E-Invoice Requirements in Malaysia: A Complete Guide for Businesses

Recent Changes and Compliance

Malaysia businesses must adhere to the new e-Invoice requirements rolled out by LHDN from August 2024 to July 2026. A recent announcement from the local tax authority in June 2025 has caused delays for some businesses. This guide will help you select the right accounting software and provide a comprehensive adoption checklist. It also includes essential tips for freelancers and small business owners.

1. Implementation Timeline (Updated on 16 June 2025)

Phase 1 - 1st August 2024: Businesses with an annual turnover of more than RM100 million must comply.

Phase 2 - 1st January 2025: For businesses with an annual turnover between RM25 million and RM100 million.

Phase 3 - 1st July 2026 (Updated): Businesses with an annual turnover between RM5 million and RM25 million.

Phase 4 - 1st January 2026 (Updated): Businesses with an annual turnover between RM1 million and RM5 million.

Phase 5 - 1st July 2026 (Updated): Businesses with an annual turnover between RM500,000 and RM1 million.

2. Overview Flow of E-Invoice Process

Source: LHDN e-Invoice Guideline

The e-Invoice process involves the following steps:

• Issuance of Invoice: The seller issues a regular invoice to the buyer.

• Validation of E-Invoice: The invoice is submitted to LHDN for validation.

• Notification of Validated E-Invoice: LHDN informs the seller of the validity of the E-Invoice.

• Sharing of E-Invoice: The seller shares the validated E-Invoice with the buyer.

• Rejection or Cancellation of E-Invoice: The buyer can reject the E-Invoice, and the seller can cancel it if necessary.

• MyInvois Portal: Successfully validated E-Invoices can be viewed on the MyInvois Portal.

  
  

3. Two Different Types of E-Invoice Mechanisms

Source: LHDN e-Invoice Guideline

There are two mechanisms for implementing E-Invoices:

• MyInvois Portal: A free portal provided by IRBM (LHDN) without any cost.

• API: Involves using third-party technology platforms, such as ERP or accounting software, which requires an upfront investment.

  
  

4. Single E-Invoice vs Consolidated E-Invoice

Source: LHDN e-Invoice Guideline

The diagram from the LHDN e-Invoice guideline explains two different scenarios for submitting E-Invoices: the single method and the consolidated method. Understanding these methods will help you choose the best approach for your business needs.

5. How to Implement for Small Businesses?

Business with Existing Software

1. Consult Your Software Provider: Ask about available upgrades and associated costs.

2. Evaluate Need for Replacement: Determine if a new software system is necessary.

3. Plan for Change Management:

• Identify upskilling needs.

• Assess changes to your business Standard Operating Procedures (SOP).

New Business Owners

1. Evaluate E-Invoice Methods: Determine if the MyInvois or API method is a better fit for your operations.

2. Invest in Training: For the MyInvois method, ensure relevant training is obtained.

3. Research Platforms: For the API method, investigate which platform aligns with your business type and invest in necessary training.

   
   

6. Selecting the Right Accounting Software

When choosing the right platform for E-Invoice implementation, there are several key factors to consider. The following table outlines some popular accounting software options and their features.

Tool	Monthly Fee (RM)	E-Invoice Integration	SST Support	Accountant Support
Pigeonbook	Free - RM49	✅ (Ready in Dec2025)	✅	✅
Xero	RM 120–290	✅	✅	❌
QuickBooks	RM 68–246	✅	✅	❌
Zohobooks	Free–RM135	❌	❌	❌

Pigeonbook offers attractive pricing with accountant support, making it an ideal choice for freelancers and small business owners without extensive accounting knowledge or background.

Conclusion

Navigating the rollout of e-Invoices can be a daunting task for many business owners. However, understanding the process and selecting the right tools can ease the transition significantly. Whether you are revamping existing systems or starting fresh, being proactive in your approach will ensure compliance and streamline your operations. If you need further assistance, reach out to industry professionals who specialize in accounting software and e-invoice implementation.