Phase Two of Malaysia's E-Invoicing Initiative: What You Need to Know

As Malaysia continues its journey toward digital transformation, the implementation of the e-invoice system marks a significant milestone in streamlining tax administration and enhancing business efficiency. As we step into 2025, Phase 2 of e-invoicing is set to roll out in Malaysia, bringing more businesses into the fold.

Quick Recap of Phase One e-Invoicing

Batch 1 businesses with an annual revenue of more than RM100 million started their e-invoicing journey on August 1, 2024. The implementation of Phase 1 e-invoicing was a crucial step in streamlining the invoicing process, reducing manual errors, and enhancing tax compliance. As of November 19, a total of 7,900 companies have adopted the e-invoice system, involving 87 million e-invoices that have been submitted.

Phase Two e-Invoicing: What to Expect

Phase 2 of the e-Invoicing initiative, starting on January 1, 2025, will apply to batch 2 businesses with an annual turnover or revenue of more than RM25 million and up to RM100 million. This phase is designed to bring medium-sized enterprises into the digital invoicing fold, ensuring that they comply with the new requirements and benefiting from the efficiencies of e-invoicing.

Here’s what you can do for businesses who are preparing for the upcoming phase 2 e-invoice initiative:

1. Assess Readiness: Evaluate your current IT capabilities and data sources to ensure they can support e-Invoicing requirements.
2. Train Personnel: Equip your staff with the necessary capabilities to adopt and oversee the implementation of e-invoicing.
3. Review Processes: Examine your current invoicing processes and make any necessary adjustments to comply with e-invoicing requirements.

Businesses must decide on the most suitable mechanism to issue and validate their e-invoices. There are three primary options to accommodate different business needs:

MyInvois Portal

A web application developed by the Inland Revenue Board of Malaysia (IRBM) that allows taxpayers to generate, submit, view, cancel, or reject invoices. It is ideal for businesses without advanced IT systems or those that generate smaller volumes of transactions.

Middleware Solution

A software that enables your company to send e-invoices, using your existing ERP or accounting software. Goldsoft serve as a service provider to convert documents to standard specifications and send it to LHDN. It is ideal for businesses with advanced IT systems or those generating moderate to large transaction volumes.

Direct Integration with Goldsoft ERP

E-invoices are generated in Goldsoft's ERP system and sent directly to the LHDN MyInvois System without human intervention. Taxpayers can track and monitor e-invoice submissions, validation, and statuses in real-time via e-invoice dashboard. This option is exclusive to Goldsoft ERP users.

To facilitate a smooth transition, the IRBM has announced a grace period for e-invoicing. During this period, taxpayers can submit consolidated e-invoices without facing immediate penalties for non-compliance. The grace period allows businesses the flexibility to make necessary adjustments and ensure full compliance by the deadline of July 1, 2025, for Batch 2 businesses. It is worth noting that the grace period for Batch 1 businesses will end on February 1, 2025.



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In addition, the government has actively provided financial support through tax incentives to assist businesses with the costs of implementing e-invoicing. One such incentive is the reduction of the claim period for capital allowances on ICT equipment and computer software packages from four years to three years, effective from the year of assessment 2024. Another incentive includes a tax deduction of up to RM50,000 per year of assessment for consultancy fees incurred by MSMEs, applicable from the year of assessment 2024 to 2027. You can find more information about these incentives in the linked article below.

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Conclusion

The Phase 2 rollout of Malaysia’s e-invoice initiative marks a crucial step in embracing digitalization and ensuring tax compliance. As the July 2025 deadline approaches for businesses from Batch 2, the government remains committed to providing the tools and guidance needed for a seamless transition. Businesses are encouraged to assess their readiness and act early to take full advantage of the system’s benefits.

For more information about Goldsoft e-invoice Ready ERP/ e-invoice middleware, please do not hesitate to contact Goldsoft's sales team at 03-2732 8833 or fill up the form below for enquiry.