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Document Statuses Within The e-Invoice Workflow in Malaysia

Updated on: Jun 5th, 2024

9 min read

The first phase of e-invoicing in Malaysia will begin on August 1, 2024, targeting businesses with an annual turnover exceeding RM 100 million. With the implementation, all businesses will be mandated to generate e-invoices for all transactions, including B2B, B2C, and B2G.

Each issued e-invoice undergoes multiple validation checks and approvals by the IRBM portal, the supplier, and the buyer before it becomes valid. It is crucial for both the issuer and the receiver to be well-informed about the status of the submitted e-invoice.

This blog will provide a detailed discussion of the various document statuses within the e-invoice workflow in Malaysia.

Before diving into the document statuses, let's briefly review how e-invoicing works in Malaysia.

E-Invoice Workflow in Malaysia

Here is how the e-invoicing process would work in Malaysia.

Preparation: Taxpayers configure their systems to generate e-invoices in XML or JSON format, adhering to a defined data structure with all 55 required fields.
Submission: After concluding a transaction, the supplier creates an e-invoice and submits it to the Inland Revenue Board of Malaysia (IRBM) for real-time validation.
Validation: The MyInvois System validates the e-invoice nearly instantly. If errors are detected, an error response is provided. Upon successful validation, a notification is sent to both the supplier and the buyer.
Sharing: The validated e-invoice is then shared with the buyer. This e-invoice must include an embedded QR code and a Unique Invoice Number (UIN) for validation via the MyInvois Portal.
Rejection and Cancellation: If errors are found in an e-invoice, buyers can reject it within 72 hours of validation. Similarly, suppliers can cancel an e-invoice within the same timeframe.
Storage of E-Invoice: After validation, all e-invoices are stored in the IRBM's database for record-keeping.

Why is Document Status necessary?

Document status refers to the current state of an e-invoice as it moves through the e-invoicing workflow. As seen in the workflow, when an e-invoice is submitted by the issuer, whether through the MyInvois portal or via API, it undergoes validation checks and must be accepted by the buyer.

Both the issuer and the receiver require detailed updates on the status of the e-invoice, whether it is validated, in process, rejected, etc. This information is essential for monitoring, error management, regulatory compliance, and reissuance if necessary.

Various document statuses

The invoice is stored in the local database with a specific status. The status is an integer value, which could be one of the following:

There are four primary document statuses outlined by Software Development Kit (SDK) released by LHDN. Invoices are stored in the local database with specific statuses, represented by integer values as detailed in the table below:

STATUS	VALUE	NOTE
Submitted	1	Indicates the invoice has passed initial structure validations but awaits additional validations to be completed.
Valid	2	Denotes a successful invoice validation, can be used as the proof of income for the supplier once the document becomes valid
Invalid	3	Indicates a submitted invoice with validation issues. The taxpayer can choose to edit the invoice, fix the errors and resubmit the e-invoice for validation
Cancelled	4	Signifies an invoice cancelled by the issuer.

Note: LHDN previously included a status for the buyer's rejection of e-invoices. However, in the subsequent SDK update on April 6, 2024, LHDN removed this status type.

Conclusion

Document statuses are crucial indicators of the current state of an e-invoice within the workflow. They provide information about the progress of the invoice, such as whether it has been submitted, validated, or cancelled. These statuses are essential for both the issuer and the receiver to track the status of transactions accurately and ensure compliance with regulatory requirements.

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