Malaysia e-Invoice Implementation: Phases & Timelines (2025 Update)
Malaysia is digitizing its tax system and business processes through e-invoicing. This shift is a big step forward. The e-invoice timeline has already started. Businesses need to know the updates, deadlines, and rules to transition smoothly.
This blog gives a clear overview of Malaysia’s e-invoice timeline. It covers Phases 1, 2, 3, and 4, including deadlines and grace periods.
E-Invoice Guidelines Update - 21st February 2025
- Timeline and Grace Period Changes: Businesses earning RM150,000 to RM500,000 yearly must start e-invoicing on January 1, 2026. They get a grace period until June 30, 2026.
- New Businesses: Companies starting in 2025 or later must begin e-invoicing on January 1, 2026, or when they start operating.
What Is E-Invoicing?
Malaysia’s e-invoice program is led by the government. It aims to make invoicing digital for businesses. Paper or PDF invoices are replaced with a machine-readable format. This format works easily with accounting systems and tax authorities. The Inland Revenue Board of Malaysia (IRBM) created the MyInvois system. MyInvois is a central hub for validating, storing, and sharing e-invoices.
Malaysia e-Invoicing Implementation Timeline
Large companies in Malaysia started e-invoicing on August 1, 2024. The rollout happens in four phases based on yearly revenue:
|
Phase |
Effective Date |
Turnover Threshold |
End of Relaxation Period |
|
Phase 1 |
August 1, 2024 |
> RM100M |
31st January 2025 |
|
Phase 2 |
January 1, 2025 |
RM25M – RM100M |
30th June 2025 |
|
Phase 3 |
July 1, 2025 |
RM500K to RM25M |
31st January 2026 |
|
Phase 3 |
January 1, 2026 |
All businesses except < RM150K |
30th June 2026 |
Grace Periods for E-Invoice Implementation
The IRBM offers a six-month grace period for each phase. This helps businesses adjust. During this time:
- Companies can issue one e-invoice for all transactions, including B2B.
- Product or service descriptions can be more flexible.
- No penalties apply under Section 120 of the Income Tax Act 1967.
This grace period lets businesses prepare their systems.
Key Phases of Malaysia’s e-Invoice Implementation
Each phase has its own rules right now.
Phase 1 e-Invoice Implementation
Businesses with revenue over RM100 million started in Phase 1. From February 1, 2025, they must fully comply. Requirements include:
- B2B Validation: Separate e-invoices for B2B transactions. B2C transactions can be combined.
- Rule Compliance: Follow IRBM guidelines.
- System Prep: Validate past data, test systems under stress, and automate workflows.
Phase 2 e-Invoice Implementation
Businesses with RM25 million to RM100 million in revenue fall in Phase 2. Until June 30, 2025, they can:
- Issue combined e-invoices for B2B and B2C transactions.
- Upload e-invoices manually via MyInvois. API integration is optional.
Tips for Phase 2 Businesses:
- Check ERP systems for e-invoice compatibility.
- Slowly connect ERP and accounting systems.
- Test high-volume transactions.
- Train staff on handling rejections and updates.
Full compliance, including separate B2B e-invoices, is required after June 30, 2025.
Phase 3 e-Invoice Implementation
Businesses with RM500,000 to RM25 million in revenue start on July 1, 2025.
Phase 3 Prep Checklist:
- Register for MyInvois Developer Sandbox by April 30, 2025.
- Digitize supplier and customer data.
- Look into affordable middleware options.
- Plan API integration with MyInvois.
Phase 4 e-Invoice Implementation
All other businesses with over RM150,000 in revenue begin on January 1, 2026.
Phase 4 Prep Checklist:
- Test system options and pick the best one.
- Digitize supplier and customer data.
- Explore cost-effective middleware.
- Plan API integration with MyInvois.
Penalties for Not Following E-Invoice Rules
Phase 1 businesses must fully comply by February 1, 2025. Penalties start then for any mistakes. Phase 2 businesses face enforcement from July 1, 2025.
Not issuing e-invoices breaks Section 120(1)(d) of the Income Tax Act 1967. Penalties include:
- Fines from RM200 to RM20,000, or
- Up to six months in jail, or
- Both, for each violation.
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Conclusion
Malaysia’s e-invoice rollout happens in four phases:
- Phase 1 (August 2024): Big companies (over RM100 million revenue).
- Phase 2 (January 2025): Medium companies (RM25 million to RM100 million revenue).
- Phase 3 (July 2025): Smaller companies (RM500,000 to RM25 million revenue).
- Phase 4 (January 2026): Other companies (over RM150,000 revenue).
During grace periods, businesses can use combined invoices and avoid penalties. They can also fix their systems. After deadlines, strict penalties apply for errors like missing UINs or late submissions.
Frequently Asked Questions
Malaysia’s e-Invoice initiative is a government-led effort to digitize the invoicing process. It replaces traditional invoices with a standardized, machine-readable format that can be validated and shared through the MyInvois System.
The initiative aims to enhance tax compliance, improve business efficiency, reduce costs, and support Malaysia’s digital economy growth.
The implementation is divided into three phases:
- Phase 1: Large corporations (August 2024).
- Phase 2: Medium-sized enterprises (January 2025).
- Phase 3: Small businesses and all taxpayers (July 2025).
e-Invoicing will be mandatory for all businesses by 1 July 2025, as part of Phase 3.
Yes, businesses can voluntarily adopt e-Invoicing ahead of their scheduled phase. Early adoption is encouraged to ensure a smooth transition.