(TAX UPDATE) Malaysia’s E-Invoicing Implementation Date for New Business

(TAX UPDATE) Malaysia’s E-Invoicing Implementation Date for New Business

Introduction

Malaysia’s e-Invoicing rollout is in full motion. With clearer deadlines and strict enforcement under the Income Tax Act, SMEs must now prepare early to avoid business disruption and legal penalties.

This blog summarises the mandatory phases, rules for new businesses, and the serious consequences of non-compliance … all in simple, practical language for SME owners and accountants.

Key Highlights from the E-Invoicing Roadmap

1. Five Phases Based on Annual Turnover (Using 2022 Figures)

Phase 1 — 1 August 2024
Mandatory for taxpayers with annual turnover above RM100 million.

Phase 2 — 1 January 2025
Mandatory for taxpayers with annual turnover between RM25 million and RM100 million.

Phase 3 — 1 July 2025
Mandatory for taxpayers with annual turnover between RM5 million and RM25 million.

Phase 4 — 1 January 2026
Mandatory for taxpayers with annual turnover between RM1 million and RM5 million.

Phase 5 — 1 July 2026
Mandatory for taxpayers with annual turnover between RM500,000 and RM1 million.

Note: Turnover is based on 2022 audited financial statements or tax returns.

2. Rules for New Businesses

Businesses started between 2023 and 2025

If annual turnover reaches RM500,000, e-Invoice must be implemented by 1 July 2026.

Businesses starting from 2026 onwards

Mandatory e-Invoicing by 1 July 2026 or upon the operation commencement date.

3. Penalty for Failure to Issue E-Invoice

This is the most important update every SME must understand:

Failure to issue an e-Invoice is an offence under Section 120(1)(d) of the Income Tax Act 1967.

The penalties are severe:

  • A fine of not less than RM200 and not more than RM20,000

  • OR imprisonment not exceeding 6 months

  • OR both

And most importantly:

The penalty applies PER TRANSACTION.

This means every missing, late, or invalid e-Invoice could trigger a separate offence.

SME Implications

1. Every SME is covered by July 2026

Even RM500k turnover businesses are included. No business escapes the system.

2. Non-compliance is now a legal risk, not just a tax risk

With penalties imposed per transaction, SMEs cannot treat e-Invoice as optional or “wait and see.”

3. Internal processes must be upgraded

This includes:
• issuing sales invoices
• receiving supplier invoices
• POS system setup
• billing workflow
• customer communication
• record keeping and audit trail
• credit control and payment timing

Manual invoicing will no longer meet compliance standards.

4. New businesses must comply immediately

Start-ups in 2026 onwards must be e-Invoice-ready from Day 1 — no transition period.

KTP’s View

The penalty structure shows IRB’s seriousness.
E-Invoicing is not a soft rollout. It is legal enforcement.

We strongly advise SMEs to:
• run a process mapping exercise
• choose the right POS/accounting system
• test the MyInvois Portal early
• train staff before peak periods
• prepare customers and suppliers
• avoid last-minute rush in 2026

From our experience, companies that start early face fewer operational issues and zero legal risk.

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