Understanding Malaysia's e-Invoice Timeline: Is Your Business Ready for the 2025 Mandate?
Malaysia's e-Invoicing system represents one of the most significant tax administration transformations in recent years. As implementation deadlines approach in 2025 and 2026, businesses across all sectors must prepare for this digital shift or risk falling behind in compliance.
Malaysia's Phased e-Invoice Implementation Timeline
The Inland Revenue Board of Malaysia (IRBM) has adopted a phased approach to e-Invoice implementation, giving businesses of different sizes varying timelines to prepare:
Phase 1 (October 1, 2024) : Businesses with annual turnover exceeding RM100 million
Phase 2 (January 1, 2025) : Businesses with annual turnover between RM25 million and RM100 million
Phase 3 (July 1, 2025): Businesses with annual turnover between RM500,000 and RM25 million
Phase 4 (January 1, 2026): Businesses with annual turnover between RM150,000 and RM500,000
This staggered implementation allows larger enterprises to lead the way while giving smaller businesses additional time to adapt their systems and processes.
How Is Your Timeline Determined?
Your business's implementation date is determined based on annual turnover or revenue, using either:
The statement of comprehensive income in your 2022 audited financial statements, or
Your annual revenue reported in the tax return for the year of assessment 2022
The implementation date is July 1, 2025, for new businesses established from 2023 onwards with revenue exceeding RM500,000.
Those with revenue up to RM500,000 must comply by January 1, 2026. Businesses starting operations from 2025 onwards must implement e-Invoice by January 1, 2026, or upon commencement of operations.
The 6-Month "Interim Relaxation Period"
Recognising the challenges of transitioning to a new system, the Malaysian government has provided a six-month grace period following each implementation phase.
During this interim relaxation period, businesses can:
Issue consolidated e-Invoices for all activities and transactions, even for industries that would normally require individual e-Invoices
Issue consolidated self-billed e-Invoices for all applicable circumstances
Use simpler formats for transaction descriptions in consolidated e-Invoices
Continue normal operations without prosecution action for non-compliance, provided they meet minimum requirements
These concessions are designed to ease the transition, but businesses should still use this period to work toward full compliance before the relaxation period ends.
Key Exemptions to Be Aware Of
Wait, not all businesses and transactions fall under the e-Invoice mandate.
Current exemptions include:
Individuals not conducting business
Businesses with an annual turnover below RM150,000
Foreign diplomatic offices
Statutory bodies for certain functions (until July 1, 2025)
International organisations (until July 1, 2025)
Additionally, specific income and expenses are exempt, including employment income, pension, alimony, zakat, and certain types of dividend distributions.
Assessing Your Business Readiness
With less than a year remaining for many businesses, here's how to evaluate your preparedness:
1. Technical Infrastructure Assessment
Do you have systems capable of generating e-Invoices in the required XML or JSON formats?
Have you determined whether you'll use the MyInvois Portal or API integration?
Is your accounting software compatible with e-invoice requirements, or will you need updates?
2. Process Readiness
Have you mapped your current invoicing processes against e-Invoice requirements?
Have you identified which classification codes apply to your common transactions?
Are your staff trained on the new requirements and workflows?
3. Data Management
Can you accurately capture all required fields for e-Invoices?
Do you have systems to store your customers' Tax Identification Numbers (TINs)?
How will you manage the transition period when some suppliers and customers are not yet e-Invoice compliant?
Next Steps: Creating Your Implementation Roadmap
If your business falls under Phase 3 or 4 (implementation in 2025-2026), now is the critical time to begin preparations:
Form an implementation team that includes accounting, IT, and operations representatives
Evaluate software options, including whether to use the free MyInvois Portal or invest in API integration
Develop a data strategy for capturing required customer information
Create training plans for staff who will handle invoicing processes
Establish new SOPs that incorporate e-Invoice requirements
Begin communicating with business partners about the upcoming changes
The Benefits Beyond Compliance
While e-Invoice implementation may seem like a compliance burden, forward-thinking businesses are recognising significant advantages:
Reduced manual processing and paperwork
Decreased errors in invoice processing
Faster payment reconciliation
Improved cash flow management
Enhanced data analytics capabilities
Reduced environmental impact through paperless operations
These benefits often outweigh the initial implementation costs, especially for businesses that embrace the change as an opportunity to digitise and streamline financial workflows.
Conclusion
The 2025 e-Invoice mandate is approaching rapidly, and businesses in Malaysia must assess their readiness and begin preparations immediately.
By understanding their implementation timeline, effectively leveraging the interim relaxation period, and creating a comprehensive implementation plan, they can navigate this transition smoothly while potentially unlocking new efficiencies in their financial operations.
For those who have yet to start their e-Invoice journey, the time to act is now—before compliance becomes mandatory and your business faces potential penalties for non-compliance.
About the Author
Mr. Chin Chee Seng is the Independent Non-Executive Director of AutoCount and the Founder of CCS Group.
This e-Invoice News series is a collaboration with AutoCount.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
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