What Businesses Need to Do to Follow E-Invoicing Guidelines from LHDN (2025)

E-invoicing in Malaysia is a digital tax compliance requirement issued by LHDN (Lembaga Hasil Dalam Negeri), also known as IRB (Inland Revenue Board) to close revenue gaps, reduce fraud, simplify audits, and speed up business processes.

“LHDN estimates Malaysia loses billions annually to invoice fraud and under-reporting. E-invoicing aims to increase transparency and reduce fraud.”

It requires all invoices, credit notes, and debit notes to be transmitted electronically to LHDN in real-time or near real-time through the MyInvois Portal or API (Application Programming Interface). Businesses must follow phased timelines between 2024 and 2027.

Quick Comparison: Manual vs Integrated E-Invoicing

How Does E-Invoicing Work in Malaysia?

LHDN’s model is based on Continuous Transaction Controls (CTC), where all e-Invoices must be validated before being sent to the buyer.

The core concept of e-Invoicing in Malaysia involves 4 parties:

1. Supplier (Issuer): prepares and submits invoice
2. LHDN: receives invoice, validates it, adds a digital signature
3. Recipient (Customer): receives validated invoice
4. MyInvois Platform: LHDN’s central hub managing all e-Invoice exchange

E-Invoicing Workflow (with MyInvois Portal)

Example: A furniture store in Penang generates an invoice and submits to LHDN, it will be validated instantly and returned with a unique UUID and QR code. The buyer scans it to confirm authenticity.

Types of Invoices Covered

Malaysia’s model covers all major invoice types, including:

• Standard Invoices: For goods and services sold
• Credit Notes:  Issued when reducing invoice amounts (e.g., refunds or return)
• Debit Notes:  For increasing payable amounts
• Self-Billed Invoices:  When buyer issues invoice 
• Consolidated Invoices:  Prepared weekly/monthly for compiling small transactions

What’s in a Valid e-Invoice?

Who Must Comply With E-Invoicing?

All taxpayers operating business and undertaking commercial activities in Malaysia, including MSMEs and multinationals are required to issue e-Invoice, in accordance with the phased mandatory implementation timeline.

Phased deadlines depending on annual turnover:

Source: Inland Revenue Board of Malaysia, “IRBM e-Invoice Guideline,” Section 1.5

Tip: Businesses with annual turnover or revenue below RM500k do not need to submit e-invoice.

What to Prepare for E-Invoicing?

Preparation is key to avoid disruptions, audit risks, and non-compliance penalties. Here’s a checklist to get started.

Step 1: Identify Affected Workflows
Start by mapping out all the processes in your business where invoices are issued such as sales, point-of-sale (POS) systems, and accounting. This helps you pinpoint exactly where the e-Invoicing system needs to be integrated.

Step 2: Appoint a Compliance Lead
Assign a dedicated person or team to manage your e-Invoicing rollout. This improves project accountability and ensures someone is overseeing coordination with LHDN and system vendors.

Step 3: Train Your Team
Educate your staff on how e-Invoicing works and how it will impact their roles. This step is critical to reducing errors and preparing your business for smoother audits and compliance checks.

Step 4: Assess Your Current Software
Review the compatibility of your existing systems including ERP, accounting, or POS software with the e-Invoicing requirements. This helps you decide whether upgrades or third-party API integrations are necessary.

Step 5: Register for the MyInvois Portal
Finally, sign up for LHDN’s official MyInvois platform. This free portal allows you to submit and validate invoices directly with the tax authority, ensuring your transactions are compliant.

Tip: If currently using software like SQL, Autocount, or QuickBooks, check with the vendor whether the app is LHDN-approved for e-Invoicing API integration.

What Systems Are Compatible?

LHDN allows 2 methods for invoice transmission:

• MyInvois Portal

Best For: Small businesses

Notes: Manual entry through a web interface; no accounting software required

• API Integration

Best For: Midsize to large companies

Notes: Enables direct, system-to-system invoice submission via API for automation

Key Documents You’ll Need to Prepare

• Business Registration (SSM): Used to verify the taxpayer’s identity.
• Taxpayer Identification Number (TIN): Required for generating and issuing invoices.
• Digital Certificate (for API Integration): Authenticates your system for secure invoice submission.
• Invoice Format Templates: Helps standardise invoice fields such as buyer details, tax codes, and itemisation.

Note: Malaysia will adopt the PEPPOL-based invoice format in future, so it’s good practice to align with international e-Invoice structures early.

Common Pain Points & Fixes

A logistics company in KL (turnover RM30m) integrated API with AutoCount.

• Reduced manual entry errors by 60%.
• Cut invoice turnaround time from 3 days to 30 minutes.
• Audit-readiness improved with digital record trails.

What Data Must Be Included in E-Invoices?

E-invoices must follow structured XML/JSON format with mandatory fields:

• Seller & Buyer Info (TIN, name, address)
  
• Invoice Date & Number
  
• Itemised Description (MSIC code/product/service name, quantity, unit price)
  
• Tax Amount (SST, exemptions, if any)
  
• Total Amount (With and without tax)
  
• Digital Signature / UUID from LHDN

Our Recommendation: Use your accountant or ERP to map MSIC codes correctly—misclassification can trigger tax queries.

How to Submit an E-Invoice in Malaysia

1. Via MyInvois Portal (Manual Upload)

• Register on LHDN’s MyInvois portal.
• Fill in structured invoice template.
• Upload invoices manually for validation.

2. Via API (Automated Integration)

• Connect your accounting or ERP system with LHDN’s API.
• Invoices are auto-generated and transmitted in real time.
• Useful for companies with >500 invoices monthly.

What Happens After Submission?

• Validation: LHDN checks structure, data, and compliance.
• QR Code: Approved invoices are tagged with UUID and QR for verification.
• Notification: Buyer and seller receive confirmation.

Tip: If rejected, corrections must be resubmitted within a specific timeframe.

What Are the Penalties for Not Complying with e-Invoicing?

Non-compliance with Malaysia’s e-Invoicing mandate can result in audits, fines, and reputational damage.

LHDN has made it clear that e-Invoicing is part of formal tax enforcement and non-compliant businesses will be penalised under existing tax laws may resulting in audits, fines, and reputational damage.

Legal Penalties Under the Income Tax Act 1967

Failure to issue or submit e-Invoices properly may trigger the following enforcement actions:

Note: LHDN can also enforce compounded penalties, especially for recurring or wilful non-compliance.

Non-Compliance During Grace Periods

Even during transitional rollout phases, businesses must demonstrate intent to comply.

Non-compliance isn’t worth the risk—set up early to avoid penalties.

Conclusion: Following E-Invoicing Guidelines the Smart Way

By 2027, e-invoicing will be mandatory for every Malaysian business, regardless of size. Early preparation ensures you stay compliant, avoid penalties, and streamline financial operations.

Instead of scrambling before deadlines, start now:

• Choose your method (Portal vs API).
• Train your staff or engage an outsourcing partner.
• Standardise data entry and invoice workflows.

Need help communicating your compliance roadmap to clients, investors, or stakeholders? A trusted PR agency in Malaysia can turn your e-invoicing transition into a compelling business story.

Disclaimer: The information in this article is for general guidance only and is not professional tax or legal advice. E-invoicing regulations are subject to change. For specific advice, please consult a qualified tax advisor or accountant. We are not liable for any actions taken based on this information.