e-Invoicing | Latest Regulatory Updates in Malaysia

Paragraph 16.1: Further Extension of Interim Relaxation Period (Phase 4)

Previously (in January 2026), it was announced that the Interim Relaxation Period for taxpayers in the following two categories would end on 31 December 2026:

• 1 January 2026 implementation date: for taxpayers with annual turnover or revenue of up to RM5 million; or
• 1 July 2026 implementation date: for new businesses or operations commencing from year 2023 to 2025 with an annual turnover or revenue of at least RM1 million.

Under the latest Specific Guideline, the Interim Relaxation Period has been further extended and will now end on 31 December 2027.

How Will This Affect You?

Suppliers’ perspective

• The further extension of the Interim Relaxation Period provides Phase 4 taxpayers with additional time for system readiness and compliance without facing penalties.
• Affected businesses should continue e-Invoice preparation efforts and not delay implementation planning.

1. One-year extension of the interim relaxation period to 31 December 2027 for selected taxpayers (as covered above) [Q104]
2. Illustrative examples (with no change to existing rules) were added for determining e-Invoice implementation dates for companies which reached RM1 million revenue threshold after FY2022 (including new businesses / operations) [Q11-13]
3. Expanded illustrations (no rule change) relating to determination of MSME exemption [Q89-93]
4. A brand-new question [Q94] was added to illustrate what qualifies as a “related company”* for MSME exemption purposes.
   • Companies are generally not treated as ‘related’ for e-Invoice purposes when the connection is through individual shareholders or directors, regardless of ownership level or management overlap. 
   • Only corporate shareholding or corporate control creates related-company status for e-Invoice exemption purposes. A corporate shareholder is deemed to create related-company status if it holds at least 20%* of shares, or has control over the company’s operations, even if its shareholding is below 20%.
   • As a reminder, MSME exemption will not apply where a taxpayer is deemed as part of a related company group (as defined above) and any company within that related group is required to implement e-Invoice.
     
     *Note: the 20% threshold was not quoted explicitly in the previous FAQ, but was incorporated by reference via a footnote stating that the term ‘related company’ has the meaning assigned under the Promotion of Investments Act 1986.

FAQ question 94 clarifies the definition of “related companies”, particularly the application of the 20% corporate shareholding and control tests. While this does not change existing implementation obligations, businesses should reassess their group structure to ensure all relevant entities have been appropriately identified and included within the scope of e-Invoice implementation, as prior assumptions on exclusion may no longer be valid.

Paragraph 3.7 (Table 3.6): Removal of Activity that requires e-Invoice to be issued for each transaction

The industry/activity of “Wholesalers and Retailers of Construction Materials” have been removed from the type of activities/transactions where consolidated e-Invoice is not allowed. 

This means that transactions for Sales of Construction Materials are not bound to the restriction of issuing e-Invoice for each transaction with Buyers (i.e., consolidation is allowed if the Buyer does not require an e-Invoice). 

Nevertheless, as per Section 3.7 of the Specific Guideline, effective from 1 January 2026, an individual e-Invoice must be issued for any single transaction with a value exceeding RM10,000 (i.e., consolidation is not allowed), regardless of industry.

Paragraph 16.1: Extension of Interim Relaxation Period (Phase 4)

For businesses in Phase 4 (annual turnover or revenue of up to RM5 million), the six (6)-month interim relaxation period from the date of mandatory e-Invoice implementation has been extended to a year. Instead of ending on 30 June 2026, it will now last from 1 January 2026 to 31 December 2026.

However, the implementation deadline remains unchanged as per Section 1.5 of the e-Invoice Guideline (Version 4.6):

• 1 January 2026 for taxpayers with annual turnover or revenue of up to RM5 million; or
• 1 July 2026 for new businesses or operations commencing from year 2023 to 2025 with an annual turnover or revenue of at least RM1 million.

Note that businesses with a 1 July 2026 implementation deadline maintains the same 6-month interim relaxation period (i.e. no extension given).

How Will This Affect You?

1. Suppliers’ perspective

• Businesses have been granted additional time this year to transition and prepare for full e-Invoice compliance without facing penalties from the IRBM during the interim relaxation period.
• Businesses in the Construction Materials sector may now issue consolidated e-Invoices for such transactions of sales of construction materials not exceeding RM10,000.

2. Buyers’ perspective

• A larger number of MSMEs will fall under the extended grace period and hence any purchases made from such MSME vendors may not be issued an e-Invoice during their interim relaxation period.

Paragraph 1: Introduction 

New sentence added on the Thirteenth Malaysia Plan, highlighting the government’s commitment to accelerate digital transformation by building a digital government and economy, improving financial management efficiency, and promoting strategies to enhance business productivity and competitiveness.

Paragraph 1.5: Targeted Taxpayers

The turnover or revenue applicable for Phase 4 of mandatory e-Invoice implementation has been revised to include taxpayers with an annual turnover or revenue of up to RM5 million (previously: RM1 million to RM5 million), with the implementation date remaining unchanged on 1 January 2026.

Phase 5 has been deleted accordingly.

Paragraph 1.5: Implementation Timeline for New Businesses 

The e-Invoice implementation timeline for newly established businesses or those commencing operations has also been updated as follows:

Note: For new businesses, whose first-year turnover or revenue is less than RM1 million (previously: RM500,000), the e-Invoice implementation date will be 1 January of the second year following the year in which the business’ total annual turnover or revenue first reaches RM1 million (previously: RM500,000).

Paragraph 1.6.1 (e): Exempted Persons

Exempted persons now include Taxpayers with an annual turnover or revenue of less than RM1 million (previously: RM500,000).

Paragraph 16.1: Interim Relaxation Period

The six (6)-month interim relaxation period from the date of mandatory e-Invoice implementation for Phase 4 has been revised to include taxpayers with an annual turnover or revenue of up to RM5 million (previously: RM1 million to RM5 million), with the relaxation period remaining unchanged from 1 January 2026 to 30 June 2026.

Interim relaxation period for Phase 5 has been deleted accordingly.

Key Updates  

The rules are the same as before except for the increase of threshold from RM500,000 to RM1 million:

If a taxpayer’s turnover/revenue did not reach RM1 million in YA2022, but later reached/exceeded RM1 million in YA2023, YA2024, or YA2025, e-Invoice is required to be implemented on 1 July 2026.

• The same applies for new businesses which reached/exceeded RM1 million turnover/revenue in those same YAs.

If the RM1 million threshold is only reached/exceeded in YA2026 (or later YAs), e-Invoice must be implemented starting on 1 January in the second year after the YA where turnover reaches/exceeds RM1 million.

Once required to implement e-invoicing, taxpayers must continue issuing e-Invoices, even if their turnover or revenue falls below RM1 million in subsequent years.

Key Updates  

With the introduction of a concessionary implementation date of 1 July 2026, taxpayers who were previously under Phase 5 of e-invoice implementation (i.e., Taxpayers with an annual turnover or revenue of up to RM1 million) and not exempt maintains the same mandatory implementation date:

The e-Invoice implementation exemption for taxpayers with an annual turnover or revenue below RM1 million does not apply if any of the following conditions are met:

1. Taxpayer has non-individual shareholder(s) (or equivalent) with annual turnover or revenue of ≥ RM1 million; or
2. Taxpayer is a subsidiary of a holding company with annual turnover or revenue of ≥ RM1 million; or
3. Taxpayer has a related company/joint venture with annual turnover or revenue ≥ RM1 million.

Taxpayers who do not meet the exemption criteria are required to implement e-Invoice starting from 1 July 2026 (concessionary e-Invoice implementation date).

How Will This Affect You?

1. Suppliers’ perspective

• You may wish to review the revenue position of subsidiaries in your Group which have yet to implement e-invoicing and assess their e-Invoice readiness.
• Note that non-MSME subsidiaries with revenue below RM1 million continue to have a 1 July 2026 implementation date (due to the new concessionary implementation date).
• While your revenue may be below RM1 million, lower Sales & Services Tax (“SST”) registration thresholds (e.g. RM500,000) may still give rise to indirect tax compliance obligations and should be monitored separately from e-invoicing thresholds.  

2. Buyers’ perspective

• A larger group of MSMEs will now be exempted from issuing e-Invoices, and hence any purchases made from such newly exempted MSME vendors will not be issued an e-Invoice.

Paragraph: Table 3.6 
Subject Matter: Types of activities/ transactions where consolidated e-Invoice is not allowed

Types of activities / transactions (where consolidated e-Invoice is not allowed) has been expanded to now include the electricity and telecommunications sectors.  

• Electricity: Distribution, supply and sale of electricity (Note that this only applies to electricity service providers)
• Telecommunication: Telecommunication services in relation to postpaid plan and internet subscription, and sale of electronic devices.

The new additions will take effect from 1 January 2026.

This means that such transactions can no longer be consolidated and require individual e-Invoice per transaction.

As a reminder, effective 1 January 2026, consolidated e-Invoice is also no longer allowed for any single transaction with a value exceeding RM10,000. (This restriction was previously added in Specific Guideline Version 4.2). 

BDO Insights

Key Considerations/ Implications:

As a service recipient, the Company should expect to receive individual e-Invoice from its electricity and telecommunication service providers as proof of expenses starting 1 January 2026, since the responsibility for issuing such e-Invoices rests with the service providers.

Paragraph: Appendix 5
Subject Matter: Industry Specific FAQ

This section has been reworded for clarity. 

In particular, “Financial Services, Stockbroking and Unit Trust” has been renamed to “Financial Services, Stockbroking, Unit Trust and Money Changing Services”, following the corresponding industry-specific FAQ update released on 2 September 2025.

The updated FAQ included more clarifications on e-Invoice treatments for unit trust and money changing services transactions (i.e. Part C and D).

BDO Insights

Key Considerations/Implications:

Based on the latest FAQs issued by the IRBM, two key areas have been updated:

1. e-Invoice Treatment for Unit Trust Related Transactions: 

Where the Company is an investor subscribing to a unit trust, it should expect to receive a visual presentation e-Invoice (e.g., in the form of statements or bills) from the supplier  (i.e., the unit trust management company) serving as proof of expense.

For redemption of unit trust units, the unit trust management company is required to issue a self-billed e-Invoice and provides the validated copy to the investor (i.e., the Company) as proof of income from the redemption, in accordance with their respective issuance frequency.

2. e-Invoice Treatment for Money Changing Services Related Transactions:

Where the Company exchanges local currency (i.e., MYR) for foreign currency, or vice versa, it should expect to receive e-Invoice from the licensed money service business operator. 

However, if the Company does not require an e-Invoice, the money changer may instead issue a normal receipt and subsequently report the transaction through a consolidated e-Invoice. 

Please note that the above highlights are not exhaustive and do not represent the full extent of the updates issued by IRBM. For comprehensive details, kindly refer to the Industry-Specific FAQs available at the following link: Link to Industry-Specific FAQs page.

Paragraph: Paragraph 1.6.7(h) 
Subject Matter: Types of income/expenses that are exempted from the implementation of e-Invoice (including self-billed e-Invoice)

The list of exemptions has been expanded to cover:
“Donations or contributions received, as specified in Question 1, Part A of the e-Invoice FAQs for Donations or Contributions.”

Based on the abovementioned FAQs, the following recipients are exempted from issuance of e-Invoice upon receiving donations or contributions:

1. Religious institutions or organisations established exclusively for the purpose of religious worship or the advancement of religion; and
2. Any person (excluding (a) above) receiving donations or contributions that are not tax exempt under the Income Tax Act 1967.
   
   

BDO Insights

Key Considerations/Implications for the donor (i.e., the Company is participating in donation activities)

• If a donation/contribution is made in monetary form, the Company should expect to receive an e-Invoice from the recipient (except in cases exempted as above (a) and (b)).
• If a donation/contribution is made in-kind, the recipient is not required to issue an e-Invoice. To substantiate the expense, the Company should request an e-Invoice from the supplier/vendor of the donated goods

Paragraph: Appendix 5
Subject Matter: Introduced a new set of FAQs on Donations and Contributions

No major structural changes were made to the e-Invoice Specific Guideline. 

The only update is the inclusion of a new FAQs addressing the e-Invoice treatment for donation or contribution transactions, providing further clarification on how such cases should be managed.

The full FAQs can be accessed via this link: FAQs for Donations or Contributions

Paragraph: Item 26
Subject Matter: Transactions with Government and related bodies

The FAQs further clarify on the data should be inserted while issuing e-Invoice or self-billed e-Invoice to the said parties: 

• TIN: EI00000000040
• BRN: NA

BDO Insights

Key Consideration/Implications to the taxpayer:

This update further emphasises that when a taxpayer transacts with the above mentioned exempt parties, the taxpayer remains responsible for issuing the e-Invoice or self-billed e-Invoice with the correct data fields, in order to substantiate income or expenses. 

Although these government and related bodies are exempted from e-Invoice implementation, taxpayers engaging in transactions with them are still required to comply with the e-Invoice requirements.

Paragraph: Paragraph 1.5 
Subject Matter:  e-Invoice Implementation Timeline

The IRBM has announced new updates on the e-Invoice implementation timeline:

Source: IRBM website

Based on the above, the implementation date of e-Invoicing for taxpayers with annual income or sales of:-

• between RM1 million and RM 5 million has been deferred to 1 January 2026 (Phase 4), from the previously announced date of 1 July 2025.
• up to RM 1 million has been deferred to 1 July 2026 (Phase 5).

The revised timeline reflects the IRBM’s recognition of the need to provide businesses, particularly micro, small, and medium enterprises (“MSMEs”) with additional time to prepare for e-Invoice adoption.

In light of these updates, the Company (as a Buyer) should assess its supplier base to determine whether any suppliers will be impacted by the revised implementation dates, as this will affect whether the Company will receive e-Invoices or normal invoices from those suppliers as a proof of expense.

Where the Company has not yet implemented the e-invoicing, the Company should re-assess the mandatory implementation date i.e. either Phase 3, 4 or 5. 

The e-Invoice implementation timeline for newly established businesses or those commencing operations has also been updated as follows:

Paragraph: Paragraph 1.6
Subject Matter:  Exempted Party(ies)

Taxpayers with an annual turnover or revenue of less than RM500,000 (previously RM150,000) are now exempt from the mandatory implementation of e-Invoicing.

Paragraph: Paragraph 3.7.2
Subject Matter:  Types of activities/ transactions where consolidated e-Invoice is not allowed

The following update applies to all industries and will take effect from 1 January 2026:

• Consolidated e-Invoice is not allowed for any single transaction with a value exceeding RM10,000.

The Company should be mindful of scenarios (such as export sales and sales to end consumers) where a single transaction exceeds RM10,000, as the Company will be required to issue an individual e-Invoice to the buyer. The Company should ensure its systems are able to detect such high-value transactions accordingly.

Paragraph: Paragraph 16.1
Subject Matter:  6-month Interim Relaxation Period

The 6-month relaxation periods for each phase have been updated accordingly to align with the revised implementation dates:

As the Company transacts with suppliers that fall within Phase 3, Phase 4, or Phase 5, it is important to note that there may be instances where the Company continues to receive normal invoices, bills, or receipts as proof of expense during the applicable interim relaxation period.

Paragraph: Paragraph 2.5.4
Subject Matter: Guidance on Handling MyInvois System Disruptions

A new paragraph has been added to address scenarios in which taxpayers experience disruptions while transmitting e-Invoices through the MyInvois System: 

BDO’s Insights: 

This update highlights IRBM’s acknowledgment of potential system limitations and offers some flexibility to compliant businesses facing technical difficulties. 

The business may consider:

• To ensure timely issuance of documents with specific deadlines, such as self-billed e-Invoices for the importation of goods or services and consolidated e-Invoices. In such case, businesses should allow sufficient preparation time to prevent delays caused by late processing.
• In cases where taxpayers are unable to transmit e-Invoices into the MyInvois System due to system failures or interruptions, Director General of Inland Revenue (“DGIR”) will not take action against the taxpayers for their inability to comply with the e-Invoice transmission and validation requirements during such period, provided they can demonstrate reasonable efforts to comply with e-Invoice requirements and present valid justifications.

However, it is important to note that this is not a guaranteed exemption. The DGIR will assess each case individually based on the supporting evidence provided.

• We advise businesses to maintain proper documentation of their e-Invoice compliance efforts to support any necessary justifications under such situations. 

If the MyInvois System is down, please gather the relevant evidence such as screenshots, all related email correspondences with IRBM, and system logs to demonstrate compliance efforts.

          Please ensure all justifications are well-documented and readily available for submission if required. 

Note: Please note that our comments are based on a general overview of the latest e-Invoice guidelines and do not constitute definitive advice. We recommend seeking professional consultation before making any decisions based on our insights. Should you require further clarification or advice, please feel free to reach out to us.

Key Updates:

New batches of targeted taxpayer have been introduced and please refer to the diagram below. Accordingly, the implementation date has been updated.

Source: IRB’s website

BDO’s Insights: 

1. Suppliers’ perspectives

• Since there are changes made to the batches of targeted taxpayers, please relook into the Companies within your Group which could be potentially recategorized to Batch 3 or 4.
• Having said that, the 6-month interim period would also be relooked as the starting period is correlated to the implementation date of each batch.
• Kindly note that the MSME exemption still applies to all categories of taxpayers (e.g., individuals, partnerships, companies, cooperatives, etc.) with an annual turnover or revenue below RM150,000. Nevertheless, this does not apply to the Group’s subsidiaries. In specific, those business [with non-individual shareholder(s) (or equivalent) / is a subsidiary of a holding company / has related company or joint venture with annual turnover or revenue exceeding RM150,000].

 2. Buyers’ perspectives

• Transactions with various batches of vendors:
  • The purchase team would also need to be aware of these changes. The official e-Invoice to be received from the vendors could be affected due to each vendors’ implementation date.
  • The team needs to be clear on the period where they can still receive the current invoices, receipts, statements, etc from the vendors. 
• Staff Claims Announcement
  • Considering the above impacts, it could also affect the staff claims, in the context of its procedures/announcement and authenticity of the supporting documents.

Key Updates:

Please take note on the following changes made to the timeline for issuing the self-billed e-Invoice, including under different periods of time:

*Please also be aware of the other provisions stated in the guideline.

BDO’s Insights: 

While the longer preparation period undoubtedly benefits the taxpayer, the Group must remain mindful of the timeline, particularly the expiration of the six-month interim period. Therefore, active communication with staff is essential, and adequate efforts should be made to monitor both the preparation timeline and the due date.

Please note that the newly revised timeline for the issuance of self-billed e-Invoices applies only to the importation of goods. 

The timeline for the issuance of self-billed e-Invoices for the importation of services remains unchanged, as per the previous guidelines. For importation of services, the Malaysian purchaser is required to issue self-billed e-Invoice latest by the end of the month following the month upon (1) payment made by the Malaysia Purchaser; or (2) receive of invoice from foreign supplier, whichever earlier.

Key Updates  

Currently, there is a list of exempted persons from implementing e-Invoice, including the “International organization for transactions of any goods sold or services performed before 1 July 2025.” No further definition or example of the said organization was provided at that time (under previous version).

 Accordingly, the latest release outlines a list of international organizations.

BDO Insights

Provided that the Company has transactions with the international organisation, the finance team has to take note on the e-Invoice implication. 

Key Updates  

Under the latest releases, there is a new transaction for issuance of self-billed e-Invoice (i.e. Para 8.3 (i)). 

Para 8.3. (g) further explained that the exception for issuance of self-billed e-Invoice for interest expenses has been expanded to the situations where interest payment is made to a related company providing centralised treasury services to its related companies; as well as late payment interest is charged by Malaysian taxpayers to its business customers.

BDO Insights

Interest on loan paid to lender who performs centralised treasury services to its Group: 

Under this circumstance, the said Malaysian lender is required to issue e-Invoice and share it to the Malaysian borrower. 

However, if the lender is a foreigner, the Malaysian borrower is required to issue self-billed e-Invoice on the interest payment.

Late payment interest : 

Please note that if the Company charges its customers for late payment interest (e.g. fail to make payment after 30 days credit terms), the Company is required to issue e-Invoice for the late payment interest charged.

Key Updates  

Under the latest releases, additional one (1) circumstance (i.e. Para 3.6.5. (d)) has been allowed for issuance of consolidated self-billed e-Invoice: 

Besides, suppliers (i.e. policyholders or beneficiaries) under Para 3.6.5 (c) has been further expanded from “individuals not conducting business” to “government, government authority, state government or state authority”.

BDO Insights

Please note that the Company is now allowed to issue consolidated self-billed e-Invoice if there are overseas transactions from its overseas branches or officers. This further reaffirms the IRB’s intention to request Malaysian taxpayers to issue self-billed e-invoices whenever there are payments made by the Company’s head office in Malaysia to the Company’s branches in overseas.  

Para 3.6.5 (c) applies to specific industry, such as insurance industry. 

Key Updates  

Page 17, Item 66

Question: 

Are Malaysian buyers required to include the import duty and/or sales tax levied by the RMCD upon customs clearance on imported goods when issuing self-billed e-Invoice?

Responses from IRBM:

No, Malaysian buyers are not required to include the duties and/or taxes levied by the RMCD in the self-billed e-Invoice.

BDO Insights

Please take note if the Company has overseas purchases of goods.