e-Invoice Phase 4 Malaysia: Key Changes, Requirements, and Implementation

Malaysia’s e-invoice mandate is being introduced in phases, based on annual business turnover (using FY2022 figures). Recently IRBM published the new guidelines and split the implementation in 5 different phases with e-Invoicing Phase 4 beginning on 1st January 2026, applicable for businesses with turnover more than RM 1 million and less than RM 5 million.

Businesses mandated under phase 4 should start generating e-invoices for all B2B, B2C, and B2G transactions via the MyInvois Portal, API, or accredited middleware providers. During the first 6 months (from 1 January 2026 to 30 June 2026), there is a grace period allowing consolidated e-invoicing, with no penalty for non-compliance until 30 June 2026.

Malaysia e-Invoice Implementation Timeline [Recently Updated]

Annual turnover is based on 2022 audited accounts or tax returns. Once your phase is set, later changes in revenue won’t affect your compliance date.

Suggested Read: Malaysia's e-Invoice Implementation Date: Timeline & All 5 Phases

Businesses Covered under Phase 4 Malaysia e-Invoicing

Phase 4 applies to businesses with annual turnover more than RM1 million and up to RM5 million. To determine your annual turnover for e-invoicing purposes:

• Use the figure reported in your 2022 audited financial statements (statement of comprehensive income), or
• If audited statements are not available, use the annual revenue reported in your tax return for the year of assessment 2022.

Exemptions:

• Businesses with annual turnover below RM500,000 are exempt from e-invoicing until at least July 2026.
• Certain entities such as individuals not conducting business, foreign diplomatic offices, statutory bodies and authorities (for specific transactions) are also exempt as per the latest IRBM guidelines.

Compliance Requirements for Phase 4

The following compliance requirements are mandatory for businesses and taxpayers covered under the phase 4 of e-invoicing

Mandatory Issuance of E-Invoices 

All businesses under Malaysia e-invoicing phase 4 are required to issue e-invoices for every sale or transaction, including business-to-business (B2B), business-to-consumer (B2C), and business-to-government (B2G) dealings. This also covers credit notes, debit notes, and refund notes as necessary for transaction adjustments.

Comprehensive Data Fields and Format

Each e-invoice must include at least 55 mandatory data fields specified by the IRBM, such as seller and buyer details, product or service descriptions, quantities, prices, tax breakdowns, and payment terms. The standard format for e-invoices is UBL 2.1, using either XML or JSON files to ensure compatibility and ease of validation.

Submission and Validation Process

E-invoices need to be submitted for real-time validation through the MyInvois System. This can be done using the MyInvois Portal, which is suitable for manual entry or batch uploads, direct API integration for businesses with compatible systems, or via IRBM-accredited middleware providers. Once validated, each e-invoice receives a Unique Identification Number (UIN) and a QR code, which must be included on the final invoice.

Digital Recordkeeping Requirements

Validated e-invoices must be securely stored in digital format for a minimum of seven years. This ensures that records are readily available for audit or inspection by tax authorities when required.

Consolidated E-Invoicing for B2C Transactions

For transactions where buyers do not require an individual e-invoice, such as most B2C retail sales, businesses are allowed to aggregate all such sales into a single consolidated e-invoice each month. This consolidated invoice must be submitted within seven days after the end of each month.

Customer Identification Flexibility

For individual customers, businesses can use either the Tax Identification Number (TIN), MyKad or MyTentera number, or passport number to fulfill customer data requirements. For business clients, full company and tax details are necessary.

Relaxation Periods for e-Invoicing Phase 4 

Malaysia’s e-invoicing rollout features a six-month interim relaxation period following each phase’s mandatory go-live date. For Phase 4, businesses with annual turnover between RM1 million and RM5 million have a six-month e-invoicing relaxation period from 1 January 2026 to 30 June 2026, during which simplified compliance is allowed before full enforcement begins.

This grace period allows newly onboarded businesses including those in Phase 4 to adapt and gradually ramp up compliance before full enforcement.

Relaxation Periods Timeline

Here’s a summary of the five-phase rollout with key deadlines and their respective relaxation periods:

What Does the Relaxation Period Mean for Phase 4 Business?

During the relaxation period, eligible businesses enjoy several key concessions:

• No Penalties for Non-Compliance: Businesses will not be penalized under Section 120 of the Income Tax Act 1967 if they face challenges in fully complying with e-invoice requirements during this window.
• Consolidated E-Invoicing Allowed: You can aggregate multiple transactions into a single consolidated e-invoice, making it easier to comply, especially for high-volume retail or service environments.
• Simplified Product Descriptions: There is flexibility in how products and services are described on e-invoices during this time.
• Opportunity to Test and Adjust: Use this period to trial e-invoicing solutions, train your team, and resolve any technical or process issues before full enforcement.

Post Relaxation Period

After your six-month relaxation period ends:

• Full compliance is required. Every transaction must have its own validated e-invoice with all mandatory data fields.
• No more consolidated monthly e-invoices.
• Penalties apply for non-compliance under Section 120 of the Income Tax Act 1967.

Note: These dates are based on the latest IRBM guidelines and may be updated. Always confirm with the official IRBM e-Invoice Guideline.

Steps to Implement E-Invoicing for Phase 4 Businesses

For Phase 4, most businesses are medium-sized enterprises with annual turnover between RM1 million and RM5 million. Here’s a step-by-step guide to help you get started with e-invoicing and ensure smooth, penalty-free compliance:

1. Assess Your Invoicing Volume and System: Review how many invoices you issue daily and what tools (ERP, accounting software, Excel, or manual) you currently use.

2. Choose the Best E-Invoicing Model: Malaysia’s e-invoicing framework allows businesses to comply either through the user-friendly MyInvois Portal or via API integration (often using accredited middleware).

• MyInvois Portal: Free and accessible through the IRBM’s MyTax portal, the MyInvois Portal is best suited for businesses issuing fewer than 10 invoices per day or those that rely mainly on manual processes. It allows for manual entry of invoice details or spreadsheet uploads for batch processing, making it ideal for companies with lower transaction volumes.
• ERP Integration with Middleware Solutions: Recommended for medium-sized businesses with higher transaction volumes or B2C operations, this approach uses IRBM-accredited middleware providers (such as ClearTax) to connect your ERP, accounting software, or even Excel systems directly to the MyInvois platform via API. This model enables automatic e-invoice generation, reduces manual data entry errors, and streamlines compliance for processing large numbers of invoices efficiently.

3. Register & Set Up Your Chosen Platform: Sign up for the MyInvois Portal using your MyTax account, or connect with your middleware/ERP provider to initiate integration and configuration.

4. Train Your Team: Educate finance, sales, and operations staff on new e-invoicing procedures, data entry requirements, and troubleshooting common issues.

5. Go Live Before the Deadline: Start issuing real e-invoices as soon as possible, ideally during the six-month relaxation period (1 Jan 2026 – 30 June 2026) to adapt and resolve any issues before full enforcement.

6. Maintain Digital Records: Store validated e-invoices securely for at least seven years, as required by IRBM, to ensure audit readiness.

Conclusion

Phase 4 of the e-invoicing mandate will begin on 1 January 2026 and these businesses must generate and submit e-invoices for all sales and transactions (B2B, B2C, and B2G) through the MyInvois Portal, direct API, or IRBM-accredited middleware providers.

For Phase 4 is a six-month relaxation period from 1 January to 30 June 2026, during which businesses benefit from simplified compliance such as consolidated monthly e-invoicing, flexible product descriptions, and no penalties for initial non-compliance. This grace period allows companies to test systems, train staff, and resolve issues before full enforcement. After the relaxation period, every transaction must have its own validated e-invoice, and penalties will apply for non-compliance.