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Disclaimer: Please note that this is for information purposes only. It does not constitute a legally binding document so you should also consult your local requirements.
Government compliance – Malaysia
Government compliance - Malaysia
E-invoicing
Malaysia announced it would implement mandatory e-invoicing starting on January 1, 2024.
- It applies to all registered businesses under the GST system, which is estimated to be around 500,000 companies.
- E-invoices must be generated directly from accounting systems and issued through the Malaysian tax authority’s website.
- Non-compliance will result in penalties, including fines and potential suspension of the company’s GST registration.
The proposal envisions a CTC model, requiring sales invoices and receipts to be first sent to the tax authorities in real-time for verification (clearance) before being delivered to the customer/buyer. The verification is done by submitting a structured XML invoice file to the LHDN platform via API. Once cleared, the XML invoice will only be returned to the supplier. Then, it may be exchanged with the intended trading party, which can be done in any format or method. The LHDN platform will notify the buyer via push notification or email for access to invoices that have been cleared. PDF and other paper invoices can be exchanged with the buyer, but a QR code with an embedded URL linking the document to the LHDN platform must be displayed.
What is the proposed timeline?
- January 2024: Voluntary adoption of e-invoicing through the LHDNM;
- June 2024: Mandatory e-invoicing for taxpayers with an annual turnover of MYR 100 million or above;
- January 2025: Mandatory e-invoicing for taxpayers with an annual turnover of MYR 50 million or above;
- January 2026: Mandatory e-invoicing for taxpayers with an annual turnover of MYR 25 million or above; and
- January 2027: Mandatory e-invoicing for all remaining taxpayers.
What transactions are included?
All domestic (B2B, B2C, B2G) and cross-border transactions will be in scope.
What are the documents in scope?
- Sales Invoices
- Credit/debit notes
- Cancellations
- Receipts
What businesses are affected?
The LHDN confirmed that all Malaysian tax-registered businesses producing sales invoices (including cross-border transactions) and receipts will be in the scope of the mandate once it is fully implemented in 2027. It is not yet clear if this obligation includes foreign resident businesses.
