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content:

e-Invoicing in Malaysia: A Complete Guide For Your Business
​

In March 2023, Inland Revenue Board of Malaysia (IRBM) announced that all businesses registered in Malaysia are required to generate e-invoices for B2B, B2G and B2C transactions.

The first phase of this e-invoicing mandate is all set to begin on August 1, 2024, for businesses with a turnover exceeding RM 100 million. Mandated taxpayers must now report e-invoices to the IRBM in UBL 2.1 format (XML or JSON) through the MyInvois portal or direct API connection.

Now, businesses with a turnover exceeding RM 25 million are preparing for the second phase, which mandates e-invoicing for these businesses starting on January 1, 2025. 

This article provides a comprehensive overview of e-invoicing in Malaysia, including its scope, process, applicability, timeline, models, penalties, and more.

Latest Updates for Malaysia e-Invoicing
IRBM Extends e-Invoicing Compliance Deadline by Six Months

This relaxation allows businesses to issue consolidated e-Invoices during this period without facing prosecution for non-compliance. Businesses that adopt e-invoicing by the original deadline will benefit from a reduced capital allowance claim period for ICT equipment and software from three years to two years for Assessment Years 2024 and 2025.

What is an e-Invoice in Malaysia?
An e-invoice is a digital record of a transactional exchange between a seller (supplier) and a purchaser (buyer), which goes through the government portal in real time for validation and recordkeeping.

e-Invoice Malaysia would contain 55 fields with details of the transactions such as seller & buyer details, item description, quantity, price, tax, total amount, payment details, etc. Successfully validated and generated e-invoices would also have a Unique Identification Number (UIN) and QR Code, which is generated by the MyInvois Portal, enabling online validation of the invoice.

e-Invoicing implementation timeline in Malaysia
The e-Invoicing system in Malaysia began on August 1, 2024, for taxpayers with an annual turnover or revenue exceeding RM100 million. The upcoming phases of implementation are as follows:

January 1, 2025: Taxpayers with an annual turnover or revenue between RM25 million and RM100 million.
July 1, 2025: All taxpayers.
Below is the Malaysia e-invoice implementation timeline:

e-Invoicing implementation timeline in Malaysia

Need to comply with Malaysia's e-invoicing mandate?

Get a 100% LHDN-compliant e-invoicing solution with ClearTax—now MDEC accredited.

Talk to a Consultant

e-Invoicing Process in Malaysia
The steps to generate an e-invoice in Malaysia vary depending on the e-invoicing model (API or MyInvois Portal) and whether the transaction is B2B or B2C. However, the majority of the process remains consistent. 

e-Invoicing Process in Malaysia

Here is a general overview:

e-Invoicing Process for B2B Transactions
Issuance: Supplier creates and sends e-Invoice to IRBM via MyInvois Portal or Business system integrated with MyInvois System via API. 
Validation: IRBM validates the e-invoice in real-time. A Unique Identifier Number is issued. 
Notification: IRBM notifies both supplier and buyer of the validated e-invoice. 
Sharing: Supplier shares validated e-Invoice with buyer, including a QR code. 
Rejection/Cancellation: Within 72 hours, the buyer can request rejection and the supplier can cancel. However, justification is required for any changes and rejection
Sharing Human Readable format: Suppliers can then share human readable (PDF, JPG) format of the e-invoice. 
e-Invoicing Process for B2C Transactions
Suppliers must issue e-invoices for all B2C transactions. However, many buyers, particularly end consumers and specific businesses, do not need an e-invoice. Therefore, the generation of e-invoices for B2C transactions varies based on the buyer's requirements:

When the Buyer Requests an E-Invoice: Suppliers gather details from the buyer/consumer and generate e-invoices in real-time, similar to B2B e-invoices.
When the Buyer Does Not Require an E-Invoice: The IRBM allows suppliers to consolidate transactions with buyers who do not need an e-invoice into a monthly consolidated e-invoice.
The process is clearly explained in the chart below for Malaysia B2C e-Invoicing.

e-Invoicing Process for B2C Transactions

e-Invoicing Model in Malaysia
In Malaysia, companies can choose from the following transmission modes to report e-invoices known as e-invoicing models

MyInvois Portal
The MyInvois Portal allows users to generate e-invoices manually, either one at a time or in bulk by uploading a spreadsheet in a predetermined format. This portal is ideal for Micro, Small, and Medium-sized Enterprises (MSMEs) or companies with lower transaction volumes due to the need for manual data entry. 

The portal was made live by the IRBM on June 28, 2024, offering both testing and production environments. It can be accessed at preprod-mytax.hasil.gov.my or mytax.hasil.gov.my.

For instructions on how to log in for the first time, visit this MyInvois Portal Login and e-invoice generation guide.

Application Programming Interface (API)
Businesses can integrate their ERP, billing, or accounting systems with the MyInvois system through an API. This integration enables the automatic generation, sending, receiving, and correction of e-invoices directly through their systems, making it possible to handle large volumes of transactions in real-time. 

Recognizing the complexity of this integration, the Lembaga Hasil Dalam Negeri (LHDN) has introduced the e-invoice Malaysia Software Development Kit (SDK).

Type of e-Invoices in Malaysia
The below documents must be issued in electronic format under Malaysia e-Invoice:

Invoices: It is generally used to record transactions between supplier and buyer. Invoices also include a self-billed invoice issued for tracking expenses.
Credit notes: A credit note is a document issued by sellers to make corrections to an e-Invoice issued previously mainly to lower the original invoice's value without returning money to the Buyer. It is generally used to adjust errors, apply discounts, or account for returned items. 
Debit notes: In contrast to credit notes, debit notes are issued to record additional costs related to a previously issued e-Invoice.
Refund notes: A refund e-Invoice is an official document issued by a Seller to record refund issued to the Buyer.
Who Needs to Comply with e-Invoicing in Malaysia?
LHDN has released guidelines outlining which entities, individuals, and businesses are required to adhere to e-invoicing rules, as well as those exempt from them.

Entities Required to Comply with e-Invoicing in Malaysia

Entities exempt from e-Invoicing

Associations
Body of persons
Branches
Business trusts
Co-operative societies
Corporations
Limited liability partnerships
Partnerships
Property trust funds
Property trusts
Real estate investment trusts
Representative offices and regional offices
Trust bodies.
Unit trusts
Ruler and Ruling Chief
Former Ruler and Ruling Chief
Consort of a Ruler of a State with specified titles
Consort of a Former Ruler of a State with specified titles
Government
State Government and State authority.
Government authority
Local authority
Statutory authority and Statutory Body
Facilities provided by the above Government, authority, or Body
Consular offices and diplomatic officers, Consular officers, and Consular employees.
Individual who is not conducting Business
Benefits of e-Invoicing in Malaysia
The Malaysian government aims to boost the digital economy and improve tax administration with e-invoicing in Malaysia. Key benefits include:

Unified Invoicing: Streamlines creation and submission of invoices, automating data entry.
Integrated Tax Filing: Ensures efficient and accurate tax reporting.
Streamlined Operations: Increases efficiency and saves resources on tax compliance
Improved Cash Flow: Reduces billing errors, speeds up payment cycles, and minimizes disputes.
Digitized Reporting: Aligns financial reporting with digital standards.
Paperless Invoicing: Eliminates paper use and prevents tax leakage.
Ease of Trade: Simplifies operations for international trade businesses.
Challenges of e-Invoicing for Businesses in Malaysia
The shift to e-invoicing in Malaysia brings several challenges:

Compliance: Complying with the e-invoicing regulations for business through technological integrations is extremely challenging.
Technological Transition: Moving from manual to automated invoicing systems requires adaptation to new technologies, deep tech integrations and staff training.
Resistance to Change: Employees accustomed to traditional methods may resist adopting e-invoicing in Malaysia.
Feasibility: Smaller businesses with limited IT infrastructure and lower resources would struggle with the technological demands.
Data Accuracy and Integration: Integrating e-invoicing with existing systems and ensuring accurate data exchange is challenging.
How can ClearTax help your business with e-Invoicing in Malaysia?
ClearTax is an MDEC-accredited e-invoicing solution provider in Malaysia. It integrates your business systems with the IRBM e-invoicing system to automate and ensure 100% compliance in e-invoice generation.

Enterprise Solutions: ClearTax delivers robust solutions for enterprises, integrating seamlessly with any ERP or business system to ensure accurate and efficient e-invoicing.
Integration of Multiple Sales Channels: ClearTax integrates various sales channels—both online and physical—ensuring 100% accuracy in e-invoicing by consolidating all sales into a single, compliant e-invoice.
Buyer Portal: ClearTax provides a web portal and app for buyers to generate e-invoices independently, speeding up billing, reducing queue times, and improving the customer experience.
IRBM Industry Specific FAQ’s
The Malaysian government acknowledges that some industries have more complex business practices and billing systems, making e-invoicing more challenging. To address these complexities, the IRBM has published industry-specific FAQs. 

The following FAQs have been released by the IRBM to date:

Healthcare
Construction
Telecommunication
e-Commerce
Petroleum Operations
Insurance and Takaful
Aviation
Tourism
Financial Services, Stockbroking and Unit Trust   
Click here to read more FAQs on Malaysia e-invoice.

Frequently Asked Questions
What is the best e-invoicing solution for Malaysia?

ClearTax stands out as one of the best e-invoicing solution provider in Malaysia. It facilitates seamless integration of your business system with the MyInvois Portal through API for efficient e-invoicing.

Shall I issue e-invoices in Malaysia from 1 June 2024?

The e-invoicing timeline for Malaysia was adjusted in October 2023. The updated schedule is as follows:

August 1, 2024: Applicable to taxpayers with annual turnover > RM 100 million
January 1, 2024: Relevant for taxpayers with annual turnover between RM 25 million and RM 100 million
July 1, 2025: Applicable to all other taxpayers.
 
What will be the e-Invoice model in Malaysia?

In order to ease the transition to e-Invoicing for taxpayers, the IRBM has created two distinct methods for e-Invoice transmission:

MyInvois Portal, hosted by the IRBM.

Application Programming Interface (API).
 

How do I get started with e-Invoicing in Malaysia?

To get started with e-Invoicing in Malaysia, it's essential to evaluate your company's readiness for e-Invoicing. First, determine if e-Invoicing applies to your company or if you wish to opt for it voluntarily. Assess your current ERP system's compatibility with e-Invoicing software and whether it can be seamlessly integrated. Ensure your employees are trained to handle e-Invoicing processes effectively. Lastly, communicate the requirements to all stakeholders and confirm their support for a smooth implementation.

Is e-Invoicing in Malaysia mandatory for all industries?

e-Invoicing is mandatory for businesses across all sizes and industries. However, to facilitate a smoother transition, it's being rolled out gradually in phases, based upon the turnover of each business.

What are the requirements for e-Invoicing in Malaysia?

Digital Certificate is a mandatory requirement for e-Invoicing in Malaysia. A digital certificate will be used for signing. A digital certificate will be issued by IRBM based on the taxpayer's TIN  and additional information. It guarantees the e-Invoice's non-repudiation, integrity, and authenticity. It will be valid for three years. 

Is e-invoice applicable only to domestic transactions in Malaysia?

No, e-invoice applies to both domestic and international transactions.

What does IRBM validate in the e-invoice?

IRBM will validate all the details mentioned in the 55 fields and additional fields (if any) in the invoice.

What are the security measures for e-Invoicing in Malaysia?

Every e-invoice will feature a digital signature along with a timestamp to ensure its integrity. Upon submission for verification, the IRBM will assign a Unique Identification Number and QR code, enabling online validation of the invoice. Additionally, the IRBM has established a secure and encrypted channel for the transmission and storage of e-invoices.

How are e-invoices validated and stored?

Once an e-Invoice is created, it is shared to IRBM. IRBM then validates the mandatory fields and other essential details and notifies the supplier and buyer about the same. Further, supplier and buyer can obtain the summary of e-Invoices generated through My Invois Portal.

Has IRBM provided any technical guidance on system integration?

The IRBM has provided general guidelines for e-invoicing, along with specific guidelines and  Software Development Kit (SDK) for e-invoicing API integration. These resources are accessible on the IRBM's official website.

Shall I issue an e-invoice for disbursements and reimbursements?

IRBM has yet to decide whether to generate e-invoices for disbursements and reimbursements. The authority may issue guidance in this regard in due course.

Can I cancel the invoice submitted to IRBM?

Yes, the seller can cancel the e-invoice within 72 hours from generation time.

Are all businesses required to issue e-invoices in Malaysia?

Every business registered in Malaysia will need to issue e-Invoices as per a phased mandatory implementation timeline. This timeline is determined by the business's annual turnover or revenue threshold.

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

Not issuing e-Invoices would be considered an offense under Section 120(1)(d) of the Income Tax Act 1967. This offence would carry a fine ranging from RM200 to RM20,000, or imprisonment for up to 6 months, or both, for each instance of non-compliance.

What file format is mandated for e-invoices in Malaysia to be submitted for validation purposes by IRBM?

e-invoices in Malaysia must be submitted in XML or JSON format. Formats like PDF, JPG, etc., are not accepted.

Is e-Invoice issuance mandatory for MSMEs operating in Malaysia?

Yes, all businesses must implement e-Invoice according to the timeline specified in the e-Invoice Guideline.

Does the MyInvois System have a maximum file size for uploading e-invoices?

Yes, the MyInvois System has the following limits for file sizes:

Maximum file size: 5MB per submission
Maximum Number of e-invoices per submission: 100
Maximum size of each each invoice: 300KB
There are no restrictions on the number of lines in an e-invoice as long as these limits are observed.

Was the implementation of e-invoicing in Malaysia postponed?

No, the implementation of e-invoicing in Malaysia was not postponed but an interim relaxation period of six months during which no prosecution under section 120 of the Income Tax Act 1967 will be taken for non-compliance with e-Invoicing regulations. During this period, businesses are allowed to generate only consolidated e-Invoices for all transactions, even if the buyer requests individual e-Invoices.

What is the e-Invoice Malaysia helpline number?

You can contact the e-Invoice HASiL Help Desk at 03-8682 8000. The help desk operates 24 hours a day, seven days a week.

When can I contact the e-Invoice Malaysia Help Centre?

The e-Invoice HASiL Help Desk is available 24/7. You can call them at 03-8682 8000 or mail them at <PRESIDIO_ANONYMIZED_EMAIL_ADDRESS> anytime, from Monday to Sunday.

How can I connect to Malaysia's e-invoicing helpdesk?

You have several options to connect with the e-Invoice helpdesk:

Email your query to <PRESIDIO_ANONYMIZED_EMAIL_ADDRESS>.
Use the feedback form at this link.
Call the e-Invoice HASiL Help Desk at 03-8682 8000, which is operational 24/7.
Chat with the IRBM help chatbot.