e-Invoicing implementation in Malaysia

This post is also available in: Bahasa Melayu


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.

ABSS e-invoice

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.

e-invoicing revised implementation timeline

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:

  1. Business to Business (B2B)
  2. Business to Consumer (B2C)
  3. 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.


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This post is also available in: Bahasa Melayu

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