A Step-by-Step Guide to Implementing E-Invoicing in Malaysia for 2025

The Inland Revenue Board of Malaysia announced that it would implement mandatory electronic invoicing to help ensure tax compliance and enhance business operations.

E-invoicing implementation in Malaysia will occur in three phases, starting with the pilot phase on 1 May 2024. The last wave, targeting all Malaysian taxpayers, will begin on 1 July 2025, making it mandatory for all business owners to generate and issue compliant e-invoices.

2025 will be a busy year for all businesses, with an annual turnover of less than MYR 25 million. They must adhere to the e-invoicing rules and mandates that already apply to large organizations with a yearly turnover of more than MYR 25 million.

So, how do business owners prepare for this transition, and what steps do they take to ensure e-invoicing compliance in Malaysia?

In this post, we’ll discuss the e-invoicing process in Malaysia, including requirements, implementation timeline, transmission method, challenges businesses may face, and benefits they will reap. We’ll also provide a step-by-step guide to help you implement electronic invoicing in Malaysia.

What is the scope of e-invoicing in Malaysia?

After announcing in May 2023 that e-invoicing would be implemented in 2024, the IRBM released updated guidelines on 6 April 2024. These aimed to enhance Malaysia’s digital economy and tax administration’s efficiency.

Malaysia's mandatory e-invoicing implementation began on 1 August 2024, and the last phase started on 1 July 2025. By then, all Malaysian taxpayers must adhere to the e-invoicing guidelines and regulations.

The PEPPOL authority in Malaysia, the Malaysian Digital Economy Corporation (MDEC), oversees and approves access point providers in the country. It ensures reliable PEPPOL-ready solutions for businesses to facilitate e-invoicing adoption.

The IRBM provides two forms of generating, issuing, receiving, and storing invoices: the MyInvois portal and an Application Programming Interface (API).

The new e-invoicing mandates in the country will require taxpayers to issue electronic documents for all transactions to provide goods or services and select non-business transactions between individuals.

The updated guidelines released by the IRBM also list several electronic documents taxpayers must issue through the new e-invoicing system.

Adopting electronic invoicing may pose a few challenges to some businesses, but the government has taken measures to ease the transition. The system in place is also reliable and easy to adopt if you take the time to understand the set regulations.

Who should comply with e-invoicing in Malaysia?

The majority of entities in Malaysia, including business trusts, branches, cooperative societies, associations, partnerships, property trust funds, and more, must adhere to the new e-invoicing regulations.

However, despite the stringent e-invoicing regulations in Malaysia, some entities will be exempt from issuing electronic invoices starting 1 July 2025, including:

Foreign diplomatic officers
Individuals not conducting business

Implementation timeline for e-Invoicing in Malaysia

The Malaysian 2024 Finance Bill introduced changes to the e-invoicing implementation timeline set earlier by the Inland Revenue Board of Malaysia. The initial stage of the obligation was postponed for two months, with the new set dates for each wave being:

1 May 2024: On 1 May 2024, the IRBM released the pilot phase of the e-invoicing system to allow businesses to test it. This permitted large organizations targeted by the first wave to familiarize themselves with the requirements before its implementation.
1 August 2024: The first phase of electronic invoicing implementation in Malaysia began by targeting large businesses with an annual turnover of more than MYR 100 million. Large organizations often have the resources for such a transition, making them ideal first targets.
1 January 2025: Starting 1 January 2025, the second wave focuses on small—to medium-sized organizations with annual revenue between MYR 25 million and MYR 100 million.
1 July 2025: The last phase will include all other taxpayers in Malaysia.

Requirements for e-invoicing in Malaysia

When issuing electronic invoices in Malaysia, here are the requirements your document must meet according to the IRBM e-invoicing regulations:

Format

The IRBM requires all electronic documents to be issued and generated in XML or JSON format. This allows relevant systems to process them automatically. Taxpayers are not allowed to issue invoices in PDF or JPG formats.

Transmission methods

Malaysian taxpayers can use the MyInvois portal or a third-party system to generate and issue electronic invoices. However, your system must ensure your invoices get to the IRBM for validation before forwarding them to the recipient.

The IRBM has tasked the Malaysian Digital Economy Corporation (MDEC) with validating PEPPOL access point providers. These help businesses adopt the new e-invoicing system and issue compliant documents.

Digital certificate

In Malaysia, a digital certificate is mandatory when issuing invoices. It helps verify the sender’s credentials and track the document’s progress.

This encryption helps protect sensitive data and reduce the risk of cyber-attacks and data theft and alteration.

Archiving

After processing an electronic invoice, the sender and recipient must archive it for at least 7 years. Digitizing Malaysia’s economy makes accessing and retrieving records for tax audits easier.

You can also archive your invoices abroad, but you must get permission from the Director General of the Royal Malaysian Customs.

What are the transmission methods for e-invoicing in Malaysia?

Business owners and taxpayers in Malaysia have two e-invoicing transmission methods to choose from, including:

MyInvois portal

The MyInvois portal is a free system for all users and is managed by the IRBM. It allows businesses with minimal transactions to generate and issue electronic invoices manually.

You can use this system to generate one invoice at a time or upload a spreadsheet containing financial data for bulk generation. The MyInvois portal went live on 28 June 2024, providing businesses with testing environments.

The biggest challenge with this option is the need for manual data entry. This makes the portal inefficient for businesses that generate a large volume of invoices.

Application Programming Interface (API)

The Application Programming Interface (API) allows businesses to connect their ERP, invoicing, or accounting systems with the MyInvois portal or an intermediary technology provider. This integration offers automation capabilities, enabling companies to handle large volumes of transactions in real time.

Malaysian businesses can find e-invoicing service providers to help with smooth integration. MDEC validates access point providers to help enterprises partner with reliable e-invoicing partners like Storecove.

An API requires upfront investment in technology and adjustments to your existing systems. This may challenge small and upcoming businesses, which often opt for the MyInvois portal.

Electronic invoicing providers help businesses generate, issue, receive, and process compliance e-invoices.

Steps to implementing e-invoicing in Malaysia

Introducing a new e-invoicing system in your business can bring out operational delays if not done properly. The following are steps to take to implement e-invoicing in Malaysia to adhere to the new e-invoicing regulations:

Step 1: Check for eligibility

The IRBM used a phased approach since not all businesses are ready to adopt e-invoicing at the same time. Small and medium-sized companies are more likely to have difficulty investing in new technological systems.

The first step should be knowing when your business needs to be compliant in order to prepare. The IRBM released the updated guidelines in 2024, but this may change. You must stay updated by frequently checking the IRBM website for new guidelines.

Step 2: Choose your e-invoicing transmission method

Know how many invoices your business generates in a day to know which transmission method. The IRBM’s official portal, MyInvois, is the most affordable option since it is free and has a user-friendly interface. It is easy to use and integrate into any business.

However, it may be efficient for businesses with higher invoicing volumes and complex needs since it requires manual data entry, which can be a resource burden for your company.

Most businesses in Malaysia use a third-party e-invoicing provider to integrate with the MyInvois portal. This eases the burden of keeping up with the new regulations, allowing company owners to focus on more business-critical tasks.

Step 3: Select an electronic invoicing system

If you want to choose another e-invoicing solution that allows automation capabilities, there are various factors to consider to help you ensure a seamless experience. These include:

Electronic invoicing expertise

Your new system should be able to improve your end-to-end processes. Find a reliable provider with enough expertise in e-invoicing technology, process improvement, and optimization. This allows you to get the best value for your investment.

Integration and features

Integration with existing systems is crucial and can help you save significantly on upfront investment costs. Good e-invoicing providers can develop a solution for your business needs while integrating with your legacy systems.

The solution must also provide critical features like automation capabilities, real-time tracking, and data validation.

Scalable and secure

A reliable system provides room for business growth and expansion. It should also be flexible to accommodate changes to e-invoicing regulations that the IRBM may introduce.

The system should also ensure data security, especially for critical financial information. It should align with e-invoicing security protocols to safeguard customer and business data.

Step 4: Configure your system

The e-invoicing provider completes the configuration process and allows you to test and verify its effectiveness. They set up user accounts with appropriate access levels and integrate the solution with your existing systems.

Step 5: Generate and issue e-invoices

With the system configured, you can generate and issue compliant invoices. If the e-invoicing solution is integrated with your existing systems, you will issue invoices as usual, and they will be automatically checked and submitted to the MyInvois portal for validation.

Step 6: Manage responses and process incoming invoices

A robust e-invoicing system provides timely notifications for invoice responses, which may include acceptance, rejection, or requests for clarification. Here are ways to manage these responses:

Rejection

In case of a rejection by the buyer, they must provide specific reasons for rejecting the document. This may be due to errors where the buyer has up to 72 hours after validation to request a rejection.

Upon rejection, the seller receives a notification, and if they agree with the reasons provided, they can cancel the invoice.

Cancellation

If an invoice contains errors after being issued, the supplier can cancel it within 72 hours after validation. They must also provide valid reasons for the cancellation.

If the buyer or seller does not reject or cancel the invoice within 72 hours of validation, all adjustments must include a new electronic document such as a refund note, credit note, or debit note.

What are the types of e-invoices in Malaysia?

When transacting, Malaysian taxpayers must generate the following documents in electronic format and submit them to the IRBM for validation:

Invoices: An invoice is a commercial document that records the sales of goods or services between a buyer and supplier.
Credit notes: Suppliers issue credit notes to account for a decrease in the value of the transaction amount in the issued invoice. This document is not applicable in instances where the seller is refunded money.
Debit notes: A debit note works contrary to a credit note by accounting for an increase in the value of the issued invoice.
Refund notes: Suppliers issue refund notes to confirm a refund of payment from the buyer.
Self-billed invoice: Buyers issue self-billed invoices on behalf of suppliers who are not liable or unable to generate electronic invoices. Self-billed invoices are used in specific circumstances, such as payments to agents, distributors, dealers, and distributors included in the IRBM guidelines.

Challenges businesses face with e-invoicing implementation in Malaysia

Mandatory e-invoicing is a sure way for businesses to enhance efficiency and ensure compliance. However, some companies may encounter obstacles in its adoption, including:

Resistance to change

Some individuals, such as employees, may resist technological advancements in a company for fear of losing jobs. They may oppose the adoption process, making it more difficult and time-consuming to get the e-invoicing system up and running.

Workers who are used to paper invoicing may be reluctant to change, making a strategic implementation plan critical.

Technological transition

Switching to electronic invoicing necessitates a change from manual to automated invoicing processes. The transition may be challenging due to integration since some businesses use outdated systems.

You must ensure employees know all your processes, including acquiring and adjusting to new technologies.

Cybersecurity risks

With the shift to electronic invoicing, businesses are more exposed to cybersecurity risks. E-invoices are transmitted through online platforms, making them vulnerable to potential hacking, data breaches, or unauthorized access.

Ensuring secure storage and transmission of sensitive financial data is crucial. While many e-invoicing providers implement robust encryption protocols, businesses must remain vigilant about cybersecurity and continuously monitor systems for threats.

Regulatory compliance

By July 2025, e-invoicing will be mandatory for all Malaysian taxpayers. Complying with the set requirements can be challenging, especially for businesses using sophisticated technology.

Data accuracy and integration

Ensuring a smooth data interchange between existing systems and a new e-invoicing solution requires careful planning and successful integration. You must partner with a reliable provider to ensure seamless integration and e-invoicing processing.

Initial setup and training costs

While e-invoicing offers long-term savings, the upfront costs associated with system implementation and employee training can be a barrier for some businesses. The cost of acquiring and integrating a new e-invoicing system and training employees on its use can be considerable.

These initial costs may seem prohibitive for small businesses, even though the transition would likely lead to greater efficiency and cost reduction in the long term.

What are the penalties for non-compliance with the e-invoicing mandate in Malaysia?

Failure to issue an electronic invoice for a transaction in Malaysia is an offense under Section 120(1)(d) of the Income Tax Act 1967. Non-compliance can result in imprisonment for up to six months, fines from MYR 200 to MYR 20,000, or both.

What are the pros of e-invoicing for Malaysian businesses?

Digital invoicing helps facilitate streamlined business operations while ensuring compliance with Malaysian invoicing regulations. Here are the benefits businesses will reap from adopting e-invoicing solutions in 2025:

Streamlining operations

E-invoicing automates manual tasks involved in invoicing, such as data entry, calculations, and approval processes. Streamlining operations enables businesses to reduce human error and minimize the time spent on repetitive tasks.

Integrating e-invoicing systems also helps significantly reduce processing time, enabling teams to manage invoices faster and more efficiently. This lets you focus on higher-value work like customer engagement or strategic planning.

Unifyning invoicing

Integrating an e-invoicing solution like the MyInvois system ensures businesses can manage all their invoices from a single platform. This centralization simplifies the entire invoicing workflow.

A unified system enables businesses to maintain consistency in their records rather than dealing with multiple invoicing systems or disparate processes. It also improves accuracy and compliance with the Malaysian tax authorities.

Integrating tax filing

With Malaysia’s tax regulations evolving, especially with the mandatory e-invoicing requirement, automating the filing process saves businesses considerable time. A reliable e-invoicing system can automatically validate and reconcile e-invoices, ensuring they comply with the latest tax laws.

This reduces the burden on accounting departments and decreases the likelihood of errors, late filings, or penalties related to tax discrepancies.

Improving cash flow

Paper-based invoicing often causes delayed payments due to lost invoices or slow processing times. E-invoicing accelerates this cycle. Automating invoice delivery and tracking ensures invoices are sent on time, reducing the chance of missed payments or disputes.

A validated e-invoice ensures that the invoice is correct and easily accepted by clients, resulting in quicker payment cycles. Businesses can also simplify payment terms and easily track an unpaid invoice using a monthly consolidated e-invoice.

Digitizing reporting and statistics

E-invoicing allows businesses to automatically generate comprehensive reports, providing real-time data on invoicing performance. This data is crucial for identifying inefficiencies, monitoring cash flow, and optimizing the billing process.

Access to digitized records makes tracking trends, generating tax reports, and analyzing monthly or yearly revenue easier. Over time, these insights will help businesses refine their invoicing process and improve decision-making.

Cost reduction through paperless invoicing

A transition to paperless invoicing drastically reduces paper, printing, and business postage costs. Besides being environmentally friendly, digital invoicing also cuts down on administrative overhead and resource allocation for invoicing.

Companies can further reduce document storage and retrieval costs, as e-invoicing systems offer cloud storage options that are secure, easy to access, and cost-efficient compared to physical storage methods.

Takeaway: Maximizing e-invoicing potential for businesses in Malaysia

The mandatory e-invoicing system for Malaysian companies is rapidly becoming necessary for compliance, operational efficiency, and cost reduction. Embracing digital invoicing helps businesses streamline operations, improve cash flow, and stay on top of tax filing obligations.

However, overcoming the implementation challenges requires careful planning, the right e-invoicing solution provider, and a strategic approach to integration.

For businesses looking to remain competitive in 2025, adopting an e-invoicing system that ensures compliance while optimizing invoicing processes is essential.

At Storecove, we help businesses ensure a smooth transition and seamless adoption of e-invoicing. Schedule a consult with one of our electronic invoicing experts.

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