E-invoicing in Malaysia began on August 1, 2024 for large businesses with an annual turnover exceeding RM 100 million and is being subsequently implemented for all businesses in Malaysia in phases. However, the Inland Revenue Board of Malaysia (IRBM) has specified exemptions to accommodate certain entities and transaction types.
Many businesses are also exempt from the e-invoicing mandate based on turnover (such as those with annual turnover below RM 500,000), specific types of entities (e.g., certain statutory bodies, foreign diplomatic offices), and particular types of income (such as employment income, pensions, zakat, and some investment income)
Here is a summary table of all e-Invoicing exemptions in Malaysia based on the latest guidelines:
Category | Exemptions |
Entities & Individuals Exempt | Certain government bodies, royalty, and diplomatic offices are exempt from e-Invoicing due to their sovereign, statutory, or international status. |
Threshold Exemptions | - Businesses with annual turnover < RM 500,000 are exempted (except subsidiaries or related companies with combined revenue > RM500,000). |
Types of Income & Payments Exempt | - Employment income (salaries, allowances, benefits) - Alimony payments - Pensions - Specific dividend distributions - Scholarships & education-related payments - Zakat contributions |
Specific Transactions Exempt | - Director Fees under contract of service (employment) - Refundable deposits - Rental Income if the landlord is not running a business - Inter-department/Inter-division Transactions - Free or refundable vouchers - Refund of wrong payments, overpayments, or security deposits. |
- Foreign income does not require e-Invoicing. | |
A 6-month grace period is provided for businesses transitioning to e-Invoicing, during which no penalties apply, and existing invoices can still be used. |
Before getting into the exemptions, here are the persons and transactions subject to e-invoicing requirements.
Applicable Entities: E-invoice is mandatory for all taxpayers involved in commercial activities in Malaysia, including associations, bodies of persons, companies, and so on.
Transaction Types Covered
Self-Generation by Buyer: If the supplier is a foreign entity or not subject to e-Invoicing rules in Malaysia, the buyer must self-generate the e-Invoice.
Implementation Timeline
Note: Companies with annual turnover below RM 500,000 are permanently exempted from the e-Invoice requirement.
The following entities and individuals are exempt from issuing e-Invoices, including self-billed e-Invoices:
Certain types of income and transactions do not require an e-Invoice, including:
The latest e-Invoicing guidelines provide clear exemptions for specific types of transactions where e-Invoices are not required or have special conditions. Below is a detailed breakdown of the exemptions:
Director Fees
The requirement for e-Invoice issuance depends on the nature of the contractual agreement with the company:
Deposits
The e-Invoice requirement depends on whether the deposit is refundable or non-refundable:
Rental Income
The e-invoice requirement depends on whether the landlord is conducting a business:
Inter-Department / Inter-Division Transactions
No e-invoice is required for transactions within the same company, as these do not involve independent taxable entities. Businesses may choose to issue e-invoices for internal records, but it is not mandatory.
Gift Cards, Vouchers, and Loyalty Points
The treatment of e-invoices depends on the nature of the voucher:
Refund of Payments
No e-invoice is required for the following payment returns:
Cross-Border Transactions
The e-invoicing requirements for international transactions depend on whether the entity is buying or selling:
To facilitate a smooth transition to e-Invoicing, the IRBM has granted a 6-month interim relaxation period for each phase of businesses as they come under the e-Invoice mandate:
Targeted Taxpayers | Interim Relaxation Period |
Turnover > RM100 million | 1 August 2024 – 31 January 2025 |
Turnover > RM25 million up to RM100 million | 1 January 2025 – 30 June 2025 |
Turnover > RM5 Million up to RM25 million | 1 July 2025 – 31 December 2025 |
Turnover > RM1 Million up to RM5 million | 1 January 2026 – 30 June 2026 |
Turnover Less than RM 1 Million and more than RM500,000 | 1 July 2026 – 31st December 2026 |
During this period:
The exemptions from implementing e-Invoice in Malaysia are provided for several reasons:
There are both positive and negative impact of e-invoice exemptions in Malaysia. Here are some major impacts of exemptions.
Malaysia’s e-invoicing exemptions reflect a balanced approach, ensuring that critical businesses comply while providing necessary relief to smaller businesses, government bodies, and non-commercial transactions. These exemptions ensure that e-Invoicing targets the right business activities without imposing unnecessary administrative burdens on non-commercial entities and exempt transactions.
Furthermore, embracing efficient invoicing solutions like those offered by ClearTax can significantly smoothen this transition towards e-invoicing.
ClearTax with its extensive experience across various nations, provides simplified, faster, and more efficient e-invoicing solutions, making the e-invoicing process compliant and highly efficient.
Transaction Types of e-Invoicing in Malaysia
Important Terms in Malaysia e-Invoicing
Reasons for Rejection and Cancellation of e-Invoice in Malaysia