Malaysia's E-Invoicing Mandate: Who Must Comply and Why?

Oct 10, 2023
Nandinee Biswas

The landscape of business processes and transactions is constantly evolving due to technological advancements. Electronic invoicing, or e-Invoicing, has emerged as a transformative solution, streamlining invoice processing and contributing to digital transformation in various industries. Malaysia is also taking significant steps towards adopting e-Invoicing to enhance economic efficiency and simplify tax administration.

The Malaysian government will be mandating the use of e-invoicing for all businesses. This mandate requires companies to issue and receive invoices electronically. The goal is to boost productivity, transparency, and oversight in financial management. However, the question arises: who falls under the ambit of the e-invoicing mandate in Malaysia?

In this post, we will delve into the importance of E-invoicing in Malaysia, the specifics of the businesses affected, and elucidate the necessary steps they need to take to align with the revised prerequisites.

What Does E-invoicing Mandate Entails?

The Malaysian Inland Revenue Board (IRB) has initiated the implementation of an e-Invoicing system, targeting businesses with an annual sales threshold of RM100 million. This first stage of implementation is set to begin in June 2024

This move by the Malaysian Inland Revenue Board (IRB) reflects a comprehensive approach to modernizing tax administration and streamlining invoicing processes. It aligns with global trends, where countries worldwide are embracing e-Invoicing to modernize their tax administration processes and improve transparency.

The e-invoicing process will involve creating files in specific formats and undergoing real-time verification through the Continuous Transaction Controls (CTC) Clearance model. Small and medium-sized businesses will also be accommodated through web-based solutions. The IRB's commitment to releasing comprehensive guidelines further underscores their dedication to a seamless transition.

Malaysian E-invoicing Details

Process and mechanism

The e-Invoicing process involves creating invoice files in specific formats, which are then submitted to the IRB's platform. This is done using a Continuous Transaction Controls (CTC) Clearance model, which ensures the accuracy and compliance of the invoicing data. This approach helps prevent errors, fraud, and tax evasion by monitoring transactions in real-time. The key elements include XML invoices and QR codes for validation. Businesses with Malaysian interests must prepare for these changes to ensure compliance and avert tax penalties.

Incentives for small businesses

Recognizing the diverse nature of businesses, especially small enterprises without sophisticated e-invoicing systems, the IRB offers web-based solutions to aid their compliance with the e-invoicing mandate. It simplifies invoicing by generating, sending, receiving, and processing electronic invoices, reducing errors and time consumption.

Utilizing the framework, Malaysia's national e-invoicing network aims for efficiency. Implementing ERP systems and other business software can aid small businesses in navigating the complexities and requirements of e-invoicing, facilitating compliance, and streamlining financial processes. This step ensures that even small companies without advanced tools can align with the new requirements.

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Implementation timeline and compliance

The implementation of the e-Invoicing mandate will occur in stages. Businesses can volunteer to participate in a pilot phase, allowing them to test and adapt their systems before e-invoicing becomes a mandate for all qualifying businesses. The mandatory e-invoicing compliance deadline for all tax-registered companies, encompassing B2B, B2G, and B2C transactions, is set for 2027. They must adapt to XML format, QR codes, and valid networks, preparing to avoid penalties.

Preparation and readiness

To ensure a smooth transition and alignment with the e-Invoicing mandate, businesses are advised to engage in several preparatory steps. These include engaging in stakeholder conversations, thoroughly understanding the e-invoicing processes, and assessing the compatibility of their existing ERP or other business software with the new.

Impact and Benefits

The e-invoice adoption in Malaysia will significantly affect businesses and the broader economy. It will lead to improved efficiency in invoice alignment, reduced paperwork, and enhanced accuracy in transaction records. Additionally, e-Invoicing aligns with the broader digital transformation efforts, driving economic efficiency and transparency.


The e-Invoicing mandate in Malaysia reflects the country's commitment to adopting modern technological solutions for tax administration and business processes. Businesses are encouraged to prepare early for the transition, ensuring they have the necessary systems and knowledge to align with the new requirements and benefit from the efficiency gains of e-Invoicing.

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