e-Invoicing Exemption in Malaysia: Everything You Should Know

In this digital era, electronic invoicing or e-invoicing in Malaysia is part of Malaysia’s digital tax transformation to streamline and automate the invoicing process. This aims to improve tax compliance, reduce manual effort, minimise human error and streamline operational efficiency. 

It is mandatory for businesses to implement e-invoicing, however, not all businesses are required to adopt this system. Based on certain criteria, some businesses are exempted from e-invoice implementation. For more information about e-invoicing exemption in Malaysia, here’s everything you should know. 



 

Overview of e-Invoicing in Malaysia

e-Invoicing is a digital approach that buyers and suppliers use to issue, receive, and store invoices. The Malaysian government has been actively pushing businesses towards e-Invoicing to improve efficiency, compliance and transparency in tax reporting or financial transactions. e-Invoicing is used to replace conventional paper invoices and credit notes as this helps avoid fraudulent transactions.
 

What is the e-Invoicing Exemption?

In Malaysia, e-Invoicing exemption refers to a certain group of entities that are not required to implement e-invoices, including self-billed invoices. The Inland Revenue Board of Malaysia (IRBM) has outlined specific details in its guidelines on the exemptions concerning e-Invoicing implementation. It’s crucial to understand which entity is exempted from this requirement and who is not. 
 

Eligibility Criteria for e-Invoicing Exemption in Malaysia

Taxpayers with an annual turnover or revenue below RM150,000 are exempt from issuing e-invoices. However, these taxpayers must meet certain conditions whereby they must not have shareholders, subsidiaries, related companies or joint ventures with annual turnover/ revenue exceeding RM150,000. 
 

Types of Businesses Exempted from e-Invoicing in Malaysia

Income Tax (Issuance of Electronic Invoice) Rules 2024 (Gazetted on 30 September 2024)

• A foreign diplomatic office
• Individual who do not carry on business
• Statutory body, statutory authority or local authority in relation to: -
• Collection of payment, fee, charge, statutory levy, summon, compound and penalty in carrying out its functions under any written law; and
• Transaction of any goods sold or service performed before 1 July 2025.
• An international organisation for the transaction of any goods sold or service performed before 1 July 2025.

 

Types of Income or Expenses Exempted That Don’t Require e-Invoicing in Malaysia

• Employment income
• Alimony
• Pension
• Specific dividend distributions
• Zakat
• Contract value for the buying or selling of securities or derivatives traded on a stock exchange or derivatives exchange in Malaysia or elsewhere
• Disposal of shares of a company incorporated in or outside Malaysia and not listed on the stock exchange, except where the disposer is a company, limited liability partnership, trust body or co-operative society

Benefits of e-Invoicing Exemption

1. The exemption from e-Invoicing of entities from issuing e-invoices allows them to experience less administrative burden and enjoy more cost savings.
2. Exemptions can reduce the workload for regulatory officials allowing them to focus on other entities who are required to issue e-invoices and ensure compliance takes place. 

 

Drawbacks of e-Invoicing Exemption

1. Exemptions may lead to inconsistency in how invoices and SST returns are documented. 
2. With exemptions being carried out, enforcement of e-Invoicing regulations becomes more complex and challenging.

 

e-Invoicing FAQs

1. What is e-Invoicing?
e-Invoicing is a digital approach that buyers and suppliers use to issue, receive, and store invoices instead of using traditional paper invoices and credit notes. 

2. What is e-Invoicing exemption?
According to the Income Tax (Issuance of Electronic Invoice) Rules 2024 and IRBM e-Invoice Guideline, certain groups of entities are not required to implement e-invoices, including self-billed invoices.

3. Who is exempted from e-Invoicing in Malaysia?
All taxpayers with annual turnover/ sales below RM150,000 are exempted from implementing e-invoices. This does not apply to taxpayers who have shareholders, subsidiaries, related companies or joint ventures with annual turnover/ revenue exceeding RM150,000. 
 

Streamline Your e-Invoicing with BDO Middleware

It’s crucial to understand e-invoicing and e-invoicing exemptions in Malaysia to help businesses navigate the digital landscape effectively. The introduction to e-invoicing and using the right e-invoicing software provides a more secure and efficient way to manage financial transactions in this digital era. As the country is moving towards developing a more digitised solution, businesses are to be more prepared to transition to digital invoicing. 

With BDO Middleware, a software that acts as a bridge between your ERP/business system and IRBM’s MyInvois System, you can rest assured that all your business transactions will be handled efficiently and in compliance with IRBM requirements. Allow our professional and experienced team to help you with your e-invoicing needs while ensuring compliance with evolving tax and invoicing regulations. 

For more information on e-invoicing in Malaysia, read here.