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E-Invoicing in Malaysia: A Practical Guide for SME
The Malaysian government is implementing mandatory e-invoice in phases to modernize tax administration and support the digital economy. This guide provides essential information for SMEs focusing service industry to prepare for this transition.
1. Implementation Timeline & Applicability
Mandatory Implementation Dates (based on annual turnover in FY2022 audited financial statements):
- August 1, 2024: Annual turnover exceeding RM100 million
- January 1, 2025: Annual turnover between RM25-100 million
- July 1, 2025: Annual turnover between RM500,000-25 million
- January 1, 2026: Annual turnover up to RM500,000
Interim Relaxation Periods (6 months from implementation date):
- Turnover > RM100 million: August 1, 2024 – January 31, 2025
- Turnover RM25-100 million: January 1, 2025 – June 30, 2025
- Turnover RM500,000-25 million: July 1, 2025 – December 31, 2025
- Turnover up to RM500,000: January 1, 2026 – June 30, 2026
During this period, businesses can issue consolidated monthly e-invoices instead of individual e-invoices.
Exemptions: MSMEs with annual turnover below RM150,000 are exempt, unless they:
- Have non-individual shareholders with turnover exceeding RM150,000
- Are subsidiaries of companies with turnover exceeding RM150,000
- Have related companies with turnover exceeding RM150,000
Once an MSME’s turnover exceeds RM150,000, they must implement e-invoice from January 1 of the second year following the threshold breach. For example, if turnover exceeds RM150,000 in 2025, e-invoice is required from January 1, 2027.
Penalties for Non-compliance: Fines between RM200-20,000, imprisonment up to 6 months, or both per violation.
2. E-Invoice Basics
An e-invoice is a digital transaction record in XML/JSON format (not PDF) validated by IRBM through the Continuous Transaction Control (CTC) model. Businesses can transmit e-invoices through:
- MyInvois Portal: Free web application suitable for small businesses
- API Integration: Direct connection between your ERP/accounting system and MyInvois
Types of E-Invoices:
- Standard E-Invoice: Issued for individual transactions upon buyer’s request
- Consolidated E-Invoice: Monthly aggregation of transactions where buyers didn’t request individual e-invoices
- Self-Billed E-Invoice: Issued by the buyer in specific circumstances
3. When to Issue E-Invoices
Standard Transactions
- When requested by buyer: Issue individual e-invoice immediately
- When not requested by buyer: Issue normal receipt, then consolidate into monthly e-invoice within 7 days after month-end
Example : Restaurant Transaction
Wani, Lilian and Muthu dine at Restaurant XYZ on different dates in July 2025 and do not request e-invoices. The restaurant issues normal receipts to them.
By August 7, Restaurant XYZ must aggregate all receipts for July into a consolidated e-invoice submitted to IRBM with “General Public” as the buyer name and “EI00000000010” as the TIN.
If Muthu later decides to request an e-invoice for his meal, he must do so within the month of the transaction (by July 31). If he requests after that date, the restaurant may deny his request as the transaction would already be included in the consolidated e-invoice.
Special Scenarios Requiring Individual E-Invoices
The following transactions always require individual e-invoices (cannot be consolidated):
- Sale of motor vehicles
- Sale of flight tickets or private charter
- Construction contracts
- Sale of construction materials (regardless of volume)
- Pay-outs to betting/gaming winners
- Payments to agents/dealers/distributors
4. Key Submission Timelines
| Transaction Type | Submission Timeline |
|---|---|
| Standard services | Upon buyer’s request after service delivery |
| Periodic billing (subscriptions) | Monthly when billing occurs |
| Consolidated e-invoices | Within 7 calendar days after month-end |
| Imported goods (self-billed) | By end of second month following customs clearance |
| Imported services (self-billed) | By end of month following payment or receipt of invoice (whichever is earlier) |
| Foreign income | By end of month following receipt of income |
| Agent/dealer payments (self-billed) | Based on existing payment schedule (e.g., monthly) |
Example : Imported Services
Food Eatery Sdn Bhd receives legal advisory services from ABC Advisory Ltd in the UK. ABC Advisory Ltd issues an invoice for RM200,000, and Food Eatery Sdn Bhd pays on July 31, 2025.
Food Eatery Sdn Bhd must issue a self-billed e-invoice by August 31, 2025 (end of month following payment). Since ABC Advisory Ltd is a foreign entity without a Malaysian TIN, Food Eatery will use the general TIN “EI00000000030” for foreign suppliers.
5. Self-Billed E-Invoices
In specific scenarios, the buyer issues a self-billed e-invoice (assuming the supplier’s role). This applies to:
- Foreign supplier transactions: When purchasing goods/services from overseas providers
- Payments to agents/dealers/distributors: For commissions or incentives
- Transactions with individuals not conducting business: Including rental payments to individual landlords
- Profit distributions: Such as dividends (except for Bursa-listed companies and local companies distributing profits under the single-tier system)
- Interest payments: Except those made by financial institutions to the public, employee to employer, etc.
- E-commerce platform payments to merchants/service providers
- Insurance claim/compensation payments to individuals
- Capital-related payments: Including share redemptions, buybacks, etc.
Example : Individual Property Rental
Best Mesra Sdn Bhd rents an office space owned by three individuals: Kamal, Cheng, and Sunita, who are not conducting business.
Best Mesra Sdn Bhd must issue separate self-billed e-invoices to each individual property owner based on their agreed proportion of the rental payment.
Example : Interest Payment Scenarios
Cee Sdn Bhd obtains a RM10 million loan from its holding company, Beeny Sdn Bhd, which charges interest but does not provide centralized treasury services. Cee Sdn Bhd must issue a self-billed e-invoice to Beeny Sdn Bhd for the interest paid.
6. Employee and Director Claims
E-Invoice Impact
When employees/directors incur business expenses, they must:
- Attempt to get e-invoices issued directly in the company’s name
- If not possible, obtain e-invoices in their own name
- For foreign vendor expenses, traditional receipts remain acceptable
Developing a Claims Policy
SMEs should establish a clear policy that specifies:
- Eligible expense categories and documentation requirements
- Monthly submission deadlines with consequences for late claims
- Procedures for obtaining proper e-invoices at point of purchase
- Company payment methods for recurring expenses
Common Issues for SMEs
A significant challenge occurs when directors pay for all business expenses personally and submit claims infrequently. This creates several problems:
- Delayed expense recognition
- Difficulty segregating business vs. personal expenses
- Improper avoidance of self-billing requirements for foreign vendors
- Insufficient documentation when claims are submitted months after purchase
To address these issues, consider implementing company payment cards, establishing strict monthly claim deadlines, and creating clear guidance for which expenses qualify for reimbursement versus which require proper self-billed e-invoices.
Employee and Director Claims
When employees/directors incur business expenses:
- Request E-Invoice in Company’s Name: Employees should first seek confirmation with the supplier if an e-invoice can be issued in the employer’s name
- Alternative Option: If not possible, supplier can issue e-invoice in employee’s name
- Foreign Expenses: Normal receipts from foreign vendors are acceptable; self-billed e-invoices not required
For small businesses where directors frequently pay expenses, establish a clear policy covering:
- Company Payment Methods: Consider issuing company payment cards to directors for business expenses
- Documentation Requirements: Specify validated e-invoices and proof of payment needed
- Submission Timeline: Implement monthly claim submission deadlines
- Expense Categories: Create clear guidelines for different business expense types
Example : Director Expense Scenarios
For small businesses, common scenarios include:
| Scenario | Previous Practice | E-Invoice Requirement | Solution |
|---|---|---|---|
| Regular monthly expenses | Director pays, submits receipt | Validated e-invoice required | Set up company direct payment; maintain list of regular vendors |
| Online/SaaS subscriptions | Director’s personal card used | Self-billed e-invoice for foreign vendors | Transfer subscriptions to company payment methods |
| Client entertainment | Director pays, claims later | E-invoice with business purpose | Train directors to request proper documentation at point of service |
7. Implementation Steps
- Determine Your Timeline: Identify your mandatory date based on FY2022 turnover
- Choose Your Approach: Decide between DIY implementation or professional services (see section 8)
- Gather Required Customer Data: Prepare to collect and maintain:
- Names, addresses, and contact numbers
- Tax Identification Numbers (TINs) or identification numbers
- SST Registration Numbers (if applicable)
- For Malaysian individuals: Either TIN, MyKad number, or both
- For non-Malaysian individuals: TIN and/or passport/MyPR/MyKAS number
- For foreign entities: Use general TIN codes (EI00000000020 for buyers, EI00000000030 for suppliers)
- For consolidated transactions: Use “General Public” with TIN “EI00000000010”
- Set Up E-Invoicing System: Either configure the MyInvois Portal or integrate your ERP via API
- Establish Processes: Create workflows for:
- Requesting customer information
- Processing standard and self-billed e-invoices
- Consolidating transactions (for non-requested e-invoices)
- Handling amendments: Establish procedures for correcting e-invoices:
- Within 72 hours: Cancel the e-invoice and reissue a new one
- After 72 hours: Issue credit note/debit note/refund note e-invoices referencing the original
- Managing employee/director claims with clear policy
- Train Staff: Ensure employees understand the new requirements
- Begin Testing: Start before your deadline using test transactions
8. Additional Resources
- 250221 irbm-e-invoice-specific-guideline
- 240911 e-invoice-illustrative-guide
- 250318 irbm-e-invoice-guideline
- Our AI Assistant: Try our AI e-invoice advisor for immediate answers to your questions
- IRBM Email: myinvois@hasil.gov.my
- Help Desk: 03-8682 8000 (available 24/7)
- Live Chat: www.hasil.gov.my/en/e-invoice/contact-us
Contact Us for Personalized Consultation
Every business has unique needs when it comes to e-invoice implementation. To receive personalized guidance tailored to your specific business situation, we invite you to arrange a private consultation with our e-invoice specialists at an hourly rate of RM400. Our experts will analyze your current systems, identify the most efficient implementation approach, and develop a customized strategy to ensure your business achieves full compliance with minimal disruption. Please contact our office to schedule your consultation.