Guide to e-Invoicing in Malaysia: Everything You Need To Know

Following the Inland Revenue Board of Malaysia’s ("IRBM") announcement in May 2023 on the implementation of e-Invoicing in 2024, the IRBM has on 6 April 2024 issued updated e-Invoice Guidelines (Version 2.3), Specific Guidelines (Version 2.1) and SDK (Version 1.0) on their website.

The implementation of e-Invoicing is intended to support Malaysia’s digital economy growth and to enhance the efficiency of Malaysia’s tax administration. e-Invoices will replace the traditional paper-based invoices which will enhance the efficiency in recording financial transactions and facilitate real time data collection. 

To support the growth of the digital economy, the Government shall implement e-Invoice in stages, in an effort to enhance the efficiency of Malaysia’s tax administration management.
 

 
what are e-invoices

What are e-Invoices?

An e-Invoice is a digital proof of a transaction between a supplier and a buyer. It eliminates the necessity for paper invoices by enabling businesses to generate and store machine-readable, digitised versions of invoices, facilitating streamlined processes for billing and payments. e-Invoices will be created in IRBM’s specified format (XML, JSON) and shall contain 55 fields (37 mandatory).

What is the e-Invoicing Implementation Timeline in Malaysia?


The e-Invoicing implementation in Malaysia began on 1st August 2024, initially applying to taxpayers with an annual turnover or revenue exceeding RM100 million. As of 1st January 2025, the system has been extended to include taxpayers with annual turnovers or revenues ranging from more than RM25 million to RM100 million. By 1st July 2025, e-Invoicing will become mandatory for all taxpayers in Malaysia, regardless of their annual turnover or revenue.

In summary: 

1 August 2024 - Taxpayers with annual turnover or revenue >RM100 million.

1 January 2025 - Taxpayers with an annual turnover or revenue of more than RM25 million and up to RM100 million.

1 July 2025 - All taxpayers.


e-Invoicing implementation timeline in Malaysiae-Invoicing Implementation Timeline in Malaysia

What are e-Invoicing Transaction Types?

e-Invoicing applies to all taxpayers undertaking commercial activities in Malaysia. It will facilitate instant validation and storage of Business-to-Business (“B2B”), Business-to-Consumer (“B2C”) and Business-to-Government (“B2G”) transactions. It will also apply to certain non-business transactions between individuals. 

For certain B2C transactions where the end consumer does not need e-Invoices to support the transactions for tax purposes, suppliers are allowed to issue normal receipts/invoices based on current practices. 

Overview of e-Invoicing for Transactions with Buyers

Below is an overview of the process for Buyers who do and don’t require e-Invoices.

e-invoicing overview workflowScenarios of e-Invoicing Transaction with Buyers

Scenario 1: Buyer requires an e-Invoice

  1. Supplier obtains Buyer’s details 
    • For Malaysians: Either TIN or IC No. / MyTentera identification number / Both TIN & IC No./MyTentera identification no.
    • For non-Malaysians: Either TIN / Both TIN & Passport

  1. Supplier issues and validates e-Invoice with IRBM

  2. Supplier shares validated e-Invoice to Buyer

  3. Buyer may scan QR code to view e-Invoice validity

  4. Buyer will be able to substantiate the transaction for tax purposes.

Scenario 2: Buyer does NOT require e-Invoice

  1. Supplier issues normal receipts to Buyer (same as current practice). However, the Buyer can request for an e-Invoice within the month of the transaction (i.e. if a purchase was made on 15 September, the Buyer is allowed to request an e-Invoice up until 30 Sept) via web portal/mobile application created by Supplier.
  2. Supplier consolidated all receipts (where e-Invoices are not required by Buyers) on a monthly basis. The consolidated e-Invoice is to be issued and submitted for IRBM’s validation within 7 calendar days after month end. 

Who is Required to Comply with e-Invoicing in Malaysia?

All individuals and legal entities are required to comply with the e-Invoicing requirement, including:

  1. Associations;
  2. Body of persons;
  3. Branches;
  4. Business trusts;
  5. Co-operative societies;
  6. Corporations;
  7. Limited liability partnerships;
  8. Partnerships;
  9. Property trust funds;
  10. Property trusts;
  11. Real estate investment trusts;
  12. Representative offices and regional offices;
  13. Trust bodies; and
  14. Unit trusts.

Scenarios Requiring e-Invoices to be Issued

Proof of Income

Issued whenever a sale or other transaction takes place to recognise the income of taxpayers.

Proof of Expense

Purchases made or other spending by taxpayers, including returns and discounts. It can also be used to correct or subtract an income receipt in terms of the amounts documented. In certain cases, taxpayers may need to issue a self e-Invoice to document an expense such as foreign transactions.

Determination of Annual Turnover or Revenue 

  • Taxpayers with audited financial statements: annual turnover or revenue stated in audited financial statements for FY 2022.  

  • Taxpayers without audited financial statements: annual revenue reported in tax return for YA 2022.  

  • In the event of a change of accounting year end for FY 2022, taxpayer’s turnover or revenue will be prorated to a 12-month period.  

  • For new businesses or operations commencing from the year 2023 onwards, the e-Invoicing implementation date is 1 January 2027 and further guidance will be provided in due course.  Notifications will be sent to taxpayers that are mandated to adopt e-Invoicing, in phases.

What are the e-Invoicing Models in Malaysia?

Two distinct e-Invoice transmission mechanisms are available:

a) A portal (MyInvois Portal) hosted by IRBM; and 
b) Application Programming Interface (API) into IRBM’s related systems. 

Taxpayers can select the most suitable mechanism to transmit e-Invoice to IRBM, based on their specific needs and business requirements. The key features of and considerations for each option are outlined below:


No.

Mechanism 

Key Features

Considerations

1.

MyInvois Portal
(hosted by IRBM) 

A portal hosted by IRBM as an option that is available to taxpayers at no cost

  • Accessible to all taxpayers

  • Suitable for MSMEs  

  • May not be efficient for large volume of data 

  • Businesses that need to issue e-Invoice but API connection is unavailable 

2.

Application Programming Interface (“API”)

(into IRBM’s related systems)


An API is a set of programming code that enables direct transmission between the taxpayers’ system and MyInvois System

  • Requires upfront investment in technology and adjustments to existing systems. API connection may be made directly to IRBM or through intermediary technology providers 

  • Ideal for large taxpayers or businesses with substantial transaction volume

e-Invoicing Overall Workflow

  1. Issuance of e-Invoice

When a sale or transaction is made (including e-Invoice adjustments), the supplier generates an e-Invoice and submits it to IRBM via MyInvois Portal or API for validation.

  1. Validation of e-Invoice

Real-time validation by IRBM is performed, ensuring necessary standards and criteria are met. Once validated, the supplier will receive a Unique Identifier Number via MyInvois Portal or API. 

  1. Notification of validated e-Invoice 

Both the supplier and buyer will be notified via MyInvois Portal or API once e-Invoice has been validated.

  1. Sharing of e-Invoice

Upon validation, the supplier is obliged to share the cleared e-Invoice (embedded with QR code) with the buyer. The QR code can be used to validate the existence and status of the e-Invoice via MyInvois Portal.

  1. Rejection or cancellation of e-Invoice 

Buyer/supplier may reject/cancel the e-Invoice with justifications within 72 hours from the time of e-Invoice validation.

  1. MyInvois Portal

Both supplier and buyer have the option to request and retrieve e-Invoice data via MyInvois Portal. 

e invoicing overview workflow

How To Assess Readiness for e-Invoicing?

  1. People

    Allocate and equip personnel with the necessary capabilities to adopt and oversee the implementation of e-Invoicing.

  2. Process

    Review current processes in issuing transaction documents (i.e. invoices, debit notes, credit notes, refunds). 

  3. Technology

    Determine availability of data sources and structure, current IT capabilities to support system readiness and processes to comply with e-Invoicing requirements and obligations.

Importance of e-Invoicing in Malaysia

The shift towards e-Invoicing in Malaysia is part of a broader initiative to enhance the digital economy and strengthen tax compliance. By adopting e-Invoicing, businesses in Malaysia can benefit from streamlined processes, reduced paperwork, and more efficient financial management. Key advantages of e-Invoicing include:


  • Enhanced Invoice Accuracy

Automating invoice creation and submission reduces manual entry errors, leading to more accurate invoicing and fewer discrepancies in financial records.

  • Simplified Tax Compliance

With direct integration into tax reporting systems, e-Invoicing enables faster and more precise tax submissions, helping businesses meet regulatory requirements with ease.

  • Operational Efficiency

By reducing the time and resources spent on manual invoice processing, e-Invoicing allows companies to allocate resources to more strategic tasks, improving overall productivity.

  • Faster Payment Cycles

e-Invoicing accelerates the payment process by reducing delays, enabling businesses to maintain healthier cash flow and minimise payment-related disputes with clients and suppliers.

  • Digital Record-Keeping

Transitioning to digital invoices supports seamless financial reporting and makes it easier to retrieve records, enhancing transparency and simplifying audits.

  • Sustainability and Cost Savings

Eliminating paper invoices not only reduces costs associated with printing and storage but also supports environmental sustainability by reducing paper waste.

  • Improved International Trade Processes

For companies engaged in cross-border trade, e-Invoicing simplifies compliance with international standards and eases transaction processes, fostering smoother trade operations.

  • Enhanced Data Security

Digital invoices come with added layers of security, protecting sensitive financial data from fraud and unauthorised access.

  • Better Financial Insights

e-Invoicing systems allow for real-time data analysis, giving businesses valuable insights into payment trends, customer behavior, and overall financial health.

How can BDO assist?

GAP ANALYSIS

Our team will review and evaluate current invoicing procedures, process workflow (including internal controls) and related system mechanisms to identify changes/improvements required. We will conduct reviews on revenue related transaction streams and Tax implication to recommend necessary changes whilst assessing potential limitations and identification of gaps noted from the analysis.

We will also review Standard Operating Procedure (SOP) for e-invoice issuance as well as provide Cybersecurity advisory / recommendation in relation to e-invoice architecture.

PROJECT MANAGEMENT

We will manage the implementation of e-invoicing together with your accounting software service provider (e.g. Oracle, SAP, MS, etc.) to be compliant to the IRBM’s requirements and ensure that the implementation is in accordance to a defined scope and timeline.

SYSTEM READINESS ASSESSMENT

We will review the readiness of the new system to comply with IRBM’s requirements as follows:

  • Gap assessment in respect of data field requirements per IRBM taxonomy
  • Validate e-invoice data to and from IRBM to ensure accuracy and correctness

MIDDLEWARE SERVICES

BDO Middleware is software that acts as a bridge between your ERP/business system and IRBM's MyInvois System. The complexity of enhancing your ERP/business system will be reduced to just exporting data to Middleware, which will handle and process e-invoices on your behalf. It will take care of future enhancements to keep up with evolving IRBM requirements, decreasing cost of compliance over time.

Explore more on how our e-Invoicing middleware can help your business here!


how we can assist with e-invoicing

e-Invoicing FAQs

1. Is e-Invoicing mandatory for all businesses in Malaysia?

Yes, e-Invoicing will become mandatory for all businesses, with the implementation dates varying based on the company's annual turnover thresholds as outlined above.

2. How can businesses prepare for e-Invoicing implementation?

Businesses should:

  • Assess and upgrade their accounting and invoicing systems to ensure compatibility with e-Invoicing requirements.
  • Train staff on new processes and compliance obligations.
  • Consult with tax professionals or service providers specialising in e-Invoicing solutions.

3. Are there any exemptions to e-Invoicing requirements?

Certain entities, such as individuals not conducting business and taxpayers with annual turnover below RM150,000, may be exempt. However, it's essential to consult the latest guidelines from the Inland Revenue Board of Malaysia (IRBM) for specific exemptions. Check out our comprehensive article for e-Invoicing exemptions in Malaysia.

4. What is the e-Invoicing treatment during the interim relaxation period?

Taxpayers are given a six (6) month interim relaxation period from their date of mandatory implementation. The e-Invoicing interim relaxation period is applicable to all phases of e-Invoice implementation. 

5. What formats are accepted for e-Invoices in Malaysia?

The IRBM accepts e-Invoices in XML or JSON formats, adhering to the Universal Business Language (UBL) 2.1 standard.

6. How will e-Invoicing affect cross-border transactions?

While e-Invoicing primarily targets domestic transactions, businesses engaged in international trade should stay informed about any additional requirements or guidelines issued by the IRBM.

7. What support is available for businesses transitioning to e-Invoicing?

The IRBM provides guidelines, FAQs, and a Software Development Kit (SDK) to assist businesses. Additionally, consulting with tax professionals or e-Invoicing solution providers like BDO can facilitate a smoother transition for your business.

8. What are the consequences of non-compliance with e-Invoicing regulations?

Non-compliance may result in penalties, fines, or other enforcement actions by the IRBM. It's crucial for businesses to adhere to the implementation timelines and requirements to avoid such consequences.

9. How long should I keep e-Invoices for tax purposes?

The IRBM typically requires businesses to retain financial records, including invoices, for a specified period (usually 7 years) for tax audits and compliance purposes. 

10. Can I submit e-Invoices in bulk, or do I need to upload each invoice individually?

The MyInvois system and most e-Invoicing platforms allow for bulk submissions, which can save time for businesses handling high volumes of transactions. See how our e-Invoice Middleware can help.

11. How does e-Invoicing benefit SMEs specifically?

For SMEs, e-Invoicing can streamline invoicing processes, reduce administrative costs, and ensure compliance with tax regulations. It also levels the playing field by allowing smaller businesses to operate with the same efficiency as larger companies.

12. How does e-Invoicing align with environmental sustainability goals?

e-Invoicing reduces the need for paper invoices, lowering your business's paper consumption and contributing to environmental sustainability. It also cuts down on storage requirements, reducing physical waste and promoting a greener business operation.

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