Malaysia e-Invoice Implementation: Phases & Timelines (2025 Update)

The implementation of e-invoicing in Malaysia is a major step toward the digital transformation of Malaysia’s tax administration and business processes. With the e-invoice implementation timeline already in motion, businesses must stay informed about the latest updates, timelines, and compliance requirements to ensure a seamless transition. 

This blog provides a comprehensive overview of Malaysia’s e-Invoicing implementation timeline, including the phase 1, 2, 3 and 4 implementation and relaxation period details.

E-Invoice Guidelines Update - 21st February 2025

• Change in E-Invoice Implementation Timelines & Relaxation Periods: Businesses with revenue of more than RM150,000 and up to RM500,000—Implementation will be mandatory from 1 January 2026, with a relaxation period until 30 June 2026.
• Additional Clarifications: For new businesses or operations commencing in 2025 onwards, the e-invoice implementation date is 1 January 2026 or the date of operation commencement.

Understanding e-Invoicing

The e-Invoice initiative in Malaysia is a government-led effort to digitize the invoicing process for businesses. It replaces traditional paper or PDF invoices with a standardized, machine-readable format that can be seamlessly integrated with accounting systems and tax authorities. The Inland Revenue Board of Malaysia (IRBM) has introduced the MyInvois System, a centralized platform for e-Invoice validation, storage, and sharing.

Malaysia e-Invoicing Implementation Timeline

E-invoices for large corporations in Malaysia began on August 1, 2024, as part of a phased rollout. The e-invoice implementation timeline is structured across three phases based on business turnover:

Relaxation Period for e-Invoice Implementation

The Inland Revenue Board of Malaysia (IRBM) has introduced a six-month relaxation period for businesses in each phase to ease the transition. During this time:

• Businesses can issue consolidated e-invoices for all transactions, including B2B transactions.
• More flexible product/service descriptions are permitted.
• No penalties will be imposed under Section 120 of the Income Tax Act 1967 for non-compliance. 

This relief allows businesses to align their systems before full enforcement.

Key Phases of Malaysia’s e-Invoice Implementation

Businesses falling under different phases of implementation has separate compliance requirements as of now. 

Phase 1 e-Invoice Implementation

For businesses with annual revenue less than RM100M, Starting February 1, 2025, Phase 1 businesses must comply with full e-invoice requirements, including:

• B2B Invoice Validation: Separate e-invoices for B2B transactions, B2C transactions can be consolidated.
• Schema Compliance with IRBM guidelines.
• System Readiness: Businesses must validate historical data, conduct system stress testing, and implement automated workflows.

Phase 2 e-Invoice Implementation

For businesses with annual revenue between RM 25Million – RM100 Million during their relaxation period until June 30, 2025, Phase 2 businesses can:

• Issue consolidated e-invoices for B2B and B2C transactions.
• Manually upload e-invoices via the MyInvois Portal (API integration optional).

Recommendations for Phase 2 Businesses:

• ERP System Gap Analysis to ensure e-invoicing compatibility.
• Gradual Integration of ERP and accounting systems.
• Pilot Testing for high-volume transactions.
• Staff Training on rejection workflows & schema updates.

After June 30, 2025, full compliance is required, including mandatory separate B2B validation.

Phase 3 e-Invoice Implementation

Starting July 1, 2025, Malaysian businesses with turnover less than RM 25 Million and RM500K must adopt e-invoicing.

Preparation Checklist for Phase 3 Businesses:

• Register for MyInvois Developer Sandbox by April 30, 2025
• Digitize supplier & customer master data
• Evaluate cost-effective middleware solutions
• Plan API integrations with MyInvois

Phase 4 e-Invoice Implementation

Starting January 1, 2026, all remaining Malaysian businesses except those with turnover below RM150K must adopt e-invoicing.

Preparation Checklist for Phase 3 Businesses:

• Check System feasibility and analyze which model is preferred for your business.
• Digitize supplier & customer master data
• Evaluate cost-effective middleware solutions
• Plan API integrations with MyInvois

e-Invoice Non-Compliance Penalty

Starting February 1, 2025, Phase 1 businesses must fully comply with e-invoicing regulations, with penalties enforced for any violations. Similarly, Phase 2 businesses will face enforcement beginning July 1, 2025.

Failure to issue an e-invoice is considered an offense under Section 120(1)(d) of the Income Tax Act 1967. Non-compliant businesses may be subject to:

• A fine ranging from RM200 to RM20,000, or
• Imprisonment for up to six months, or
• Both penalties, for each instance of non-compliance.

How ClearTax Can Help Meet e-Invoicing Implementation Deadlines?

ClearTax is an MDEC-accredited e-invoicing solution provider in Malaysia, offering seamless API-based integration to help businesses comply with MyInvois requirements.

• End-to-end ERP integration with MyInvois for automated e-invoicing
• Multi-channel e-invoicing support (POS, e-commerce, ERP, and accounting software)
• Real-time validation & compliance monitoring to prevent penalties
• Buyer portal & self-billing support to streamline B2B & B2C invoicing

Book a Demo with ClearTax to ensure 100% e-invoicing compliance before the mandatory deadlines.

Conclusion

Malaysia’s e-invoice implementation timeline is structured to ensure a progressive rollout across three phases:

• Phase 1 (Aug 2024): Large corporations (> RM100M turnover)
• Phase 2 (Jan 2025): Mid-sized businesses (RM25M – RM100M turnover)
• Phase 3 (Jul 2025): Small businesses (RM25M – RM500K turnover)
• Phase 4 (Jan 2026): Small businesses (> RM150K turnover)

During the relaxation period, businesses can use consolidated invoices, avoid penalties, and adapt their systems. After the compliance deadline, strict penalties for missing UINs, late submissions, or schema errors will apply.