Regulatory updates - Malaysia

On February 20, 2025, the Malaysian government announced a revised timeline for e-invoicing implementation. This decision primarily benefits micro, small, and medium enterprises (MSMEs) by allowing a longer preparation window before compliance becomes mandatory. E-invoicing for MSMEs with annual sales between 150,000 RM and 500,000 RM will now start on January 1, 2026.

Revised implementation timeline

Previously, Phase 3 applied to all remaining taxpayers; however, it has now been revised to include taxpayers with an annual turnover or revenue of more than 500,000 RM (ca. 110,000 EUR) and up to 25 million RM (ca. 5 million EUR), effective July 1, 2025.

The newly introduced Phase 4, commencing January 1, 2026, will apply to taxpayers with an annual turnover or revenue of more than 150,000 RM (ca. 35,000 EUR) and up to 500,000 RM (ca. 110,000 EUR).

Grace (“relaxation”) period

As previously reported by Pagero, the IRBM introduced a six-month grace period for each implementation phase, allowing businesses to issue consolidated e-invoices for all transactions.

Under the third phase, this grace period extends from July 1, 2025, through December 31, 2025, while the fourth phase’s grace period runs from January 1, 2026, through June 30, 2026.

Exemption

Businesses earning below 150,000 RM (ca. 35,000 EUR) annually are fully exempt from the e-invoicing requirement.

Updated e-invoice Guidelines

To reflect these changes, the Inland Revenue Board of Malaysia updated the previously published  e-invoice Guideline version 4.2. and the e-invoice Specific Guideline version 4.1.

On January 28, 2025, the Inland Revenue Board of Malaysia updated the previously published e-invoice Guideline version 4.1. and the e-invoice Specific Guideline version 4.0. These revisions address self-billed transaction rules, exceptions to self-billed e-invoice issuance, and the consolidation of self-billed transactions.

Notably, Guideline v.4.1. now includes a list of international organizations exempt from issuing e-invoices (including self-billed e-invoices). Meanwhile, Specific Guideline v.4.0. introduces modifications to self-billing consolidation — usually disallowed except under certain circumstances — and clarifies new transaction types requiring self-billed e-invoices.

Consolidation of self-billed transactions

Consolidation does not apply to self-billed e-invoices, except for certain self-billed circumstances.

Under the revised guidelines, consolidation does not apply to self-billed e-invoices except under these additional scenarios:

• Claims, compensation, or benefit payments from an insurance company made to individuals (not conducting a business), government entities, or state authorities.
• Self-billed circumstances involving taxpayers’ overseas branches or offices.

New transaction type to be issued as self-billed e-invoice

Buyers must issue self-billed e-invoices for transactions involving payments related to capital reduction, share/capital/unit redemption, share buybacks, return of capital, or liquidation proceeds.

Exceptions to self-billed invoice issuance

Self-billed e-invoices are generally required for interest payments, but exceptions include:

• Businesses (e.g., financial institutions) charging interest to the public at large;
• Interest payments made by employees to employers;
• Interest payments made by foreign payors to Malaysian taxpayers.

The following have been added to the list of exceptions for interest payments:

• Interest paid to a related Malaysian-incorporated company providing centralized treasury services to its affiliates (implementation required by July 1, 2025);
• Late payment interest or charges imposed by Malaysian taxpayers.

In November 2024, the following e-invoicing document specifications for use in Malaysia were published in updated versions:

• PINT BIS Malaysia Billing process 1.1.0 - incorporating invoice and credit note transactions;
• PINT BIS Malaysia Self Billing process 1.1.0 – 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).

This update aims to streamline invoicing processes, enhance compliance, and improve interoperability across various platforms.