Who Needs to Implement e-Invoice in Malaysia? Deadlines & Exemptions Explained

We outline what the IRBM/LHDN rollout means for businesses and taxpayers across Malaysia. The phased scheme runs from August 1, 2024 through July 1, 2026 and covers B2B, B2C, and B2G transactions.

This change raises operational needs: validated e-invoices will carry a Unique Identifier and a QR code. Parties have 72 hours to reject or cancel a document.

All individuals and legal entities conducting business activities fall within scope, though certain entities and income types qualify for exemptions. Two implementation routes exist: the MyInvois Portal or API integration.

We focus on practical steps you can take now. Align people, processes, and systems so your finance team can handle validation, rejection windows, and documentation standards with confidence.

Key Takeaways

• Rollout runs from Aug 1, 2024 to Jul 1, 2026 and covers multiple transaction types.
• All business entities are generally in scope; some income types may be exempt.
• Validated e-invoices include a Unique Identifier, QR code, and a 72-hour rejection window.
• Choose MyInvois Portal for simplicity or API for automated workflows.
• Prepare staff, SOPs, and systems now to reduce compliance risk.

The Ultimate Guide to Malaysia’s e-Invoicing: Scope, Purpose, and What’s Changing

We define an e-invoice as a structured, machine-readable document validated by LHDN that replaces PDFs and paper records. It standardises data capture and improves auditability for companies and accountants.

The scope covers B2B, B2C, and B2G transactions. LHDN guidelines list document types—invoice, credit note, debit note, and refund note—and the system accepts XML or JSON files with up to 55 fields, of which 37 are mandatory.

Near real-time validation adds a QR code and a Unique Identifier for each validated record. This tightens tax controls and reduces reconciliation time for finance teams.

All entities that carry out commercial activity—companies, partnerships, LLPs, co‑operatives and trusts—must map current processes against the new requirements. Sales and annual turnover figures determine phase-in dates and portal or API choices.

• Practical impact: consistent data standards, coding rules, and error-handling will be essential.
• Systems: integrate ERP or use the MyInvois portal to meet submission and validation timelines.

Who Needs to Implement e-Invoice in Malaysia? Deadlines & Exemptions Explained

We confirm that every legal or natural person conducting commercial activity must comply with the phased e-invoicing mandate under IRBM/LHDN.

Covered entities include companies, partnerships, LLPs, co‑operatives, trusts, associations, unit trusts, and representative or regional offices. This applies to taxpayers across the full range of entity types.

Scope of transactions

The scheme covers B2B, B2C (when requested or via allowed consolidation) and B2G transactions. Both suppliers and buyers share responsibilities for accurate submission and validation.

Roles, turnover, and special cases

Suppliers must issue validated documents. Buyers should confirm receipt and keep records for audit and reconciliation.

• Annual turnover bands determine your phase-in date; FY 2022/YA 2022 figures are decisive.
• Group structures are assessed per entity unless consolidation guidance applies.
• Representative and regional offices must evaluate whether activities constitute business transactions.

Checklist: confirm your legal form, review FY 2022 turnover, map supplier and buyer touchpoints, and choose portal or API integration.

e-Invoicing Implementation Timeline by Annual Turnover

The implementation schedule links compliance dates directly to an entity’s reported annual turnover. We map clear phases so finance and IT teams can plan resourcing and testing windows.

Phased dates: Aug 2024 to Jul 2026 by turnover bands

Key phase dates are:

• 1 Aug 2024 – above RM100m
• 1 Jan 2025 – RM25m to RM100m
• 1 Jul 2025 – RM5m to RM25m
• 1 Jan 2026 – RM1m to RM5m
• 1 Jul 2026 – up to RM1m

Temporal context and what’s next

Use 2022 sales and audited figures to confirm your mandated date. Businesses with annual turnover below RM500,000 are exempt from mandatory adoption.

New businesses and voluntary adoption

New entities commencing 2023–2025 with projected turnover ≥ RM500,000 follow the 1 Jul 2026 start. Firms starting 2026 either begin on 1 Jul 2026 or at commencement, with special rules if first-year turnover is under RM500,000.

We recommend early adoption where feasible. Early rollout spreads workload, validates integrations against the latest guidelines, and reduces last-minute risk to tax reporting and operations.

How to Determine Your Implementation Date

Your mandated calendar depends on a single annual figure drawn from audited or tax filings. We show the precise source and steps so your team can confirm the correct band quickly.

Using FY 2022 audited financials or YA 2022 tax returns

Use the annual turnover reported in FY 2022 audited financial statements where available. If you do not have audited financials, use the sales total from your YA 2022 tax return. This single figure sets your compliance date.

Prorating for year-end changes and thresholds

If your FY 2022 accounting year-end changed, prorate turnover to a 12‑month basis. Prepare clear workpapers that show the calculation and reconciliations.

• Documentation: extracts, reconciliations, and supporting data so determinations are auditable.
• Multi-entity: treat each legal entity separately unless consolidation rules apply.
• Pitfalls: mismatched sales lines, rounding issues, or missing fields can misplace your date.

Act early: LHDN will notify in phases, but we advise validating assumptions, testing integration, and using the myinvois portal for fallback validation if needed.

Transaction Coverage and Document Types

This section maps which commercial documents the new validation process accepts and how each record should flow through tax and accounting systems.

Document universe and corrections

e-invoices include standard invoices plus credit notes, debit notes, and refund notes. These documents create an audit trail for revenue recognition and subsequent adjustments.

Invoices record sales and services as proof of income. Credit, debit, and refund notes adjust amounts and preserve transaction history for auditors.

Proof of income versus proof of expense

Proof of income is issued by the supplier when payment becomes due or services are delivered. Proof of expense is recorded by buyers for procurements, discounts, returns, or cost corrections.

In specific cases—such as imports or foreign suppliers—the buyer issues a self e-invoice so the payment and expense are documented inside the system.

Data, coding, and operational controls

The LHDN schema uses a 55-field XML/JSON structure. Key data points include names, TINs, MSIC, itemisation, and code classifications.

• Standardise codes across companies and suppliers to reduce reconciliation work.
• Create a matrix that maps revenue streams to document types and routing rules.
• Issue supplier playbooks for advances, partial shipments, and returns.

Outcome:a clear taxonomy of document types and transaction rules that keeps validation clean and audit-ready.

Malaysia e-Invoicing Exemptions: Entities, Income Types, and Special Cases

Certain public offices and specific payment types are carved out from mandatory validation. We list who and what falls outside the standard e-invoicing flow and explain common transaction treatments.

Exempt entities

Exempt entities include rulers and royal consorts, federal and state government agencies, local authorities, statutory bodies, and foreign diplomatic or consular missions.

Excluded income and payments

Excluded income and payments cover employment wages, pensions, alimony, zakat, certain dividend distributions, scholarships, and education-related support. These are excluded to avoid duplicate reporting across payroll and social systems.

Special transaction treatments

• Refundable deposits and returned security deposits are out of scope until a charge event occurs.
• Non-refundable deposits require an e-invoice at receipt; forfeiture triggers issuance.
• Director fees paid as salary are excluded; fees under a contract for service require an invoice.
• Rent: landlords running a business must issue; non-business landlords may be self-billed by tenant companies.
• Internal transfers, incorrect payment refunds, and voucher issuance rules follow the guidance above: redemption or sale may trigger an invoice.

Turnover threshold: businesses with annual turnover below RM500,000 remain exempt from mandatory adoption. Follow these points to align your processes with compliance guidelines for smooth e-invoicing rollout.

Interim Relaxation Period: Transition Rules and Flexibilities

We present a structured relief framework so your finance and IT teams can stabilise processes before the enforcement date. Use the grace period to tune controls, test integrations, and train staff.

Six-month windows by turnover band

Practical points:

• Issue consolidated e-invoices at month-end where allowed and reconcile daily sales to avoid gaps.
• No penalties apply during the interim, but follow core requirements and keep records ready.
• Use the myinvois portal as fallback while testing API integrations; submit via myinvois if needed.
• Detect and correct errors within hours to reduce audit exposure.

“Treat the window as operational runway: design, build, test, train, deploy against your compliance date.”

Choosing Your e-Invoice Model: MyInvois Portal vs API Integration

We guide you through two practical submission models so you can match cost, volume, and risk to an operating choice.

MyInvois Portal

MyInvois Portal provides no-cost access and simple onboarding for smaller teams. It suits MSMEs and units with low transaction counts.

The portal supports manual entry and ad-hoc uploads, making it a practical fallback when systems are offline or during initial testing.

API integration

API integration links your accounting or erp directly to the myinvois system for automated transmission.

This route improves throughput, speeds validation, and keeps data consistent at scale. It requires an LHDN digital certificate, callback endpoints, and robust logging.

We recommend evaluating volumes, internal capacity, and vendor SLAs before committing. Keep the myinvois portal as a contingency channel via myinvois while you test and stabilise integration.

End-to-End e-Invoicing Workflow and Validation

Here we map the end-to-end workflow that links your accounting systems to LHDN validation services. This gives teams a clear, auditable route for every electronic invoice.

Creation and submission: create an invoice in your ERP or manually via the myinvois portal. For high volume, choose API integration and submit records via myinvois.

Near real-time confirmation

Validation occurs almost immediately. A validated e-invoice returns a Unique Identifier, date/time stamp and embedded QR code that proves authenticity.

Notifications and sharing

Notifications go to supplier and buyer by portal, email or Notification API. You must share validated invoices with the buyer and keep confirmations for audit trails.

Rejection, cancellation and adjustments

Either party may reject or cancel within 72 hours—often within hours of validation. After that, corrections require a credit, debit or refund note, or a new invoice.

• Monitor system responses, implement retry logic, and log error codes for quick fixes.
• Define approval matrices and segregation of duties for exception handling.
• Handoff model: IT manages integration and time-sensitive retries; finance approves adjustments and stores records.

“Design your workflow so validation and sharing occur without delay; rapid detection reduces tax and operational risk.”

Special Scenarios: Consolidated and Self-Billed e-Invoices

Aggregation of retail receipts is permitted under a strict seven-day post month-end submission window.

Consolidated B2C filing

Suppliers may compile daily B2C sales into a single consolidated e-invoice for the month. Submit the consolidated file within seven calendar days after month-end.

Keep line-level records so you can expand the summary during audits and reconcile totals to POS receipts.

Prohibited sectors and high-value limit

Certain industries cannot use consolidation. Also, any single transaction above RM10,000 is excluded from aggregation from 1 Jan 2026.

Buyer-issued self-bills

Buyers must issue self-billed e-invoices for agent, dealer, and distributor payments, imports from foreign suppliers, dividend distributions, e-commerce settlements, gaming payouts, and other listed cases.

Obtain master records and supporting evidence before issuing. This preserves data integrity and aligns ledgers for payment and reconciliation.

“Split consolidated and non-consolidated flows at source. That control reduces exceptions and speeds reconciliations.”

Cross-Border and Non-Standard Transactions

When goods or services cross borders, companies must map who issues the validated record and when. Clear rules reduce disputes and keep ledgers aligned with customs and payment events.

Foreign income, imports, and exports

Foreign income is out of scope for local e-invoicing and does not require a validated record for LHDN submission.

Imports require the Malaysian buyer to create a self-billed e-invoice for customs and accounting. Services supplied from abroad follow the same approach where the recipient must issue the document.

Exports require Malaysian sellers to issue an e-invoice to the foreign buyer and retain evidence to support zero-rating for tax purposes.

Payments to agents, dealers, distributors and gaming payouts

Payer-issued self-billing applies to agent, dealer, and distributor payments and to gaming payouts. The payer must generate the validated record and share it with the payee.

• Document counterparties and contracts before self-billing.
• Map postings in ERP for customs, payment, and recognition timing.
• Retain evidence to support zero-rating, exemptions, or tax positions linked to annual turnover.

Outcome: define a transaction matrix for cross-border flows, align AP/AR for self-billed creation, and implement controls that validate overseas counterparty details. This ensures consistent treatment and reduces audit risk.

“Consistent documentation and timing keep customs, tax, and ledger entries aligned across borders.”

Readiness, Systems, and Integration: From Data to Compliance

We advise starting with clear roles and clean master data so your finance and IT teams can meet compliance deadlines with confidence.

People and process readiness

Train finance, IT, and operations with focused sessions. Publish concise SOPs and enforce internal controls.

Outcome: consistent approvals, fast exceptions handling, and audit-ready records.

Data requirements and validation

LHDN requires up to 55 fields per record, with 37 mandatory items such as TIN and MSIC. Build validation checks that catch missing fields before submission.

Accounting, ERP and integration choices

Connect your accounting or erp via direct API with an LHDN digital certificate, or use middleware to map formats and monitor traffic.

• Align AR/AP workflows to shorten cycles and reduce disputes.
• Plan resources for build, testing, deployment, and hypercare.
• Enforce governance: quality gates, version control, and audit documentation.
• Use fallback submission via myinvois for resilience and runbook escalation.

“Design controls so validation happens before issuance; fast detection limits rework.”

We help companies map data, choose the right integration, and allocate resources for a smooth implementation.

Conclusion

Verify your 2022 sales band first, then align teams and systems for the mandated rollout.

We recommend confirming your phase using FY2022 turnover, mobilising resources, and running focused tests. The phased e-invoicing mandate runs from 1 Aug 2024 to 1 Jul 2026 and exempts entities under RM500,000 turnover.

Validation is near real time. Each validated e-invoice includes a QR code and a 72-hour window for rejection or cancellation. Apply consolidated and self-billed rules carefully and keep payment evidence for audits.

Next steps: confirm your phase by sales, build a practical roadmap that meets requirements, train teams, and stabilise integrations during the transition. With a disciplined plan, your business can improve control, reduce risk, and keep operations steady. We are ready to guide your team from scope to go-live.