Understanding LHDN E-Invoice Requirements in Malaysia: Complete Guide

Malaysia's Inland Revenue Board (LHDN) mandates e-invoicing for all businesses starting 2025. This comprehensive guide explains e-invoice requirements, implementation timelines, and how to ensure your accounting software complies with regulations.

What is E-Invoice?

E-invoice is a structured digital document issued by suppliers to buyers for transactions. Unlike PDF invoices sent via email, e-invoices follow standardized formats (XML or JSON) and are transmitted through approved channels to LHDN's MyInvois system for validation. The key difference: e-invoices are machine-readable and validated in real-time by LHDN, ensuring accuracy and preventing fraud. Once validated, LHDN issues a unique identification number and QR code, making the invoice legally recognized.

Implementation Timeline

LHDN rolled out e-invoicing in phases: Phase 1 (August 1, 2024): Companies with annual turnover exceeding RM 100 million Phase 2 (January 1, 2025): Companies with annual turnover exceeding RM 25 million

Revised Mandatory Implementation Schedule

The rollout is based on annual turnover or revenue, primarily determined by a taxpayer’s 2022 financial statements:

Exemption Threshold: Taxpayers with an annual turnover or revenue below RM1,000,000 are currently exempt from e-invoicing requirements.

Note: Some December 2025 reports indicate the Cabinet approved raising this threshold to RM1 million, effectively withdrawing the 1 July 2026 mandate for those between RM500k and RM1m.

Timeline for New Businesses

For businesses commencing operations from 2023 onwards:

• Commencing 2023–2025: If annual turnover is at least RM1 million, the mandatory date is 1 July 2026.
• Commencing 2026 onwards: Mandatory as of 1 July 2026 or upon commencement, whichever is later.

Critical 2026 Deadlines & Rules

• Individual E-Invoices Required: Effective 1 January 2026, consolidated e-invoices are no longer permitted for transactions exceeding RM10,000.
• Sector-Specific Bans on Consolidation: From 1 January 2026, specific industries including electricity (postpaid) and telecommunication services (postpaid/internet) must issue individual e-invoices for every transaction regardless of amount.

Official Resources

For technical specifications and the latest official updates, refer to the Inland Revenue Board of Malaysia (IRBM) e-Invoice Portal.

Types of E-Invoices

1. Invoice

Standard invoice issued by suppliers to buyers for goods or services. This is the most common e-invoice type covering typical business transactions.

2. Credit Note

Issued to reduce the amount of a previously issued invoice due to returns, discounts, or errors. Credit notes must reference the original invoice.

3. Debit Note

Issued to increase the amount of a previously issued invoice due to additional charges or corrections. Debit notes must reference the original invoice.

4. Refund Note

Issued when refunding payments to customers. Common in retail and e-commerce for returned goods.

5. Self-Billed Invoice

Issued by buyers on behalf of suppliers in specific scenarios (e.g., purchases from individuals, foreign suppliers without Malaysian presence).

E-Invoice Requirements

Mandatory Information

Every e-invoice must include:

• Supplier information (name, TIN, address, contact)
• Buyer information (name, TIN/ID, address)
• Invoice date and time
• Invoice number (unique sequential)
• Product/service description
• Quantity and unit price
• Total amount before tax
• Tax amount (SST if applicable)
• Total amount including tax
• Payment terms and methods

Optional Information

Additional details that may be included:

• Delivery information
• Purchase order reference
• Project codes
• Custom fields for industry-specific data

Digital Signature

E-invoices must be digitally signed to ensure authenticity and prevent tampering. LHDN validates the digital signature upon submission.

E-Invoice Submission Process

Step 1: Generate E-Invoice

Create the invoice in your accounting software with all required information. The software formats the data according to LHDN's specifications (XML or JSON).

Step 2: Validate E-Invoice

The software validates the e-invoice against LHDN's rules to catch errors before submission. Validation checks include:

• Required fields present
• Correct data formats
• Valid TIN numbers
• Logical consistency (e.g., total = subtotal + tax)

Step 3: Submit to MyInvois

The validated e-invoice is transmitted to LHDN's MyInvois system through:

• API integration (automated submission from accounting software)
• Peppol network (international e-invoicing standard)
• MyInvois portal (manual submission for low-volume businesses)

Step 4: Receive Validation Response

LHDN's system validates the e-invoice in real-time (typically within seconds). If valid, LHDN issues:

• Unique Invoice Reference Number (IRN)
• QR code for verification
• Validation timestamp If invalid, LHDN returns error messages indicating what needs correction.

Step 5: Share with Buyer

Once validated, share the e-invoice with the buyer through:

• Email (PDF with QR code)
• Buyer's accounting system (if integrated)
• Peppol network (for Peppol-enabled buyers) The buyer can verify the e-invoice's authenticity by scanning the QR code or checking the IRN on MyInvois portal.

Peppol Network

Peppol (Pan-European Public Procurement On-Line) is an international e-invoicing network adopted by Malaysia. Peppol provides:

Standardized Format

Peppol uses Universal Business Language (UBL) format, ensuring e-invoices are readable across different systems and countries.

Access Points

Peppol-certified access points (like QNE AI Cloud) connect directly to the Peppol network, enabling seamless e-invoice exchange. Businesses using Peppol-certified software enjoy automated submission without manual portal access.

International Compatibility

As more countries adopt Peppol, Malaysian businesses can exchange e-invoices internationally using the same infrastructure—future-proofing your compliance capability.

Choosing E-Invoice-Ready Software

Peppol-Certified Options

QNE AI Cloud (including its Prime version) is a Peppol-certified access point, providing the most automated e-invoice experience. E-invoices are generated, validated, and transmitted automatically through Peppol infrastructure. Advantages:

• Fully automated submission
• Real-time validation
• International compatibility
• Minimal manual intervention

Direct LHDN Integration

AutoCount, SQL Account, ABSS, Financio, Xero, QuickBooks integrate directly with LHDN's MyInvois system via API.

• More control over submission process
• Easier troubleshooting
• Suitable for businesses preferring direct LHDN connection Disadvantages:
• Slightly more manual steps than Peppol
• Limited international compatibility

Evaluation Criteria

When choosing software for e-invoice compliance, consider: Automation level: How many manual steps required? Validation: Does software validate before submission to prevent errors? Error handling: How are rejected e-invoices handled? Training: Does vendor provide e-invoice training? Support: Is e-invoice support included or extra? Limits: Any monthly e-invoice quotas?

Common E-Invoice Challenges

TIN Validation

E-invoices require valid Tax Identification Numbers (TIN) for both supplier and buyer. Ensure your customer database includes accurate TINs. Invalid TINs cause e-invoice rejection. Solution: Verify customer TINs before issuing e-invoices. LHDN provides TIN verification services.

Timing Issues

E-invoices must be issued within specific timeframes:

• Within 7 days of transaction for most businesses
• Within 1 month for specific industries (e.g., construction) Late submission may cause compliance issues. Solution: Automate e-invoice generation immediately upon transaction completion.

Credit/Debit Notes

Credit and debit notes must reference original invoice numbers. Ensure your software links these documents correctly. Solution: Use software that automatically references original invoices when creating credit/debit notes.

Self-Billed Invoices

Purchases from individuals or foreign suppliers without Malaysian presence require self-billed invoices issued by the buyer. Solution: Ensure your software supports self-billed invoice creation with proper documentation.

System Downtime

LHDN's MyInvois system may experience downtime during maintenance or high traffic. Solution: Submit e-invoices during off-peak hours. Use software that queues failed submissions for automatic retry.

Best Practices

1. Start Early

Don't wait until the mandatory deadline. Implement e-invoicing early to:

• Identify and resolve issues before deadlines
• Train staff gradually
• Build confidence with the system

2. Clean Customer Data

Ensure your customer database includes:

• Accurate company names
• Valid TINs
• Complete addresses
• Correct contact information Incomplete or inaccurate data causes e-invoice rejections.

3. Train Your Team

Provide comprehensive training on:

• E-invoice requirements
• Software features for e-invoicing
• Error handling procedures
• Compliance deadlines Most vendors offer free e-invoice training—take advantage of these resources.

4. Test Thoroughly

Before going live:

• Create test e-invoices
• Submit to LHDN's sandbox environment (if available)
• Verify QR codes and IRNs
• Test error scenarios

5. Monitor Compliance

Regularly review:

• E-invoice submission rates
• Rejection rates and reasons
• Compliance with timing requirements
• Customer feedback on e-invoice receipt

6. Keep Documentation

Maintain records of:

• All e-invoices issued
• LHDN validation responses
• Error logs and resolutions
• Training records Proper documentation helps during audits and troubleshooting.

Penalties for Non-Compliance

LHDN may impose penalties for e-invoice non-compliance:

• Rejected tax deductions: Expenses without valid e-invoices may be disallowed
• Audit triggers: Non-compliance increases audit likelihood
• Penalties: Fines for persistent non-compliance
• Business disruption: Inability to issue valid invoices affects operations The exact penalty structure is still being finalized, but compliance is clearly mandatory.

Getting Help

LHDN Resources

• MyInvois Portal: https://myinvois.hasil.gov.my
• E-Invoice Guidelines: Available on LHDN website
• Helpdesk: Contact LHDN for compliance questions

Software Vendor Support

All accounting software vendors provide e-invoice support:

• Free webinars and training
• Documentation and guides
• Technical support for implementation
• Compliance updates

Professional Advisors

Consider engaging:

• Accountants: For compliance advice
• Tax consultants: For complex scenarios
• Software consultants: For implementation assistance

Future Developments

E-invoicing is evolving. Expect:

• Expanded requirements: More transaction types may require e-invoices
• International adoption: More countries joining Peppol network
• Enhanced features: Real-time reporting, automated reconciliation
• Integration: E-invoicing connecting with other government systems Choosing software with strong e-invoice capabilities future-proofs your business for these developments.

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Last Updated: November 2025