Regulatory updates - Malaysia

The Inland Revenue Board of Malaysia (IRBM) continues its gradual implementation of mandatory e-invoicing as it approaches the second phase of its roll-out. The first phase, launched in August 2024, mandated e-invoicing for select businesses, and now the IRBM is preparing to expand requirements from companies with annual turnovers between RM 25 million (approx. EUR 5 million) and RM 100 million (approx. EUR 20 million) as of 1 January 2025.

The scope and format of mandatory e-invoices

Under the second phase, e-invoices must be submitted in electronic formats, using the Universal Business Language (UBL2.1) in XML or JSON formats. The mandated documents include:

• E-invoices (including consolidated and self-billing e-invoices);
• Credit note e-invoices;
• Debit note e-invoices;
• Refund e-invoices.

Transmission methods

To meet these requirements, taxpayers can use one of two e-invoice submission methods: the MyInvois Portal or the MyInvois System (API).

The MyInvois Portal provides general accessibility, though it is not well-suited for high-volume transactions. Larger enterprises are encouraged to use the API-based MyInvois System, which may involve initial investment in technology and system upgrades to manage substantial transaction volumes more efficiently.

Grace (relaxation) period

As previously reported by Pagero, the IRBM announced a 6-month grace period per each phase, considering the allowance to issue consolidated e-invoices for all transactions.

The grace period under the second phase will apply to taxpayers from 1 January 2025 until 30 June 2025.

Penalties

For the taxpayers in the scope of the e-invoicing implementation first phase, penalties for non-compliance are imposed from 1 October 2024.

Consequently, any penalties for non-compliance among taxpayers required to comply with the e-invoicing implementation second phase will be imposed as of 1 January 2025.

Peppol implementation in Malaysia

As part of the national e-invoicing initiative, Pagero, a Peppol-accredited service provider, has been approved by the Malaysian Digital Economy Corporation (MDEC) to facilitate e-invoicing compliance.

Peppol-accredited providers, including Pagero, are collaborating with MDEC in ongoing sessions to finalize and streamline the e-document exchange process in Malaysia.

Pagero closely monitors these developments and will continue notifying our customers about the latest changes.

On 4 October 2024, the Inland Revenue Board of Malaysia updated the previously published e-invoice Guideline version 4.0. and the e-invoice Specific Guideline version 3.1. addressing the exemptions from e-invoice implementation.

The list of taxable persons exempted from issuing e-invoices (including self-billed e-invoices) was updated as follows:

• Foreign diplomatic office;
• Individuals who are not conducting business;
• Statutory body, statutory authority and local authority, concerning the following:
  • collection of payment, fee, charge, statutory levy, summon, compound and penalty by it in carrying out functions assigned to it under any written law; and
  • transaction of goods sold and services performed before 1 July 2025.
• International organization for the transaction of any goods sold or service performed before 1 July 2025;
• Taxpayers with an annual turnover or revenue of less than RM 150 000 (ca. 30 400 EUR).

Suppliers who provide goods or services to the persons above are required to issue e-invoices.

The previous version of this list included state, government, local and statutory authorities, as well as certain organizations related to government bodies, which are now under the scope of the e-invoicing mandate.

On 30 July 2024, the Inland Revenue Board of Malaysia (IRBM) updated the previously published e-invoice Guideline version 3.2. and the e-invoice Specific Guideline version 3.0. addressing the scope of gradual implementation of e-invoicing.

To summarize, the following changes have been stipulated in the updated versions of the e-invoice Guideline 3.2. and e-invoice Specific Guideline 3.0.:

Grace (“relaxation”) period phases

1 August 2024 – 31 January 2025: Turnover > RM 100 million (ca. EUR 20 million).

1 January 2025 – 30 June 2025: Turnover > RM 25 million (ca. EUR 5 million) to RM 100 million.

1 July 2025 – 31 December 2025: All other taxpayers.

Allowances during the grace (“relaxation”) period

• Issuing consolidated e-invoices for all activities and transactions,
• Issuing consolidated e-invoices for the industries or activities where required for each transaction separately.
• Issuing consolidated self-billed e-invoices for all self-billed scenarios.
• Flexible input for product/service descriptions and reference numbers.
• Input the receipt/statement/bill reference numbers as required under the rules for “transactions with buyers” and “statements or bills periodically”.
• No individual e-invoices/self-billed e-invoices are needed even if requested by buyers/suppliers provided taxpayers comply with the above allowances.

Timing of issuance of consolidated e-invoices

Consolidated e-invoices/self-billed e-invoices are submitted to LHDN within seven (7) calendar days after the end of the month in which the transactions occurred.

Penalties

No penalties for non-compliance if adhering to consolidated e-invoicing rules.

Exemption from e-invoicing

Taxpayers with an annual turnover or revenue of less than RM150,000 (ca. 30,450 EUR) are exempted from issuing e-invoices (including self-billed e-invoices). The conditions and criteria will be indicated in the General FAQ.

On 26 July 2024, the Inland Revenue Board of Malaysia (IRBM) released a media statement titled,  “Flexibility to Submit Consolidated e-Invoices during the Initial Period of Implementation of e-invoices”.

The announcement provides taxpayers with a 6-month grace period starting from 1 August 2024, which includes the following provisions:

• Taxpayers may issue consolidated e-invoices for all transactions with the following allowances:

• • Allowing all activities/industries to issue consolidated e-invoices, including self-billed e-invoices.
  • Allowing any transaction description to be entered in the "Product or Service Description" field.
  • If there is an e-invoice request from the buyer, the seller may issue a consolidated e-invoice without issuing an e-invoice for each transaction.

• Penalties under Section 120 of the Income Tax Act 1967 for non-compliance with e-invoicing rules will not be applied to taxpayers, provided they adhere to the consolidated e-invoicing requirements.

Taxpayers who implement e-invoicing within the stipulated timeline without using the grace period will benefit from a reduced capital allowance claim period for ICT equipment and software packages from 3 years to 2, applicable from the 2024 to 2025 assessment years.

On 28 June 2024, the Inland Revenue Board of Malaysia (IRBM) updated the previously published guidelines and Software Development Kit for MyInvois System (API), addressing the scope of gradual implementation of e-invoicing:

• Software Development Kit (SDK) 1.0; 
• The updated version 3.0. of the e-invoice Guideline; 
• The updated version 2.2. of the e-invoice Specific Guideline.  

Updates to the Guidelines

To sum up, the following changes have been stipulated in the updated versions of e-invoice Guideline 3.0. and e-invoice Specific Guideline 2.2.:

• A new abbreviation (SSM - Companies Commission of Malaysia) was added;
• The scope of persons under the mandate is clarified as applying to all persons (all individuals and legal entities);
• New transaction types are added to the list of not required under the e-invoicing mandate;
• The IRBM has initiated a discussion with the government, state government and relevant authorities to implement e-invoices with government bodies;
• The IRBM exempts the Supplier (or Buyer in self-billed e-invoice scenarios) from sharing either the validated e-invoice or a visual representation of the validated e-invoice with the Buyer;
• The detailed clearance process is provided in the guideline adhering to the list of e-invoice statuses and document validation rules;
• Clarifications to the rules on sharing of e-invoice information between IRBM and the Royal Malaysian Customs Department (RMCD);
• Clarification of the new and older versions of the Business Registration Number (BRN);
• New self-billed transactions were added to the list that applies to consolidated e-invoices;
• “Claim, compensation or benefit payments from the insurance business of an insurer” as a type of transaction is added to the list of mandatory self-billed transactions;
• Both Guidelines include rephrasing and removal of certain provisions as well as editorial changes to the text to provide more clarifications for the implementation of the e-invoicing mandate.

Updates to SDK 1.0.

SDK 1.0 considers updates to align API Response and Standard Error Response, the Document Type examples to specify “v1.1”, removal of ‘Continuation Token’ from Search Documents API, updates to signatures, new additions such as signature page, type page, new page (sample) containing sample payload for each document type, updates to response to the Get All Document Types, Reject Document and Get Recent Documents APIs, and updates to contacts page.

On 6 April 2024, the Inland Revenue Board of Malaysia (IRBM) updated the previously published guidelines and Software Development Kit for MyInvois System (API), addressing the scope of gradual implementation of e-invoicing:

• Software Development Kit (SDK) 1.0; 
• The updated version 2.3. of the e-invoice Guideline; 
• The updated version 2.1. of the e-invoice Specific Guideline.  

SDK 1.0 considers updates to validations and documentation, updates to API documentation, new additions such as new code, tax exemption field in invoice and InvoiceLine, the guidance with Digital Signature Creation and Validation, as well as specific other updates concerning document types, currency exchange rate, file size limitations, and mathematical mapping.

The Guidelines include rephrasing and removal of certain provisions as well as editorial changes to the text to provide more clarifications for the implementation of the e-invoicing mandate.

On 26 February 2024, the following e-invoicing document specifications for use in Malaysia were published:

• PINT BIS Malaysia Billing process 1.0 - incorporating invoice and credit note transactions;
• PINT BIS Malaysia Self Billing process 1.0 – incorporating self-billing invoice and credit note transactions.

These specifications are structured in compliance with Peppol Business Interoperability Specifications (BIS) PINT methodology and requirements of the Inland Revenue Board of Malaysia (IRBM).

On 9 February 2024, the Inland Revenue Board of Malaysia (IRBM) published the Software Development Kit and updated the previously released guidelines: 

• Software Development Kit (SDK); 
• The updated version 2.2 of the e-invoice Guideline; 
• The updated version 2.0. of the e-invoice Specific Guideline.  

The SDK contains documentation of the APIs exposed to taxpayer ERP systems integrating with MyInvois System for document processing automation. 

The updated guidelines provide clarifications for the implementation of the upcoming e-invoicing mandate. 

On 28 October 2023, the Inland Revenue Board of Malaysia (IRBM) updated the previously published guidelines addressing the scope of gradual implementation of e-invoicing for targeted taxpayers.

- The updated version 2.1 of the e-invoice Guideline.

- E-invoice Specific Guideline version 1.1.

- E-invoice Catalogue.

The new mandatory e-invoicing implementation considers the gradual roll-out plan for targeted taxpayers from:

- 1 August 2024: Taxpayers with an annual turnover or revenue of more than RM 100 million (ca. EUR 20 000 000).

- 1 January 2025: Taxpayers with an annual turnover or revenue of more than RM 25 million (ca. EUR 5 000 000) and up to RM 100 million (ca. EUR 20 000 000).

- 1 July 2025: All other taxpayers.

Other amendments made to the guidelines clarify the current provisions and does not explicitly consider significant changes.

Pagero follows the developments closely and will inform our customers once further guidance is announced.

On 13 October 2023, the Prime Minister of Malaysia announced the delay in the implementation of the country-wide e-invoice implementation within Malaysia’s national Budget 2024 proposals.

Starting from 1 August 2024, taxpayers with an annual income or sales exceeding RM 100 million (ca. EUR 20 770 000) will be mandated to issue an electronic invoice.

The next steps in the gradual roll-out plan are yet to be announced, whereas the mandate for targeted taxpayers under other income categories is expected to be implemented starting from 1 July 2025.

In addition, the usage of Tax Identification Number (TIN) in Malaysia will be extended to support the implementation of e-invoicing.

Pagero closely follows the developments in Malaysia and will publish further updated information in the upcoming weeks.