvois Portal or API.

Scenario 2: Buyer Does Not Require an E-Invoice

When the buyer does not require an e-invoice, suppliers issue normal receipts and consolidate all such transactions every month to generate one single e-invoice for all the transaction after the month ends as a “Consolidated e-invoice”

What is Consolidated e-invoicing?

Consolidated e-invoicing is a feature designed for suppliers who engage with buyers that do not require an individual e-invoice for every transaction. In such cases, suppliers can issue a regular receipt for each transaction, but instead of submitting these individual receipts to the IRBM, they are allowed to aggregate them into a single consolidated e-invoice. This consolidated document is then submitted to IRBM monthly, reducing the administrative burden for both parties.

Consolidated e-invoicing is particularly beneficial for businesses that deal with multiple low-value transactions where buyers, such as walk-in customers or small businesses, do not require individual invoices. It simplifies the submission process while ensuring compliance with the IRBM’s e-invoicing mandate.

Key Components of Consolidated e-Invoicing

1. Normal Receipts for Buyers Not Requiring e-invoices: When buyers do not require an e-invoice for each transaction, the supplier issues a regular receipt. These receipts do not need to be submitted for IRBM validation individually. Instead, they are collected and compiled into a single consolidated e-invoice at the end of each month.
2. Submission Timeline: Consolidated e-invoices must be submitted to the IRBM within seven calendar days after the end of the month. This timeline ensures that all transactions from the previous month are reported promptly for tax purposes.
3. Aggregation Methods: The IRBM allows suppliers to choose one or a combination of the following methods for aggregating transactions into a consolidated e-invoice:
   • Listing each receipt as a separate line item: Each transaction receipt is presented individually in the consolidated e-invoice.
   • Grouping receipts by continuous numbers: If receipt numbers follow a continuous sequence, they can be grouped as one line item. If there is a break in the sequence, a new line item begins.
   • Branch/Location-specific invoicing: Businesses with multiple branches or locations can issue separate consolidated e-invoices for each branch, using either of the aggregation methods mentioned above.
4. System Limitations: To optimize the performance of the MyInvois system (Malaysia's e-Invoicing platform), the IRBM has imposed several limitations:
   • The maximum file size for each submission is 5MB.
   • A single submission can contain a maximum of 100 e-invoices.
   • The maximum size for each individual e-invoice is 300KB.

Consolidated Self-Billed e-invoices

It is crucial to understand that the consolidation process does not apply to self-billed e-invoices, except under specific circumstances, which include:

• Transactions with individuals who are not conducting a business.
• Interest payments made to the public at large, whether to businesses or individuals.
• Claims, compensation, or benefit payments made by an insurance company to individuals who are not conducting a business.

The timing for issuing consolidated self-billed e-invoices aligns with that of consolidated e-invoices, requiring submission to the IRBM every month, within seven (7) calendar days after the month's end.

Required Details for Consolidated e-invoices

When submitting a consolidated e-invoice, suppliers must enter specific details about the buyer, even when dealing with general customers who do not require personalized e-invoices. The following fields are required in the consolidated e-invoice:

1. Buyer’s Name: Suppliers must input "General Public" as the buyer’s name.
2. Buyer’s Tax Identification Number (TIN): The standard TIN for consolidated e-invoices is "EI00000000010".
3. Buyer’s Registration/Identification/Passport Number: "NA" is entered for these fields since no individual buyer details are needed.
4. Buyer’s Address: Suppliers must input "NA".
5. Buyer’s Contact Number: This field is also populated with "NA".
6. Buyer’s SST Registration Number: This is similarly entered as "NA".
7. Description of Product/Services: A summary of the goods or services provided must be included, either as separate line items for each receipt or as a list of continuous receipt numbers.

Data Fields for Consolidated Self-Billed E-Invoice

1. Supplier’s Name: Buyer inputs “General Public.”
2. Supplier’s TIN: Buyer inputs “EI00000000010.”
3. Supplier’s Registration/ID/Passport Number: Buyer inputs “NA.”
4. Supplier’s Address: Buyer inputs “NA.”
5. Supplier’s Contact Number: Buyer inputs “NA.”
6. Supplier’s SST Registration Number: Buyer inputs “NA.”
7. Supplier’s MSIC Code: Buyer inputs “00000.”
8. Supplier’s Business Activity: Buyer inputs “NA.”
9. Classification: Buyer inputs a 3-digit code based on IRBM’s catalogue.
10. Description of Product/Services: Buyers can use one of the following:
11. Separate line items for each receipt.
12. Continuous receipt numbers listed as line items.
13. Branch-specific consolidation adopting (a) or (b), including receipt reference numbers.

Consolidated e-Invoicing for All Transactions During 6-Month Relaxation Period

To facilitate a smooth transition to e-invoicing, the Government of Malaysia has provided a six-month interim relaxation period for taxpayers, starting from the mandatory implementation date of each phase. This grace period allows:

• Taxpayers to issue consolidated e-Invoices for all transactions.
• The issuance of consolidated self-billed e-Invoices for self-billed scenarios.
• Flexibility in filling out any details the "Description of Product or Service" field in both consolidated e-Invoices and self-billed e-Invoices.
• Taxpayers are not required to issue individual e-invoices or self-billed invoices, even upon request, if they follow the consolidated invoicing guidelines.

Additionally, no prosecution will be taken under Section 120 of the Income Tax Act 1967 during this period, if taxpayers comply with the above guidelines.

Validation and Notification Process

Once a supplier submits a consolidated e-invoice to the IRBM, it undergoes a validation process. After the IRBM validates the e-invoice:

• Notification: The supplier will receive notification of the e-invoice validation. Importantly, buyers do not receive any notification, as consolidated e-invoices are not tied to individual buyers but represent a summary of transactions for the general public.
• Proof of Income: The validated e-invoice serves as the supplier’s official proof of income for tax purposes.

Handling Post-Transaction Requests for e-invoices

Even if a buyer initially chooses not to request an e-invoice, they may change their mind later. In such cases, the buyer must request the e-invoice within the same month as the transaction. The supplier is then obligated to issue an e-invoice for that transaction before consolidating the month’s receipts into the consolidated e-invoice.

Suppose a request is made after the month has ended and the consolidated e-invoice has already been submitted. In that case, the supplier may refuse the request, as the receipts have already been aggregated.

Industries That Must Issue Individual e-invoices

While consolidated e-invoicing offers flexibility for most businesses, certain industries are required to issue individual e-invoices for every transaction. These industries include:

• Automotive Industry: Any sale of motor vehicles.
• Aviation Industry: Sale of flight tickets and private charters.
• Licensed Betting and Gaming: Payouts to winners for betting and gaming activities.
• Construction Industry: Contractors working under construction contracts.
• Wholesale/Retail of Construction Materials: Sale of construction materials, regardless of volume.

Supplier Responsibilities for Consolidated e-invoices

Suppliers who opt to issue consolidated e-invoices must adhere to the following responsibilities:

• Accurate Record-Keeping: Ensure that all transaction details and receipts are accurately recorded and compiled for the consolidated e-invoice.
• Timely Submission: Submit the consolidated e-invoice within seven calendar days after the end of the month.
• Maintain Proof of Transactions: The consolidated e-invoice serves as proof of income, and suppliers must maintain proper records for tax audits or inquiries.

Conclusion

The introduction of e-invoicing in Malaysia brings about significant changes in how businesses handle consumer e-invoicing, particularly with the introduction of consolidated e-invoices. By allowing suppliers to aggregate multiple transactions into a single document, the IRBM has made it easier for businesses to comply with tax regulations while reducing administrative burdens.