What Is e-Invoice Malaysia and How It Affects Landlords and Properties

Malaysia is embracing digitization by implementing a mandatory e-Invocing model for businesses. Here is how landlords and properties are also affected.

In this article:

• What is e-Invoice in Malaysia?
• How does an e-Invoice in Malaysia effects landlords and properties?
• Who among landlords is required to use e-invoicing? How does an e-Invoice in Malaysia effects landlords and properties?
• How does e-invoicing affect rental transactions
• What are the benefits of e-invoicing for landlords?
• What does the process flow of an e-invoice in Malaysia look like?
• What if  the utility bill is issued in the landlord’s name, how does a tenant substantiate its payment of utility expenses?
• What are the consequences for failure to issue e-Invoice?

August 2024 marks an important shift in how business in conducted in Malaysia. Taxpayers with an annual turnover of more than MYR 100 million are required to use electronic invoicing (e-invoicing) starting from that month.

This will be followed by further implementation phases in 2025 for businesses with other revenue brackets. Landlords and property managers need to be aware of the impending changes and how e-invoicing will affect their rental operations.

What is e-Invoice in Malaysia?

An e-invoice is a digital representation of a transaction between a supplier and a buyer. It will replace traditional transactional documents such as invoices, credit notes, and debit notes.

An e-invoice contains the same essential information as those traditional documents. For example, supplier’s and buyer’s details, item description, quantity, price excluding tax, and total amount, which records transaction data for daily business operations.

The first phase of this e-invoicing mandate in Malaysia began on August 1, 2024. It involves businesses with a turnover exceeding RM 100 million.

The Inland Revenue Board of Malaysia uses the MyInvois portal to receive and validate invoices. It is free for all taxpayers. This digital transformation aims to enhance efficiency, improve compliance, and provide greater transparency in financial transactions.

How does an e-Invoice in Malaysia effects landlords and properties?

Property goes beyond the basic need of living. It can also be a business and more often than not, a lucrative one.

Therefore, just like other businesses, the implementation of e-invoicing will have direct implications for landlords who generate rental income through business operations or manage properties. Landlords will need to adapt their invoicing and record-keeping practices to comply with the new requirements.

Who among landlords is required to use e-invoicing?

The current revenue threshold makes it mandatory for landlords with annual rental income exceeding RM100 million to adopt e-invoicing. The same also applies to any landlord operating through business entities or property management companies that meet the revenue criteria.

Landlords involved in non-commercial rental activities are not be required to issue e-invoices. Those with personal rental income below the threshold also do not need to issue e-invoices. The current threshold is set at an annual income below RM150,000.

However, if the tenant is operating a business in the property, they would be required to issue a self-billed e-invoice for the rental of property.

How does e-invoicing affect rental transactions

e-invoicing affects rental transactions in more than one way, mainly:

Efficiency	e-invoicing streamlines rental transactions by automating invoice creation, reducing manual errors, and speeding up processing times.
Compliance	Ensures that all rental transactions comply with government regulations, avoiding potential legal and financial penalties.
Transparency	Provides a clear and verifiable record of rental transactions, which is beneficial for both landlords and tenants.

What are the benefits of e-invoicing for landlords?

The implementation of e-Invoice not only provides seamless experience to taxpayers, but landlords can also reap the benefits in these following ways:

• Simplified Processes

Reduces administrative workload by automating the invoicing process.

• Improved Accuracy

Minimizes errors associated with manual invoicing and ensures accurate financial reporting.

• Enhanced Record Keeping

Facilitates better tracking and management of rental income and transactions.

• Facilitate efficient tax filing

Seamless system integration for efficient and accurate tax reporting.

• Digitalize tax and financial reporting

Aligns financial reporting and processes to be digitalized with industry standards.

What does the process flow of an e-invoice in Malaysia look like?

There are two available mechanisms to transmit e-Invoices to IRBM (Inland Revenue Board of Malaysia):

1. MyInvois Portal

• A portal hosted by IRBM
• Accessible to all taxpayers at no cost
• Also accessible to taxpayers who need to issue e-Invoice where Application Programming Interface (API) connection is unavailable
• Supports both individual and batch e-Invoice generation through spreadsheet upload for processing multiple transactions

2. Application Programming Interface (API)

• An API is a set of programming code that enables direct data transmission between the taxpayers’ system and MyInvois system
• Requires upfront investment in technology and adjustments to taxpayers existing systems
• Ideal for large taxpayers or businesses with substantial transaction volumes

Generally, the e-Invoice workflow should look like the following:

1. Issuance of e-Invoice	The supplier creates an e-Invoice and shares it to IRBM via MyInvois Portal or API.
2. Validation of e-Invoice	IRBM validation is performed in near real-time. Once validated, the supplier will receive a Unique Identifier Number from IRBM.
3. Notification of validated e-Invoice	Supplier will be notified via MyInvois Portal or API.
4. Sharing of e-Invoice	The supplier is obliged to share the validated e-Invoice with the buyer.
5. Rejection or cancellation of e-Invoice	Rejection request or cancellation must be accompanied by justifications.
6. MyInvois Portal	A summary of the e-Invoice transactions are available here.

What if  the utility bill is issued in the landlord’s name, how does a tenant substantiate its payment of utility expenses?

As previously mentioned, when tenant is operating a business in the property, they would be required to issue a self-billed e-invoice for the rental of property.

In cases where the tenant is unable to request for the utility bills to be issued his name, the payment for those bills should be included in:

• the e-Invoice issued by the landlord (if the landlord is conducting a business); or
• the self-billed e-Invoice issued by the tenant (if the landlord is not conducting a business), as the case may be

What are the consequences for failure to issue e-Invoice?

After the e-invoice law is fully implemented, failure to issue e-Invoice will be an offence under Section 120(1)(d) of the Income Tax Act 1967. It will result in a fine of not less than RM200 and not more than RM20,000 or imprisonment not exceeding 6 months or both, for each non-compliance.

What about incentives? Are there any for implementing the e-invoice system?

There is a tax deduction of up to RM50,000 for each year of assessment given on environmental, social and governance related expenditure, including consultation fee for the implementation of e-Invoice incurred by Micro, Small, and Medium Enterprises (MSMEs), effective from year of assessment 2024 to year of assessment 2027

Where can landlords get more information or assistance with e-invoicing?

We get it, new laws require time to adapt, if you need more information or assistance, these following resources can assist you:

1. Government Resources
Refer to official guidelines and resources provided by the Malaysian government or tax authorities.

2. Professional Advice
Consult with accountants, tax advisors, or compliance specialists for tailored advice and support.

3. Training Programs
Look for training opportunities or workshops offered by e-invoicing solution providers or industry associations.

As the e-invoicing mandate in Malaysia takes effect, landlords and property managers must be proactive in understanding the requirements and preparing their businesses for the upcoming changes.

By embracing this digital transformation, landlords can streamline their operations, enhance compliance, and maintain a competitive edge in the evolving property landscape.

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