Information & Resources
Who Must Comply With E-Invoice And Who Can Be Exempted From E-Invoice?
Malaysia LHDN E-Invoice - Part 4
The Malaysian government has implemented a mandatory e-invoicing system to streamline tax processes and enhance transparency. Businesses with an annual turnover of RM100 million or more are required to implement e-invoicing by August 1, 2024, while all other businesses must comply by July 1, 2025.
This guide provides a comprehensive overview of Malaysia’s e-invoicing requirements, including industries affected, mandatory compliance criteria, and exemptions.
Which Industries Need To Comply With E-Invoicing?
e-Invoice covers typical transaction types such as B2B, B2C, and B2G. For B2G transactions, the e-Invoice flow will be similar to B2B. e-Invoice applies to all taxpayers undertaking commercial activities in Malaysia.
All individuals and legal entities are required to comply with e-Invoice requirement, including:
In relation to certain B2C transactions where e-Invoices are not required by the end consumers to support the said transactions for tax purposes, Suppliers will be allowed to issue a normal receipt or invoice in accordance with the current practices adopted by Suppliers.
After a certain period or timeframe, Suppliers would be required to aggregate the normal receipts or invoices issued to end consumers and issue a consolidated e-Invoice to support the transactions made with end consumers
Are All Industries Included In The E-Invoice Implementation?
Are There Any Industries Exempted?
- Association;
- Body of persons;
- Branch;
- Business trust;
- Co-operative societies;
- Corporations;
- Limited liability partnership;
- Partnership;
- Property trust fund;
- Property trust;
- Real estate investment trust;
- Representative office and regional office;
- Trust body; and
- Unit trust.
Currently, there are NO industries that are exempted from the e-Invoice implementation. Note that certain persons and types of income and expenses are exempted from e-Invoice implementation.
Who's Exempt From E-Invoice Implementation?
While e-Invoicing is a mandatory requirement for all taxpayers, certain individuals are presently exempt from the obligation to issue e-Invoices, including the issuance of self-billed e-Invoices as below:
- Ruler and Ruling Chief
- Former Ruler and Ruling Chief
- Consort of a Ruler of a State having the title of Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri or Permaisuri
- Consort of a Former Ruler of a State previously having the title of Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri or Permaisuri
- Government
- State government and state authority
- Government authority
- Local authority
- Statutory authority and statutory body
- Facilities provided by the above government, authority or body (e.g., hospital, clinic, multipurpose hall, etc.)
- Consular offices and diplomatic officers, consular officers and consular employees
Hence, the above-mentioned persons are not required to issue an e-Invoice (including self-billed e-Invoice). For tax purposes, the receipts / bills / invoices issued by the above-mentioned purposes would be used as proof of expense.
Suppliers who provide goods or services to the persons listed above are required to issue e-Invoice, in accordance with the implementation timeline.
The exemption only be applicable to said persons. Any entities (e.g., companies, limited liability partnership, etc.) owned by the above-mentioned persons would still be required to implement e-Invoice, in accordance with the e-Invoice implementation timeline
However, in relation to transactions with persons above, Suppliers are allowed to replace the Buyer’s details with the information stated in the e-Invoice Specific Guideline.
What Type Of Income Or Expenses Are Exempted From E-Invoice?
The IRBM acknowledged there are various challenges in issuing e-Invoices for certain types of income or expense. To ease the adoption of e-Invoice, an e-Invoice (including self-billed e-Invoice) is not required for the following types of income or expense:
- Employment income
- Pension
- Alimony
- Distribution of dividend in specific circumstances (Refer to Section 11 of e-Invoice Specific Guideline for more details)
- Zakat
- Scholarship
