E-invoicing in Malaysia: preparing for mandatory compliance in 2025

The Inland Revenue Board of Malaysia (IRBM) now requires all businesses earning over RM 100 million to generate and send an e-invoice for their B2B, B2G, and B2C transactions. 

On January 1st, 2025, this is set to apply to all taxpayers, no matter their income. If you’re running a small business, you will be expected to comply with the IRBM's new e-invoicing Malaysia requirements. While this might seem stressful, it’s easy once you understand how the new electronic invoice system works. 

Malaysia has joined 60+ countries in digitalising tax compliance. Countries like the Philippines, North Korea, and Italy have already seen major benefits from their e-invoicing policies, including fewer instances of tax fraud. 

Keep reading for a comprehensive guide to the new e-invoicing policies in Malaysia and advice on meeting your new obligations in 2025. 

What is e-invoicing? Understanding the basics

E-invoicing isn’t a new concept. Chile was the first country to introduce government electronic invoicing software back in 2001, and now, more than 100 nations^[1] have some sort of e-invoicing legislation in place. In Malaysia, mandatory einvoicing for all taxpayers will only happen in 2025, but it’s still essential to understand the requirements beforehand. 

E-invoicing is designed to streamline your compliance with the IRBM by documenting all income in an electronic invoice format. That way, the IRBM can register and categorise your invoice, automating the calculation of your tax obligations. You can use e invoicing services to create and send your invoices to the IRBM, simplifying your financial processes. 

E-Invoicing compliance in Malaysia: key deadlines and requirements

It’s crucial to understand the new e invoicing Malaysia legislation as it moves towards a fully digital tax system. 

For medium-sized businesses operating in Malaysia, the deadline for switching to the new electronic invoice system is January 1st, 2025. All taxpayers, regardless of size and income, are expected to comply by July 1st, 2025. 

All businesses are expected to use an approved electronic invoicing system, like QuickBooks. This ensures that all submitted invoices meet the specifications set out by the IRBM.

The benefits of e-invoicing for Malaysian businesses

Setting out e-invoicing legislation isn’t just beneficial for governments—it also helps businesses to streamline their financial processes so that they can submit accurate and timely tax returns.

Electronic invoice processing is also guaranteed to save your business time and effort, as software performs manual entry tasks for you. Automating invoicing also means you can speed up your payment cycles so you have a steady cash flow and better liquidity. 

The benefits of electronic invoicing also extend to your tax obligations. It makes it far easier to comply with the IBRM, ensuring you can submit accurate tax returns on time. When it’s time to file, electronic invoicing software like QuickBooks will file records, making it easier for you to find the information you need.

How e-invoicing works in Malaysia: step-by-step guide

Here’s a quick guide to using the upcoming electronic invoice system in Malaysia, including formatting rules. 

1. Generate Your Electronic Invoice - Create an electronic invoice using accounting software like QuickBooks. You must stick to the XML or JSON format, as stated by the IRBM. 
2. Integrate Electronic Invoicing Software With Your Existing Systems - Integrate e-invoicing providers, like ClearTax and QuickBooks, with your other business systems. This ensures that your invoices are processed and stored correctly. 
3. Submit Your Invoice For Validation - Submit your electronic invoice to the IRBM for validation. They will verify the accuracy of your invoice and whether it complies with tax regulations. 
4. Get Validated - Once you’re validated, both you and your client will be notified. It will be embedded with a QR code, so you can both verify that the invoice is authentic. 
5. Receive a Digital Certificate - A digital certificate from the IRBM will be sent to you to be signed. It will include your Trade Register Number (TIN) and any extra information you require.

Choosing the right e-invoicing provider for your business

When it’s time to choose an e-invoicing provider for your business, you should look for three main features: real-time VAT reporting, seamless integration, and scalability. Here’s why: 

• VAT Reporting: Try choosing a provider with real-time VAT reporting features. This will help you stay compliant with Malaysian tax regulations while simultaneously avoiding any penalties. 
• Integration: Seamless integration with your existing ERP and accounting systems is key. Without it, you’ll find the electronic invoicing process difficult to manage. 
• Scalability: Your software should always grow with your business. It should be able to handle growing transactions and multiple invoices at once. 

One of the most popular e-invoicing providers in Malaysia is QuickBooks, which offers these three features and more. This will help you comply with the IRBM. 

Global trends in e-invoicing: what Malaysia can learn

Over 100 nations have already jumped on the global e-invoicing trend. Italy and the Philippines are currently leading the way with e-invoicing regulations designed to reduce tax fraud and improve how businesses comply with their tax obligations. 

South Korea is one of the biggest players, consistently evolving its einvoicing legislation. As of 2023, the country is issuing self-billing tax invoices^[2]. 

As Malaysia implements its e-invoice policy, local businesses will benefit. They can improve their financial accuracy and ensure they comply with ever-changing tax regulations. 

Preparing for e-invoicing: next steps for Malaysian businesses

Your business needs to take immediate action if you want to meet the 2025 mandatory e-invoicing in Malaysia. Focus first on finding the right e-invoicing provider that can seamlessly fit into your business’s existing software and help you meet requirements set out by the IRBM. 

With deadlines for e-invoicing approaching fast, signing up for QuickBooks will help your business transition towards digitisation. Try our 30-day free trial to learn more about how our software can help you send e-invoices to the IRBM. 

Sources referenced

1. https://innovatetax.com/blog/e-invoicing-compliance/#:~:text=Chile%20became%20the%20first%20country,this%20only%20applies%20to%20B2G
2. https://sovos.com/en-gb/blog/global-vat/south-korea-e-invoicing-and-self-billing-invoices/