Briefing Document & Podcast: E-Invoicing in Malaysia: Scope, Regulations & Future Outlook

Last update: December 7, 2025

SUMMARY

Malaysia is implementing a mandatory e-invoicing system, with a phased rollout from August 2024 to July 2026. The mandate covers B2B, B2C, and B2G transactions for all GST/SST-registered businesses established in Malaysia exceeding a RM1 million annual turnover threshold. Businesses must submit invoices in a structured digital format (XML/JSON) to the Inland Revenue Board’s (IRB) MyInvois system for validation before issuance. Non-compliance will result in fines and potential imprisonment.

Key Themes and Details:

1. Scope and Coverage:

Comprehensive Coverage: The mandate applies to all invoices for goods and services within Malaysia, including domestic (B2B, B2G, B2C) and cross-border transactions (exports and imports). “Comprehensive coverage of invoices for goods and services in Malaysia.“
No Sector-Specific Exemptions: All industries and transaction types must comply.
B2C Considerations: While B2C sales are in scope, businesses can issue regular receipts at the point of sale and submit a monthly consolidated e-invoice reporting all those B2C sales together. Individual e-invoices must be issued on the spot if a customer requests a tax invoice. “Malaysia allows B2C retail transactions to be aggregated: a business can issue a regular receipt at point-of-sale, then later submit a monthly consolidated e-invoice that reports all those B2C sales together.“
Exports and Imports: Exports must be reported via e-invoice with optional fields for customs/export details. For imports, the Malaysian importer self-issues an e-invoice to report the purchase. “For inbound transactions, since the foreign seller won’t be on Malaysia’s system, the Malaysian importer self-issues an e-invoice to report the import purchase.“

2. Taxable Persons and Thresholds:

“Prescribed Person”: The mandate applies to any “prescribed person” under Malaysian law exceeding the annual revenue threshold (RM1 million). This includes companies, SMEs, sole proprietors, and partnerships. “The requirement applies to any “prescribed person” under Malaysian law, effectively all businesses and organizations that are registered taxpayers in Malaysia, once they exceed the annual revenue threshold.“
Exemption for Small Businesses: Small businesses with revenue below RM1 million per year are exempt. This threshold was recently raised from RM500k. “Small businesses with revenue below RM1 million/year are exempt from mandatory e-invoicing (this threshold was raised from RM500k starting 2026 to ease the burden on micro enterprises). “
Foreign Entities: Foreign companies without a Malaysian tax ID are not directly obligated. However, the Malaysian counterparty must ensure the transaction is captured. If a foreign company has a local registered entity in Malaysia, that local entity must comply. “all locally registered taxpayers must comply (above the threshold), while foreign parties are indirectly covered through the reporting by Malaysian partners.“

3. Implementation Timeline:

Phased Rollout: A staggered schedule based on company size:
August 1, 2024: Large businesses (annual turnover > RM100 million)
January 1, 2025: Upper-medium businesses (> RM25 million up to RM100 million)
July 1, 2025: Mid-size businesses (> RM5 million up to RM25 million)
January 1, 2026: Lower-medium businesses (> RM1 million up to RM5 million)
Small businesses (≤ RM1 million) are exempt until further notice.
Grace Period: Each phase includes a 6-month grace period where penalties are not enforced, but best efforts to comply are expected. “Each phase has a “grace period” of 6 months from its start date during which penalties will not be enforced.“

4. E-Invoice Format and Clearance:

Clearance Model: Invoices must be submitted to the IRB’s MyInvois system in XML or JSON format for approval before issuance. “Malaysia has adopted a clearance model – invoices must be sent to the tax authority in a machine-readable format for approval.“
Mandatory Data Fields: 37 mandatory data fields must be included, covering invoice particulars, line item details, and totals.
Validation and UIN: Upon approval, the IRB system assigns a Unique Invoice Number (UIN), QR code, and digital signature. The validated invoice is the legal invoice.
Submission Methods: The MyInvois platform offers a web portal for manual entry and an API for integration with accounting software. “The MyInvois platform provides a web portal for manual entry or batch uploads, and an API for integration so businesses can submit directly from their accounting software.“

5. Data Reporting Requirements:

Comprehensive Invoice Data: The e-invoice must mirror a full tax invoice, including supplier and customer information, invoice details, line items, tax breakdown, and total amounts.
E-Reporting (Periodic Reports): For B2C transactions (consolidated invoices) and potentially out-of-scope transactions, data is submitted as aggregate summaries, including key totals and tax information. “For E-Reporting (periodic reports), such as the monthly B2C consolidated invoice, the data submitted is an aggregate summary.“

6. Invoice Clearance & Transmission Deadlines:

Real-time Clearance: E-invoices must be submitted to IRB and approved before they are considered issued. This implies near-real-time transmission. “at the moment of creating an invoice, the business’s system or user sends it to MyInvois (via API or portal) and waits for validation…Only then is the invoice finalized and can be sent to the buyer with the IRB’s approval details.“
E-Reporting Deadlines:Monthly B2C consolidated invoices: Within 7 days after month-end.
Self-billed import invoices: Prompt reporting, ideally in the same tax period as the import.
Credit/Debit Notes: Must also go through clearance when issued.
Electronic Transmission: Data transmission to the authorities is entirely electronic, via the MyInvois web portal or API integration.

7. Penalties for Non-Compliance:

Strict Penalties: Fines of RM200 to RM20,000 per offence and/or up to 6 months imprisonment. “Under the Income Tax Act and the specific e-invoice regulations, not complying with the mandate is an offence punishable by a fine of RM200 to RM20,000 per offence and/or up to 6 months imprisonment.“
Tax Implications: Non-compliant invoices are not recognized for tax deductions or credit claims.
Customs Penalties: The Royal Malaysian Customs Department’s existing penalties for failing to issue proper tax invoices (up to RM50,000 under SST law) still apply.

8. Archiving Requirements:

Retention Period: Electronic invoice records must be maintained for at least seven years.
Format: Invoices should be kept in their original electronic format (XML/JSON with digital signatures/QR intact).
Location: Records should be stored on servers or physical media within Malaysia.
Accessibility: Businesses must be able to retrieve and present any e-invoice from the past 7 years. The IRB system doesn’t absolve businesses from keeping their own copy.

9. Pre-Filled VAT Returns:

Not Applicable: Malaysia currently operates an SST regime and does not auto-populate tax returns from e-invoice data. “There is no mechanism for pre-filled SST returns based on e-invoicing data…” E-invoice data is for tax authority verification and audit purposes.

Conclusion:

The implementation of e-invoicing in Malaysia is a significant change for businesses. Understanding the scope, timelines, and requirements is crucial for compliance. Businesses should prepare by evaluating their systems, processes, and resource needs to ensure a smooth transition to the new e-invoicing environment.

INDEPTH ANALYSIS

Malaysia’s E-Invoicing & E-Reporting Framework (2024–2026) – Malaysia is mandating electronic invoicing through a phased rollout from 2024 to 2026. All B2B, B2C, and B2G transactions are in scope for e-invoicing clearance. Businesses must submit each invoice in a structured digital format to the tax authority’s system (MyInvois) for validation before issuance. The mandate applies to all taxpayers established in Malaysia above a RM1 million annual turnover threshold (recently raised from RM500k), with smaller businesses exempt. Key details of the framework are outlined below, based on the latest official guidelines and updates: [thestar.com.my]

Scope of Mandate:
- Comprehensive coverage of invoices for goods and services in Malaysia. The e-invoice mandate spans domestic transactions (within Malaysia) as well as cross-border transactions involving Malaysian businesses. It covers B2B (business-to-business) sales, B2G (business-to-government) invoices, and even most B2C (business-to-consumer) sales. There are no sector-specific exemptions – all industries and transaction types must comply. Non-business consumers and purely public entities (as buyers) are not issuers of e-invoices, but businesses must e-invoice their sales to government or consumers just like any other sale. In summary, any sale of goods or services by a GST/SST-registered business in Malaysia must be documented via an e-invoice (with slight adjustments for retail B2C, explained under E-Reporting below).
- Taxable Persons in Scope: All businesses established in Malaysia over the threshold; foreign entities via local transactions. The requirement applies to any “prescribed person” under Malaysian law, effectively all businesses and organizations that are registered taxpayers in Malaysia, once they exceed the annual revenue threshold. This includes companies, SMEs, sole proprietors, partnerships, etc. – if they issue invoices in the course of business, they must do so electronically per the timeline.
- Small businesses with revenue below RM1 million/year are exempt from mandatory e-invoicing (this threshold was raised from RM500k starting 2026 to ease the burden on micro enterprises). Note that if an exempt small business voluntarily opts into e-invoicing, it can use the system, but it won’t be penalized if it doesn’t.
- Foreign (non-established) companies without a Malaysian tax ID are not directly obligated to use Malaysia’s e-invoice system. However, when they transact with Malaysian companies, the Malaysian counterparty must ensure the transaction is captured: e.g. for imports, the Malaysian buyer self-issues an e-invoice on the system to report the purchase. If a foreign company has a local branch or entity registered in Malaysia, that local entity falls under the mandate like any other domestic business. In short, all locally registered taxpayers must comply (above the threshold), while foreign parties are indirectly covered through the reporting by Malaysian partners. [thestar.com.my]
Implementation Timeline & Grace Periods: Phased rollout by company size from Aug 2024 to July 2026, each with a 6-month grace period. Malaysia’s Inland Revenue Board (LHDN/IRB) set a staggered schedule for mandatory adoption:
- 1 August 2024: Large businesses (annual turnover > RM100 million) must begin e-invoicing.
- 1 January 2025: Upper-medium businesses (> RM25 million up to RM100 million) compliance date.
- 1 July 2025: Mid-size businesses (> RM5 million up to RM25 million) compliance date.
- 1 January 2026: Lower-medium businesses (> RM1 million up to RM5 million) compliance date. (Originally, the threshold for this phase was RM500k up to RM5M, but in Dec 2025 it was raised to RM1M, effectively pushing businesses under RM1M out of the mandate.) [thestar.com.my]
- [No mandatory phase for < RM1M]: Small businesses (≤ RM1 million) are exempt until further notice. (They were initially slated for 1 July 2026, but the threshold increase means those below RM1M won’t be forced to adopt then.) [thestar.com.my]
Each phase has a “grace period” of 6 months from its start date during which penalties will not be enforced. Businesses are expected to make best efforts to comply from the phase start, but the grace period allows leniency as systems stabilize. For example, a company in the 1 Jan 2025 phase should start e-invoicing then, and by 1 July 2025 the grace period ends – after that, non-compliance may be penalized. By mid-2026, essentially all medium and large enterprises in Malaysia should be using e-invoicing, with only micro enterprises remaining voluntary. [thestar.com.my]
Transactions Covered: All invoice-relevant transactions: domestic B2B/B2G, domestic B2C, exports, and imports. If a transaction in Malaysia normally requires an invoice or would be recorded for tax, it falls under the e-invoicing system:
- Domestic B2B and B2G: Invoices between two Malaysian businesses, or a business to a government agency, must be electronic and cleared through IRB at the time of issuance. This is the core use-case of the mandate.
- Domestic B2C: Sales from a business to a consumer are also in scope, but typically a consumer doesn’t need a formal tax invoice. Malaysia allows B2C retail transactions to be aggregated: a business can issue a regular receipt at point-of-sale, then later submit a monthly consolidated e-invoice that reports all those B2C sales together. If however a consumer requests a tax invoice (e.g. for warranty or claims), the business must issue an individual e-invoice for that sale on the spot.
- Exports (Sales out of Malaysia): When a Malaysian company exports goods or provides services abroad, it must still issue an e-invoice through MyInvois for that zero-rated supply. The system has fields for customs/export details (optional) to accommodate these cases. The cleared e-invoice serves as the official export invoice.
- Imports (Purchases from foreign suppliers): For inbound transactions, since the foreign seller won’t be on Malaysia’s system, the Malaysian importer self-issues an e-invoice to report the import purchase. This self-billed invoice uses the information from the supplier’s commercial invoice and must be submitted to IRB just as any other invoice. This ensures imports are captured in the data pool for tax purposes (and can later be matched with customs import declarations).
In summary, every sale or purchase a Malaysian business engages in – whether domestically or across borders – gets recorded via the e-invoicing platform. Even consumer sales are eventually reported (immediately if invoiced, or via monthly summary if not).
E-Invoice Format: Structured digital file (XML/JSON) with mandatory fields, validated through IRB’s portal or API. Malaysia has adopted a clearance model – invoices must be sent to the tax authority in a machine-readable format for approval. The Inland Revenue’s MyInvois system accepts XML or JSON e-invoice files conforming to the official data schema. There are 37 mandatory data fields (out of ~55 total in the schema) that an e-invoice must contain, including:
- Invoice particulars: Supplier and buyer details (name, address, Tax ID/VAT number), invoice date, invoice number, currency.
- Line item details: Product/service description, quantity, unit price, and taxation details for each line (e.g. any sales tax).
- Totals: Subtotal, taxes, and grand total amounts.
- Additional references: For example, if applicable, references like purchase order number, delivery order, or export declaration number (for exports).
  Each invoice submitted is subject to automatic validation. Upon approval, the IRB system assigns a Unique Invoice Number (UIN) and adds a QR code and digital signature to the invoice. The validated invoice (with UIN/QR) is considered the legal invoice for tax purposes, and a copy must be provided to the buyer. (Buyers who are also on the platform get notified and can download it; otherwise, sellers can send a PDF copy that includes the IRB-issued QR code and ID.) Paper or PDF invoices alone are not recognized – only those cleared through the system count as official. The MyInvois platform provides a web portal for manual entry or batch uploads, and an API for integration so businesses can submit directly from their accounting software. Digital signatures are applied within the system to ensure invoice authenticity and integrity. [thestar.com.my]
Data to be Reported (Content of E-Invoices/E-Reports): Comprehensive invoice data enabling tax authority to see full transaction details. The e-invoice must essentially mirror a full tax invoice. Key data points include:
- Supplier and Customer Information: Legal names, addresses, tax identification numbers (for companies). For B2C where the customer isn’t a business, the customer identifier might be a national ID or passport number if an invoice is requested.
- Invoice Details: A unique invoice serial number, the date of issuance, and payment terms if relevant. Also whether it’s an original invoice, credit note, or debit note (these must also be reported via the system when adjusting invoices).
- Line Items: Description of each good or service, quantity, unit measure, unit price, any discounts or line charges, and the tax code/rate applied (e.g. SST code or “ZRL” for zero-rated, etc.).
- Tax Breakdown: The system captures any Malaysian Sales Tax or Service Tax on the invoice. (Currently Malaysia’s indirect tax is SST; if GST returns in future, the system is designed to handle GST as well.)
- Total Amounts: Total before tax, total tax, and invoice grand total. If multi-currency is used, relevant currency and exchange rate info.
- Other Info: Optional fields allow inclusion of Purchase Order number, reference to related documents, vehicle number (for fuel transactions), or customs declaration numbers for exports/imports to tie the invoice to import/export records.
- Time of supply: While not a field per se, the invoice date is used to determine tax period. The e-invoice effectively timestamped by IRB upon clearance, serving as proof of when the supply was made.
For E-Reporting (periodic reports), such as the monthly B2C consolidated invoice, the data submitted is an aggregate summary: e.g., “Retail sales for the month of October: total taxable amount X, tax Y, total Z,” possibly broken down by tax rate category. It’s not line-by-line per transaction but still contains key totals and tax info for that period. Similarly, if any out-of-scope transactions needed reporting, they would likely be summarized. Essentially, all data needed to audit and verify tax liabilities should be present either per invoice or via summary reports.
Invoice Clearance & Transmission Deadlines: Real-time or near-real-time clearance for individual invoices; specific periodic deadlines for summaries. Malaysia’s model requires that for each standard transaction, an e-invoice is submitted to IRB and approved before it is considered issued to the customer. This implies real-time transmission: at the moment of creating an invoice, the business’s system or user sends it to MyInvois (via API or portal) and waits for validation (which typically is nearly instantaneous if all data checks out). Only then is the invoice finalized and can be sent to the buyer with the IRB’s approval details. There is no separate lengthy deadline like “within 24 hours” – it’s essentially immediate as part of the issuance workflow. However, in practice, minor delays (seconds or minutes) for processing are expected but do not violate compliance. For E-Reporting scenarios (cases where invoices are not individual):
- Monthly B2C consolidated invoices must be sent within 7 days after the month-end for those retail transactions. For example, all non-invoiced cash sales in January must be reported by 7th February.
- Self-billed import invoices should be generated at the point of receiving the goods or the supplier’s invoice. While not explicitly “X days” in the guideline, the expectation is prompt reporting so that the tax record is timely (typically this would mean recording it in the same tax period as import, effectively immediate upon import).
- Credit/Debit Notes related to an invoice must also go through clearance when issued, ideally referencing the original invoice’s ID in the system.
- If the system is down (exceptional scenario), IRB has procedures for issuing invoices and later uploading when the system is back, but this is an emergency measure only.
- Data transmission to the authorities is entirely electronic – either via the MyInvois web portal (which a user can log into and input or upload invoices) or via API integration from software. There is no offline or paper submission for e-invoice data; internet connectivity is required to comply. The IRB system will store all submitted data centrally upon receipt.
- Post-issuance timeline: Once an invoice is approved, the law requires businesses to provide it to their customer in a “timely” manner (immediately in practice, since the digital invoice is ready to share). For e-reporting monthly summaries, the 7-day rule is the specific timeline given. There isn’t a scenario in Malaysia’s model of say “reporting invoices within X days of issuance” – because issuance itself hinges on reporting.
Penalties for Non-Compliance: Strict penalties including fines and possible imprisonment for failing to e-invoice, after grace period. Under the Income Tax Act and the specific e-invoice regulations, not complying with the mandate is an **offence punishable by a fine of RM200 to RM20,000 per offence and/or up to 6 months imprisonment. Each invoice not issued electronically when it should be can be treated as a separate offence. Authorities have stated that once the grace period lapses for a taxpayer group, they may start enforcing these penalties on businesses that continue issuing manual invoices. In addition to legal fines, there are practical consequences: a non-compliant invoice (outside the system) is not recognized for tax deduction or credit claims. For instance, a buyer cannot claim input tax credit on a purchase if the invoice wasn’t in the MyInvois system, and a seller might violate SST invoice rules, risking audits or denial of expense deductions. The Royal Malaysian Customs Department (which oversees SST) has existing penalties for failing to issue proper tax invoices (up to RM50,000 under SST law), and those still apply. Overall, after the grace period, businesses that ignore the e-invoicing requirement face significant financial penalties, risk of prosecution, and adverse tax implications. The government’s messaging has been that enforcement will be strict to ensure high compliance, especially for medium and large companies. [thestar.com.my]
Archiving Requirements: Maintain electronic invoice records for 7 years, accessible in Malaysia. Malaysian tax law requires all records, including invoices, to be kept for at least seven years. With e-invoices, companies must ensure that the digital invoices and related documents are stored securely and remain legible and accessible to the authorities upon request. Key points:
- Format: Invoices should be kept in their original electronic format (XML/JSON with the digital signatures/QR intact) to preserve authenticity. Businesses may also archive human-readable copies (PDFs) for convenience, but the source electronic record is crucial.
- Location: Records should be stored on servers or physical media within Malaysia, unless permission is obtained to store abroad. This is to ensure jurisdictional control over the data. Many companies use cloud solutions – if so, they should check the data center location or keep a backup in Malaysia.
- Accessibility: In case of an audit, the company must be able to retrieve and present any e-invoice from the past 7 years. Using the government’s system does not absolve the company from keeping its own copy. The MyInvois platform does provide a log of all invoices, but prudent businesses will maintain their own archive as well (for example, downloading a batch of invoices periodically or storing the API-submitted data).
- Integrity: Since each invoice is digitally signed by the system, that signature ensures the invoice hasn’t been tampered with. Archives should preserve these files without alteration. If converted to other formats for storage, one must ensure the content remains unmodified from what was approved.
Pre-Filled VAT Returns: Not applicable – Malaysia does not auto-populate tax returns from e-invoice data (no GST at present). Malaysia currently operates a Sales and Service Tax (SST) regime rather than VAT/GST. There is no mechanism for pre-filled SST returns based on e-invoicing data, and businesses must continue to manually file their tax returns (SST returns are typically bi-monthly) using their records. The e-invoice system’s data is primarily for tax authorities’ verification and audit purposes, not for preparing taxpayer returns automatically. Even if Malaysia were to reintroduce GST in the future (a possibility that has been discussed in policy circles), as of late 2025 there is no provision for generating draft GST/VAT returns from the e-invoice system. Taxpayers should reconcile their e-invoice records with their own accounting to ensure their filings are accurate, but they will not receive a pre-filled form from the government. No pre-populated VAT/SST returns are provided in Malaysia’s framework at this time – the onus remains on businesses to report their taxes, with e-invoicing acting as a cross-check for the authorities.

Sources & References:

Inland Revenue Board of Malaysia – e-Invoice Guidelines & FAQ (updated 2025) – Official technical and policy guidelines for implementation. IRBM e-Invoice Guideline, PDF})
Malay Mail – “Malaysia exempts businesses below RM500,000 from e-invoicing, delays mandate for RM1m-5m group to 2026” (News, 9 May 2025).
The Star (Malaysia) – “E-invoice exemption threshold up to RM1mil starting 2026, says PM” (News, 6 Dec 2025). [thestar.com.my]
Bernama – “E-invoice Exemption Threshold raised to RM1 Million – Anwar” (News, 6 Dec 2025). [thestar.com.my]
LHDN (IRB) – Press Release: Rescheduling of E-Invoice Implementation for Businesses under RM5 Million (5 June 2025) – announcement of timeline adjustments.
BDO Malaysia – “Guide to E-Invoicing in Malaysia” (Tax News, Aug 2025).
Sovos – “Malaysia CTC E-invoice Reporting – Country Guide” (2025).
KPMG – “Malaysia e-Invoicing – Client Tax Alert” (July 2024)