E-Invoice in Malaysia: Everything You Need to Know (2025 Guide)
As part of Malaysia’s digital transformation and tax transparency goals, the Inland Revenue Board of Malaysia (LHDN) is implementing a mandatory electronic invoicing (e-Invoice) system. This guide explains how e-Invoicing works in Malaysia, who it applies to, when it starts, and how businesses can comply smoothly.
What is an E-Invoice?
An e-Invoice is a digital document that records business-to-business (B2B), business-to-government (B2G), or business-to-consumer (B2C) transactions in a structured electronic format. It allows real-time validation, reporting, and audit capabilities by tax authorities.
Malaysia’s E-Invoice Timeline (LHDN)
| Annual Turnover Threshold | Mandatory E-Invoice Start Date |
|---|---|
| RM 100 million and above | August 1, 2024 |
| RM 25 million – RM 100 million | January 1, 2025 |
| All other businesses | July 1, 2025 |
Who Must Comply?
All businesses, regardless of size or industry, must comply with Malaysia’s e-Invoice requirements by July 1, 2025. This includes:
- Companies and sole proprietors
- Partnerships and LLPs
- Foreign companies operating in Malaysia
- Individuals offering taxable services
What Transactions Require E-Invoices?
- Sales of goods and services
- Exports and imports
- Business expenses (including disbursements and reimbursements)
- Credit/debit notes and refunds
Types of E-Invoices in Malaysia
- Normal Invoice – for standard sales
- Credit Note – for price reductions or returns
- Debit Note – for additional charges
- Refund Note – for reimbursements
How Does the E-Invoice Process Work?
- The seller generates an e-Invoice with mandatory data (buyer info, tax ID, items, total, etc.)
- The e-Invoice is submitted to LHDN’s MyInvois system
- LHDN validates the invoice in real time
- Once approved, a Unique Identifier Number (UIN) and QR code is issued
- The invoice can now be shared with the buyer
Benefits of Malaysia’s E-Invoice System
- Reduces fraud and underreporting
- Streamlines accounting and reporting
- Real-time visibility for businesses and LHDN
- Improved VAT/GST compliance and automation
What Should an E-Invoice Contain?
According to LHDN, each e-Invoice must include:
- Seller and buyer names, TINs (Tax Identification Numbers)
- Invoice number and date
- Itemized product/service description
- Quantity, unit price, total
- Applicable tax codes
- Digital signature / QR code
How to Generate E-Invoices
- Use LHDN’s free MyInvois Portal
- Or integrate with LHDN’s API via your accounting software (e.g., SQL, AutoCount, QuickBooks)
Software Options
- Free: MyInvois portal for small businesses
- Paid: ERP and POS systems integrated with LHDN API
Challenges Businesses May Face
- Adapting legacy systems to LHDN’s format
- Employee training and user onboarding
- Timely error resolution during validation
- Connectivity for real-time reporting
Tips to Prepare for E-Invoicing
- Register your business with LHDN and get a TIN (Tax Identification Number)
- Test your software with sample e-Invoice formats
- Ensure customer and supplier data are clean and updated
- Train your finance and admin team
- Use automation wherever possible
Is E-Invoicing Linked to VAT/GST?
Yes. Although Malaysia currently has no GST, e-Invoicing lays the groundwork for possible reimplementation of VAT/GST in the future. The system already supports tax calculations and audit trails.
FAQs About E-Invoice in Malaysia
Is e-Invoicing mandatory in Malaysia?
Yes. It will be mandatory for all businesses by July 1, 2025, with earlier phases starting in August 2024 based on turnover.
Can I use Excel to submit e-Invoices?
No. E-Invoices must be submitted through LHDN’s portal or a validated API-integrated system in structured digital format (e.g., XML/JSON).
What happens if I don’t issue an e-Invoice?
You may be subject to compliance penalties or tax audits by LHDN for failing to report transactions digitally.
Can freelancers and self-employed individuals use e-Invoicing?
Yes. All individuals who issue invoices for taxable services must comply once the system becomes mandatory for their income bracket.
Conclusion
Malaysia’s e-Invoice system is a leap toward full digital tax administration. Whether you’re a large corporation or a small business owner, understanding how it works is key to avoiding penalties and ensuring smooth operations. Start preparing now, train your team, and consider integrating software that supports LHDN’s requirements. The future of invoicing in Malaysia is digital—and it’s already here.