Is e-invoicing Mandatory in Malaysia? What Businesses Need to Know

The progress of Malaysia toward becoming a digital economy demands immediate attention to electronic invoicing (e-Invoicing) implementation. This study explores government-backed e-invoicing programs and presents regulations regarding e-invoicing as well as the scheduled implementation dates and potential penalties for non-compliance and preparation strategies for businesses during the transition.

Government Initiatives Driving E-Invoicing

IRBM which operates under the Malaysian government launched the e-Invoicing initiative because it aims to improve both tax administration and support economic digital growth. The administrative wing of the government supports e-invoicing through its implementation for these reasons:

• Improve transparency in business transactions.
• Electronic invoicing systems work to improve both data reporting and collection operations.
• Reduce tax evasion and fraud.
• Enhance operational efficiency for businesses

The established objectives support the main goal of developing an advanced digital platform that provides benefits to public sector organizations and private industry entities.

Current Legal Requirements

Malaysia implements specific legal frameworks that control E-Invoicing operations for both compliance and standardization purposes. Key aspects include:

• All companies operating in Malaysia must use electronic invoices to handle B2B, B2C and B2G transactions under mandatory requirements.
• All e-Invoices need authentication through either the IRBM's MyInvois Portal combined with an approved Application Programming Interface (API) for verifying their validity.
• The requirement to store e-invoice data exists for businesses to maintain records that support internal audits and business analysis over a particular retention period. Businesses must store e-Invoice data between 5 and 7 years according to expectations but the exact timeframe remains undefined.

Timeline for Mandatory Implementation

The rollout of e-Invoicing in Malaysia is structured in phases, based on annual turnover thresholds:

Note: The e-invoice implementation timeline has been updated on 21 February 2025

The enforced phasing of deadline extensions provides organizations time to adjust their systems and procedures to fulfill the new requirements.

Implications for Non-Compliance

Non-compliance with e-invoicing mandates results in several serious consequences that business organizations should avoid.

• The failure to validate invoices through the IRBM system causes problems with revenue reporting along with difficulties in expense claim processes.
• Non-compliance with e-invoicing mandates can cause financial cash flow interruptions and client attrition alongside the loss of business reputation in the market.

Preparing Your Business for the Transition

Every successful shift toward e-invoicing requires businesses to follow these steps for transition success.

To ensure a seamless transition to e-invoicing, businesses should consider the following steps:

Assess Readiness: Evaluate current invoicing processes and identify gaps to meet e-Invoicing standards.

Upgrade Systems: Invest in e-invoicing-compliant accounting solutions that can integrate with the IRBM's systems. Platforms like ABSS Connect can facilitate this integration.

Employee Training: Conduct comprehensive training sessions to familiarize staff with new e-invoicing procedures and compliance requirements.

Engage with Experts: Consult with tax professionals and IT consultants to ensure all aspects of the transition are covered, minimizing potential pitfalls.

Participate in Pilot Programs: Engage in government-led pilot programs to gain firsthand experience and insights into the e-invoicing system before mandatory implementation.

By proactively embracing e-invoicing, businesses not only comply with regulatory requirements but also position themselves to reap benefits such as improved operational efficiency, reduced costs, and enhanced competitiveness in the digital marketplace.