The Inland Revenue Board of Malaysia (LHDN/IRB) is stepping up its push for e-invoicing, aiming to improve efficiency, reduce errors, and streamline tax reporting. However, understanding who is affected, who is exempt, and the deadlines is crucial for businesses of all sizes.
I. Small Businesses Exempted
- Businesses with annual sales below RM 500,000 are fully exempt from mandatory e-invoicing.
- This exemption acknowledges that smaller businesses may not yet have the resources or systems in place to implement digital invoicing.
- Exempt businesses are still encouraged to adopt e-invoicing voluntarily to prepare for the future and improve internal accounting efficiency.
II. Extended Deadline for Medium-Sized Businesses
Companies with annual sales between RM 1 million and RM 5 million have a grace period until 1 January 2026.
This delay allows these businesses to:
- Upgrade invoicing systems to support e-invoices.
- Train finance and accounting staff on digital compliance.
- Test integration with IRB’s e-invoice platform to avoid submission errors.
III. Why E-Invoicing is Important
- Accuracy & Compliance: E-invoicing reduces human errors in invoicing, improving the accuracy of tax reporting.
- Speed & Efficiency: Digital invoices streamline processing for both businesses and IRB.
- Audit Readiness: E-invoices are automatically stored digitally, making it easier to retrieve and verify records during audits.
IV. Steps for Businesses to Prepare
- Check Annual Sales: Determine whether your business is exempt, in the extended period, or required to comply immediately.
- Assess Systems: Ensure accounting software can generate e-invoices in the format required by IRB.
- Staff Training: Train staff to issue, record, and manage e-invoices.
- Trial Run: Conduct a test submission to IRB before your first official e-invoice.
- Monitor Updates: IRB may release further guidance or FAQs, so stay informed.
V. Benefits of Acting Early
Even if your business is exempt or has an extended deadline, early adoption offers advantages:
- Reduced risk of last-minute technical issues.
- Improved internal accounting efficiency.
- Familiarity with digital systems, which will be essential for future regulatory updates.
The IRB’s approach balances enforcement with practicality. Small businesses are protected from immediate compliance burdens, while medium-sized businesses are given extra time to transition. Regardless of size, businesses that start preparing now will be ahead of the curve and ready for full digital invoicing in Malaysia.
To know more, refer here.