On 16th August 2023, Lembaga Hasil Dalam Negeri (LHDN) announced that e-Invoicing will be implemented in Malaysia.
e-Invoice requires all businesses to submit their invoices to LHDN for validation BEFORE sending it to their customer.
e-Invoicing implementation timeline
When do businesses need to comply with e-Invoicing?
e-Invoicing will be mandatory for all businesses and will be implemented in phases starting from August 2024.
1st August 2024
Businesses with annual turnover of RM100m or more
1st January 2025
Businesses with annual turnover of RM25m or more
1st July 2025
All other businesses.
In early July 2024, it was announced that businesses with annual turnover of RM150,000 or less will be exempted.
Voluntary opt-in
Businesses may opt-in for e-Invoicing before the specified timelines if they prefer.
Updates
Transition period
On 26th July 2024, LHDN announced a six-month transition period for businesses in phase 1 of the e-invoicing implementation due to begin 1st August 2024.
During this transition period, businesses have the option to either submit each invoice for validation, or issue a normal invoice and instead submit consolidated details on the 7th day following the end of each month.
3.8 million e-invoice transactions
It was reported in The Star that since the commencement of phase 1 of e-Invoice, 3.8 million transactions have been recorded in LHDN’s MyInvois portal.
From 1st August to 10th August, 3,500 companies have submitted their invoices.
How is turnover determined?
Turnover for e-Invoicing compliance is based on the reported income for 2022.
Audited accounts
If your accounts need to be audited, then turnover is based on the accounts for the financial year ended 2022.
If there has been a change in financial year, the turnover is to be pro-rated.
Tax returns
For businesses such as sole proprietors, partnerships, etc., where audited accounts are not required, the turnover is based on the tax returns submitted for the year of assessment 2022.
New businesses
If you are a newly setup business, where you do not have turnover for 2022, then you will need to comply with e-Invoicing from 1st July 2025.
Implications of non-compliance
Penalties
For the supplier, failure to submit affected transactions for validation can incur a penalty of RM20,000.00 per invoice.
Proof of cost and expenses
For customers who conduct business, purchases that have not been validated may be disallowed.
The invoice that your supplier sends to you must be validated for the expense to be allowed for tax purposes.