Introduction

With the introduction of e-Invoicing in Malaysia, businesses are required to adopt a standardized process for documenting transactions, including those involving foreign purchasers. This guide provides Malaysian sellers with a comprehensive overview of how to issue e-Invoices for goods sold or services rendered to foreign purchasers. By understanding these steps and exceptions, sellers can ensure compliance with the Inland Revenue Board of Malaysia (IRBM) guidelines and streamline cross-border transaction reporting.

This guide highlights the necessary steps, data requirements, and practical considerations for e-Invoicing, while addressing unique challenges when dealing with foreign purchasers who are outside the MyInvois system.

    Steps for Issuing E-invoice

  Step 1: Issuing the e-Invoice

Upon completing a sale or service transaction, the Malaysian seller must issue an e-Invoice to the foreign purchaser. The e-Invoice will document the transaction as taxable income and serve as a record for both parties.

• Supplier: Malaysian Seller
• Buyer: Foreign Purchaser

Step 2: Completing the Required Fields

Sellers must fill in all mandatory fields as outlined in Appendices 1 and 2 of the e-Invoice Guidelines.

In cases where certain details are unavailable:

• If a detail is not applicable to the foreign purchaser, the seller must input “NA” (e.g., local tax details).
• If information is missing because it was not provided by the foreign purchaser, the seller must also use “NA.”

Step 3: Adhering to the Workflow

The Malaysian seller must follow the e-Invoice workflow described in the guidelines, which can be implemented either through the MyInvois Portal or via API. The following exceptions apply:

1. Notifications
2. Proof of Income
3. Error Management

Real Life Scenario

ABC Tech Solutions, a Malaysian software development company, delivers a custom software project worth RM 50,000 to XYZ International, a client based in Singapore.

To comply with the e-Invoicing requirements, ABC Tech Solutions generates an e-Invoice, including transaction details such as the service description, total payment, and applicable tax information. Since XYZ International is a foreign purchaser, some local fields like tax registration number are not applicable. ABC Tech Solutions inputs “NA” for these fields and submits the e-Invoice through the MyInvois Portal.

Once validated by IRBM, the e-Invoice serves as proof of income for ABC Tech Solutions. The company shares a PDF copy of the validated e-Invoice with XYZ International for record purposes. Later, XYZ International identifies an overcharge in the invoice, prompting ABC Tech Solutions to issue a credit note e-Invoice to adjust the transaction.

     Conclusion

The implementation of e-Invoicing marks a significant step forward in streamlining and standardizing transaction reporting for Malaysian sellers. For cross-border transactions, especially those involving foreign purchasers, compliance with the outlined processes is essential to ensure smooth operations and adherence to the Inland Revenue Board of Malaysia (IRBM) requirements. By following this guide, Malaysian sellers can handle e-Invoices effectively while minimizing errors and ensuring transparency in their records.

   What’s Next?

In the next article of this series, we’ll delve into E-Commerce Transactions and explore the unique requirements for e-Invoicing in the online marketplace. This comprehensive guide will address the specific guidelines for documenting online sales and purchases, ensuring that your digital transactions are fully compliant with Malaysia’s e-Invoice regulations.

Stay tuned to learn how e-Invoicing impacts e-commerce and gain practical insights for smooth implementation. Don’t miss out—get ready to elevate your understanding of e-Invoicing in the digital age!

    FAQs : Cross Border Transactions

1. Do Malaysian sellers need to issue e-Invoices for foreign purchasers?

Yes, all Malaysian sellers must issue e-Invoices for transactions with foreign purchasers to comply with IRBM regulations.

2. What should Malaysian sellers do if required details for foreign purchasers are unavailable?

Sellers should input “NA” in fields where information is either not applicable or unavailable due to a lack of details from the foreign purchaser.

3. Will foreign purchasers receive notifications about validated e-Invoices?

No, foreign purchasers are not part of the MyInvois system and will not receive notifications from IRBM. Sellers may share a visual copy of the validated e-Invoice with the foreign purchaser for record purposes.

4. How should Malaysian sellers address errors in validated e-Invoices issued to foreign purchasers?

Errors must be corrected by issuing a credit note, debit note, or refund note e-Invoice, depending on the type of correction required.

5. Are foreign sellers required to issue e-Invoices to Malaysian purchasers?

No, foreign sellers are not obligated to issue e-Invoices under Malaysia’s system. However, Malaysian purchasers must ensure proper documentation and compliance with local tax requirements.

Introduction

In an increasingly globalized world, cross-border transactions are commonplace for Malaysian businesses. Whether dealing with foreign suppliers or selling to international buyers, understanding the e-Invoicing requirements for such transactions is crucial. This guide covers two key areas:

1. Goods Sold or Services Rendered by a Foreign Seller (Supplier) to a Malaysian Purchaser (Buyer)
2. Goods Sold or Services Rendered by a Malaysian Seller (Supplier) to a Foreign Purchaser (Buyer)

By the end of this guide, you’ll have a clear understanding of how to handle e-Invoicing for these transactions and ensure compliance with Malaysian tax regulations.

Goods Sold or Services Rendered by a Foreign Seller to a Malaysian Purchaser

Overview

In cross-border transactions, when a Malaysian business purchases goods or services from a foreign supplier, the foreign seller issues an invoice or bill as per their local regulations. However, since foreign suppliers are not bound by Malaysian e-invoicing mandates, Malaysian buyers must issue a self-billed e-invoice to record the expense. This is crucial for tax documentation and compliance in Malaysia.

Source: LHDN e-Invoice Guidelines, © LHDN Malaysia.

Steps for Issuing a Self-Billed E-Invoice by the Malaysian Purchaser

When a foreign supplier sells goods or services to a Malaysian buyer, the steps for issuing a self-billed e-invoice are as follows:

Step 1: Invoice Issued by Foreign Seller Once the foreign seller concludes a sale, they will issue an invoice or receipt to the Malaysian purchaser. This invoice will follow the invoicing requirements of the foreign seller’s country and serve as a record of the income generated from the transaction.

Step 2: Malaysian Purchaser Issues Self-Billed E-Invoice To document the expense for tax purposes, the Malaysian purchaser assumes the role of the “supplier” and must issue a self-billed e-invoice. The purchaser should refer to the original invoice provided by the foreign seller to fill in the necessary details. If any required details are missing or not applicable, the purchaser can input “NA” where relevant.

Step 3: Validation by IRBM The self-billed e-invoice will be submitted via the MyInvois Portal or API, as per the guidelines provided by the Inland Revenue Board of Malaysia (IRBM). Once validated, the Malaysian purchaser will receive a notification confirming the validity of the invoice. The foreign seller will not receive this notification.

Step 4: Proof of Expense The validated self-billed e-invoice will serve as proof of the expense for the Malaysian purchaser. There is no obligation for the purchaser to share this self-billed e-invoice with the foreign seller. However, it is essential for the purchaser to retain this document for tax reporting purposes.

Real Life Scenario

Let’s look at a real-life scenario to understand the process more clearly:

Scenario ABC Foods Sdn Bhd, a Malaysian company, has contracted with XYZ Consulting Ltd, a consultancy firm based in Australia, for professional services. XYZ Consulting Ltd issues an invoice amounting to RM150,000 for their services. Since the service is subject to Malaysia’s service tax on imported services, ABC Foods Sdn Bhd needs to issue a self-billed e-invoice for tax purposes.

ABC Foods Sdn Bhd refers to the invoice from XYZ Consulting Ltd to input the required details, such as the service description, transaction amount, and supplier’s details. Since XYZ Consulting Ltd does not have a Malaysian TIN, ABC Foods Sdn Bhd enters “NA” in the TIN field, as per the guidelines.

The self-billed e-invoice is then submitted to the MyInvois Portal for validation, and ABC Foods Sdn Bhd receives a notification from IRBM confirming the invoice’s validity. This self-billed e-invoice is retained by ABC Foods Sdn Bhd as proof of the expense and used for tax reporting.

Conclusion

This article has provided a clear guide on handling e-Invoicing for Goods Sold or Services Rendered by a Foreign Seller (Supplier) to a Malaysian Purchaser (Buyer), along with a practical scenario to illustrate the process. Following these steps ensures compliance and proper documentation for Malaysian businesses dealing with international suppliers.

In our next article, we’ll shift focus to Goods Sold or Services Rendered by a Malaysian Seller (Supplier) to a Foreign Purchaser (Buyer), outlining the requirements for Malaysian businesses exporting goods or services. Be sure to follow our page and stay updated, as this next piece will complete your understanding of e-Invoicing for cross-border transactions.

Stay tuned!