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💼 E-Invoice in Malaysia (LHDN Guide)

Everything you need to understand, register, and comply with Malaysia's new E-Invoice system — especially for freelancers, small businesses, and online sellers.

🔥 Urgent Implementation Timeline

Phase 3 starts July 1, 2025 - ALL taxpayers including freelancers, Shopee sellers, Grab drivers must comply!

🔍 What is an E-Invoice?

Simple Definition

E-Invoice is a digital document sent to LHDN in real time, for every business transaction.

Key Points to Understand:

  • Not just a PDF invoice - Must be sent through LHDN's system (MyInvois)
  • Real-time submission - Invoice must be validated by LHDN before giving to customer
  • Government transparency initiative - Part of Malaysia's effort to reduce tax evasion
  • Applies to ALL transactions - Sales, services, even small amounts

Old vs New Invoice System

Before E-Invoice After E-Invoice
Create invoice in any format Must follow LHDN's structured format
Give invoice directly to customer Send to LHDN first, then customer
Report to LHDN quarterly/yearly LHDN knows every transaction instantly
Manual record keeping Automated tax calculation & reporting

🗓️ Who Needs to Use E-Invoice (And When)?

Implementation Timeline

Date Who Must Comply Status
Aug 1, 2024 Businesses with >RM100M annual revenue ✅ Active
Jan 1, 2025 Businesses with >RM25M annual revenue ⏳ Soon
Jul 1, 2025 ALL taxpayers - including individuals and freelancers 🚨 Prepare Now

✅ Yes, This Includes You If You Are:

👨‍💻
🛒
🚗
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💰 Revenue Threshold Check

Important: The revenue threshold is based on your total annual income, not profit.

  • If you make >RM25,000 per year = Must comply from Jan 2025
  • If you make any taxable income = Must comply from Jul 2025
  • Even RM100/month side income = Must use E-Invoice

🧾 What You Need to Do

1. Register on MyTax Portal

What to do:

  • Go to mytax.hasil.gov.my
  • Register with your IC number
  • Activate your tax profile
  • Get your Tax Identification Number (TIN)

Time needed: 15-30 minutes

Cost: FREE

2. Register for MyInvois

What to do:

  • Login to MyTax portal
  • Apply for MyInvois access
  • Choose submission method (Portal, API, or Peppol)
  • Wait for approval (usually 1-3 working days)

Time needed: 20 minutes + waiting time

Cost: FREE

3. Create Proper E-Invoices

Must include:

  • Your business info (name, address, TIN)
  • Customer info (name, address, TIN if available)
  • Item/service details with correct tax classification
  • SST/GST calculations (if applicable)
  • Total amount in MYR

Format: Must follow LHDN's JSON structure

4. Submit in Real-Time

Process:

  • Create invoice immediately after transaction
  • Submit to LHDN via MyInvois system
  • Get validation response with UUID
  • Share validated invoice (with QR code) to customer

Timeline: Must be done within 72 hours of transaction

⚠️ Important Compliance Notes

  • No backdating: Cannot create invoices for past transactions beyond 72 hours
  • Sequential numbering: Invoice numbers must be in sequence
  • Penalty for non-compliance: Fines up to RM20,000 or 6 months jail
  • Customer TIN: Must collect customer's TIN number when possible

🧰 Tools You Can Use

🖥️

MyInvois Portal (Free)

Recommended for Small Users

Best for: Freelancers, small businesses with <50 invoices/month

How it works: Manual entry through web interface

Pros: Free, simple, no technical knowledge needed

Cons: Time-consuming for high volume

How to Use:

  1. Login to MyInvois portal
  2. Click "Create New Invoice"
  3. Fill in all required fields
  4. Submit and download validated invoice
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API Integration

For Tech-Savvy Users

Best for: Medium-large businesses, e-commerce platforms

How it works: Direct system-to-system connection

Pros: Automated, fast, high volume support

Cons: Requires programming knowledge

Requirements:

  • Developer or IT support
  • Existing invoicing system
  • API integration capability
🧾

Accounting Software

Most Popular Choice

Best for: Established businesses with existing accounting needs

How it works: Built-in E-Invoice submission feature

Pros: Integrated with accounting, automated workflows

Cons: Monthly/yearly subscription cost

E-Invoice Supported Software:

  • SQL Accounting - Most popular in Malaysia
  • AutoCount - Local accounting software
  • Wave Accounting - Free option
  • Bukku - SME focused
  • Xero - Cloud-based
  • QuickBooks - International option
🧑‍💻

Peppol Service Providers

For Cross-Border Business

Best for: Businesses dealing with international clients

How it works: Third-party service handles submission

Pros: Cross-border compatibility, managed service

Cons: Additional service fees

📊 Quick Comparison

Tool Cost Best For Volume Ease of Use
MyInvois Portal Free Freelancers <50/month ⭐⭐⭐⭐⭐
Accounting Software RM50-300/month SMEs 50-1000/month ⭐⭐⭐⭐
API Integration Development cost Large businesses 1000+/month ⭐⭐

💡 Examples for Different Users

👨‍💻

Freelancer (Graphic Designer)

Situation:

Ahmad designs logos for RM500 per project, about 8 clients per month

E-Invoice Solution:

  • Use MyInvois Portal (free option)
  • Create invoice after completing each project
  • Submit to LHDN, get validation
  • Send validated invoice to client

Typical Workflow:

  1. Complete logo design
  2. Login to MyInvois portal
  3. Create invoice with client details
  4. Submit and get UUID + QR code
  5. Email validated invoice to client
  6. Receive payment as usual
🛒

Shopee/Lazada Seller

Situation:

Siti sells fashion items online, RM30k revenue per month across platforms

E-Invoice Solution:

  • Use accounting software with E-Invoice integration
  • Import sales data from e-commerce platforms
  • Bulk submit invoices daily/weekly
  • Automated tax calculation

Platform Integration Options:

  • Manual method: Download sales reports, upload to MyInvois
  • Semi-automated: Use accounting software with CSV import
  • Fully automated: API integration (if platform supports)
🏪

Small Business (Kedai Runcit)

Situation:

Encik Lim runs a grocery store with daily cash transactions, mostly walk-in customers

E-Invoice Solution:

  • Upgrade to E-Invoice compatible POS system
  • Integrate cash register with MyInvois
  • Print receipts with QR codes
  • Automated daily submission to LHDN

Common Challenges & Solutions:

  • Customer without TIN: Use "General Public" category
  • Cash transactions: Still need E-Invoice for each sale
  • Small amounts: No minimum threshold, every sale counts
  • Internet issues: Store offline, bulk submit later
🚗

Grab Driver

Situation:

Rahman drives for Grab part-time, earns RM1,500 per month

E-Invoice Solution:

  • Wait for Grab platform integration (likely automated)
  • Alternative: Manual monthly summary via MyInvois
  • Invoice Grab for total monthly earnings
  • Keep trip records for backup

Important Note:

Gig economy platforms like Grab are working on automated E-Invoice integration. Check with your platform for updates closer to July 2025.

🆘 Common Questions (FAQ)

❓ Do I need to use E-Invoice for personal online sales?

Yes, if you meet any of these criteria:

  • Annual income >RM25,000 (from Jan 2025)
  • Any taxable income (from Jul 2025)
  • Regular selling activity (not one-off sales)

Example: Selling preloved items occasionally = probably no. Running an Instagram shop regularly = yes.

❓ What if my customer doesn't have a Tax ID?

Solutions:

  • For individuals: Use "General Public" category in MyInvois
  • For businesses: Request their SSM number or tax ID
  • For foreigners: Use passport number as alternative

Important: You still need to issue E-Invoice even without customer TIN.

❓ Can I backdate or combine multiple invoices?

Backdating: Only allowed within 72 hours of transaction

Combining invoices: Not recommended. Each transaction should have separate E-Invoice

Exception: Monthly summary invoices may be allowed for certain service types (check with LHDN)

❓ What if I issue invoice but payment is not made?

E-Invoice is based on transaction, not payment:

  • Issue E-Invoice when service/goods delivered
  • Payment timing doesn't affect E-Invoice requirement
  • For bad debts, handle through normal tax procedures
  • Cannot cancel E-Invoice once validated by LHDN

❓ Do I need to charge SST/GST on my invoices?

SST Registration threshold: RM500,000 annual revenue

Below threshold: No need to charge SST, but still need E-Invoice

Above threshold: Must register for SST and include in E-Invoice

Note: E-Invoice requirement is separate from SST/GST obligations

❓ What's the penalty for not complying?

Legal penalties under Income Tax Act:

  • Fine up to RM20,000
  • Imprisonment up to 6 months
  • Additional penalties for repeat offenses

Practical impacts: Tax audits, difficulty in business banking, compliance issues

❓ Can I use E-Invoice for services to overseas clients?

Yes, but with considerations:

  • Still need E-Invoice for Malaysian tax reporting
  • Use client's overseas tax ID if available
  • Consider Peppol providers for international compatibility
  • Mark clearly as export service for tax purposes

🚀 Ready to Get Started?

Don't wait until the deadline. Start preparing your E-Invoice setup now to avoid last-minute stress.

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