On 22nd May 2023, LHDN announced that e-Invoicing will be implemented in Malaysia in stages starting from 2024.
The implementation will be in four phases starting from June 2024 through to January 2027.
Implementation timeline
June 2024
Mandatory for businesses with annual revenue of RM100 million or over
January 2025
Mandatory for businesses with annual revenue of RM50 million or over.
January 2026
Mandatory for businesses with annual revenue of RM25 million or over.
January 2027
Mandatory for ALL businesses.
Update
In October 2023, LHDN revised the implementation timelines to:
August 2024
Businesses with RM100m turnover or more.
January 2025
Businesses with turnover of between RM25m and RM100m
July 2025
ALL other businesses.
More on e-Invoicing implementation in Malaysia
Who is required to implement e-Invoicing?
LHDN has stipulated that all individuals and legal entities undertaking commercial activities in Malaysia are required to comply, including:
- 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 and regional offices
- Trust bodies
- Unit trusts.
Voluntary opt in
Businesses not in the revenue thresholds mentioned above may opt to implement e-Invoicing earlier.
Why opt for early implementation?
Although a business may have less than RM100m or RM50m turnover, it could have customers that fall in those thresholds.
As such, when these businesses issue invoices, it would facilitate digital exchange of the document.
How is turnover determined?
- Based on audited accounts for the financial year ended 2022. If the financial year was changed, then the turnover will be pro-rated over a 12 month period.
- For businesses that are not required to have audited accounts, as well as for individuals conducting commercial activities, turnover will be based on tax returns for year of assessment 2022.
The criteria is based on turnover for the financial year 2022 even if turnover in 2023 is less than the amount stipulated.
Newly incorporated businesses will be required to implement e-Invoicing by July 2025.
What categories of transactions are affected?
The implementation of e-Invoice will cover:
- Business to Business (B2B)
- Business to Consumer (B2C)
- Business to Government (B2G)
Penalties and implications for non-compliance
Supplier
Failure to adhere to e-Invoicing requirements could result in a fine of not less than RM200.00 and not more than RM20,000.00 or imprisonment not exceeding 6 months or both.
Buyer
The potential implication of e-Invoicing on the buyer would be that invoices from suppliers that have not been validated by LHDN may not be allowed as an expense for tax purposes.
Who is exempted?
- Ruler and Ruling Chief
- Former Ruler and Ruling Chief
- Consort of a Ruler of a State having the title of Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri or Permaisuri
- Consort of a Former Ruler of a State previously having the title of Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri or Permaisuri
- Government
- State government and state authority
- Government authority
- Local authority
- Statutory authority and statutory body
- Facilities provided by the above government, authority or body (e.g., hospital, clinic, multipurpose hall, etc.)
- Consular offices and diplomatic officers, consular officers and consular employees
- Individual who is not conducting business
However, suppliers to the above are still required to issue e-Invoices when providing services or goods.
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e-Invoice compliant accounting solutions
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