E-Invoice Implementation in Malaysia

The e-Invoice system is a critical step in Malaysia’s digital transformation of its tax administration. Designed to improve tax compliance and efficiency, the system mandates businesses to issue invoices in a machine-readable format (XML/JSON). The Inland Revenue Board of Malaysia (IRBM) has set clear timelines for the implementation of the e-Invoice system based on business turnover.

This guide provides a thorough breakdown of the e-Invoice implementation start date and exemption scenarios. It also covers the impact on subsidiaries and related companies, helping businesses understand when they will be required to comply with the system.

E-Invoice Implementation Timeline

The implementation of e-Invoices will occur in phases, based on a company’s annual turnover. The following is the official timeline for compliance:

Implementation Date	Annual Revenue Threshold	Annual Revenue Threshold
1 August 2024	Exceeding RM100 million	Large enterprises
1 January 2025	RM25 million - RM100 million	Medium-large enterprises
1 July 2025	RM5 million - RM25 million	Medium enterprises
1 January 2026	RM1 million - RM5 million	Small enterprises
1 July 2026	Below RM1 million	Micro enterprises

However, MSMEs with annual turnover below RM500,000 are exempt from the e-Invoice requirement. Despite this exemption, the government encourages voluntary adoption of the e-Invoice system.

Exemption Criteria for MSMEs: Three Key Scenarios

In general, businesses with an annual turnover below RM500,000 are exempted from the mandatory e-Invoice requirement. However, three scenarios exist where MSMEs are not exempted from issuing e-Invoices, even if their revenue is below the RM500,000 threshold.

For sole proprietors, if they run multiple businesses, the combined total revenue of all their businesses is considered when determining whether they are exempt. If the combined revenue exceeds RM500,000, they are required to implement e-Invoice, regardless of the revenue of individual businesses.

Mr. Ali operates three businesses:

Business A: RM250,000
Business B: RM180,000
Business C: RM120,000

The total combined revenue of RM550,000 exceeds the RM500,000 threshold. Hence, Mr. Ali will be required to implement e-Invoice starting 1 January 2028, two years after surpassing the threshold.

If an MSME is a subsidiary of a company whose annual turnover exceeds RM500,000, the subsidiary is not exempted from the e-Invoice system. Even if the subsidiary’s revenue is below RM500,000, it must comply with the e-Invoice rules because it is part of a larger corporate group that is mandated to implement e-Invoice.

If a company is part of a related company group, and any one of the related companies exceeds RM500,000 in revenue, the entire group must comply with the e-Invoice system. This applies regardless of the individual revenue of each company within the group.

Company A owns 30% of Company B.
Company A has an annual revenue of RM100 million and is required to implement e-Invoice.
Even if Company B has revenue of RM400,000, it is still required to implement e-Invoice because it is part of the related company group of Company A.

Implementation Timeline

MSMEs that exceed the RM500,000 threshold must implement e-Invoice from 1 January of the second year after they exceed the threshold.

Winner Fertilizer Sdn. Bhd. exceeded RM500,000 in revenue as of 31 August 2026. Therefore, they must begin issuing e-Invoices starting 1 January 2028.

No Re-Exemption

Once a business has been mandated to implement e-Invoice, it cannot be exempted again, even if its annual turnover falls below RM500,000 in subsequent years.

Even if Winner Fertilizer Sdn. Bhd. has revenue of RM480,000 in 2027, it must still implement e-Invoice starting 1 January 2028.

FAQs

Are MSMEs in Malaysia required to issue e-Invoice?

In general, businesses with an annual turnover below RM500,000 are exempted from the mandatory e-Invoice requirement. However, there are three specific scenarios where this exemption does not apply.

How will sole proprietorships be affected by e-Invoice implementation?

For sole proprietorships with more than one business, the combined revenue of all businesses registered under the same name is used to determine whether the RM500,000 threshold has been exceeded.

Can MSMEs be exempted again if their revenue falls below RM500,000?

No, once a business has been mandated to implement e-Invoice, it cannot be exempted again, even if its annual turnover falls below RM500,000 in subsequent years.

Learn E-Invoicing with Our Expert-Led Classes

Ready to master e-invoicing and streamline your business? Join our comprehensive class and get hands-on guidance!

Join Our E-Invoicing Class

Explore AutoCount solutions that make your business run smoothly

Payroll / HRM Solutions

Paying your workers easy! With AutoCount, you can simplify how you give out salaries and employee benefits.

POS System Solutions

Selling things easy! Use our strong cash register system to handle sales quickly. This is super important for stores!

E-Commerce Solutions

Sell things online easily! With AutoCount, you can handle online sales and process orders smoothly using our e-commerce solutions.

Mobile App Business Solutions

Manage your business data on-the-go with AutoCount's mobile solutions. Handle your information conveniently from your phone.

Accounting Solutions

Money tasks easy! Use AutoCount to write down and see how your money is doing, from the start to the reports.

F&B Solutions

Get special help for food and drinks! We have solutions that take care of orders, keeping track of food, and selling things – perfect for restaurants and cafes!

Customized Accounting Software

Make your own special money program! AutoCount can create customized accounting software just for you, addressing exactly what you need.