LHDN e-Invoice Mandate 2025: Critical Updates for SMEs

The 2025 e-Invoice Timeline: Are You Ready?

As we approach 2025, the Inland Revenue Board of Malaysia (LHDN) has solidified the timeline for the mandatory e-Invoice implementation. For Small and Medium Enterprises (SMEs), understanding these dates is no longer optional—it is a business survival necessity.

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.

What Has Changed in the Latest Guidelines?

The latest guidelines clarify several "grey areas" that were previously causing confusion:

1. Consolidated e-Invoices: B2C businesses (retailers, F&B) are allowed to issue consolidated e-Invoices at the end of the month, rather than for every single transaction, unless the customer explicitly requests an e-Invoice.
2. Cross-Border Transactions: New specific fields have been added for import/export documentation, requiring tighter integration with Customs data.
3. 72-Hour Validation Window: The validation window remains strict. Once an invoice is submitted to the MyInvois portal, businesses have only 72 hours to correct any errors before the invoice is rejected.

Why "Wait and See" is a Dangerous Strategy

Many SMEs are planning to wait until June 2025 to upgrade their software. This is risky for three reasons:

1. Vendor Bottlenecks: Accounting software vendors are already facing a backlog of implementation requests. Waiting until the last minute guarantees a rushed, potentially flawed setup.
2. Staff Training: Your team needs time to unlearn old habits and adapt to the new "validate-first" workflow.
3. Audit Trails: LHDN has indicated that early adopters will face "soft" enforcement, while late adopters may face immediate penalties for non-compliance.

Recommended Action Plan

1. Audit Your Current Software: Does your current system (AutoCount, SQL, QNE, Xero) have a live connection to the MyInvois API? "Roadmap" promises are not enough.
2. Check Your Hardware: Ensure your internet connection is stable. e-Invoicing requires real-time data transmission.
3. Consult Your Accountant: Don't just rely on software vendors. Your company secretary or tax agent should be guiding your compliance strategy.

Conclusion

The e-Invoice mandate is the biggest shift in Malaysian tax administration since GST. By preparing now, you turn a compliance burden into a competitive advantage—streamlining your operations while your competitors scramble.