Invoicing and Tax regulation in Malaysia
Invoicing Regulation in Malaysia
In Malaysia, invoicing regulations are crucial for B2B, B2C, and B2G businesses. Businesses are required to provide a tax invoice within 21 days of the taxable period. The invoicing regulation is mandatory and involves certain key elements that must be included in the tax invoice such as the invoice number, the date of issuance, the total amount payable, and the customer’s name.
Real-Time Reporting / Fiscalization in Malaysia
In Malaysia, real-time reporting isn't mandated by the regulatory bodies; consequently, fiscalization isn't strictly required. Nevertheless, businesses need to maintain clean books of accounts and ensure that their financial transactions are up to date. This not only benefits the business in terms of effective financial management but also readily prepares it for unexpected audits and financial inspections.
E-Invoicing in Malaysia
As of 2022, e-invoicing is not compulsory in Malaysia, although it is widely encouraged to simplify operations and ensure efficiency. The transition to e-invoicing is being supported by the Malaysian government, and businesses are expected to slowly replace traditional paper-based methods. An approved electronic system is used for the registration, issuance, storage, and management of electronic invoices, promoting improved traceability and financial control.
VAT / GST / Tax Compliance in Malaysia
In Malaysia, the Good and Services Tax (GST) has been replaced with Sales and Service Tax (SST) as of September 2018. Although GST no longer applies, businesses providing taxable services are required to charge SST at the rate of 6% or 10% depending on the nature of the service, which must be clearly stated in the pricing. Compliance to these tax laws is mandatory and non-compliance can result in hefty penalties. The tax authority, known as the Royal Malaysian Customs Department (RMCD), may also conduct audits to ensure businesses comply with the tax laws. Businesses that fail to comply can face heavy fines, imprisonment or both.