Malaysia’s e-Invoice system

Understanding Malaysia's e-Invoice System – A Step Toward Digital Taxation

Malaysia is undergoing a digital transformation in its tax system, and e-Invoicing is at the heart of this change. The Lembaga Hasil Dalam Negeri (LHDN) Inland Revenue Board of Malaysia is introducing a nationwide e-Invoice mandate as part of its effort to improve tax compliance, reduce fraud, and streamline the reporting process for businesses.

What is an e-Invoice?

An e-Invoice (electronic invoice) is a digitally generated and verified document that records the sale of goods or services between a seller and a buyer. Unlike traditional paper or PDF invoices, an e-Invoice is standardized, validated, and transmitted electronically through a government-monitored system.

The main goals are:

1. Improve tax transparency
2. Reduce the shadow economy
3. Enhance efficiency for businesses
4. Automate data collection for LHDN

Malaysia's e-Invoice applies to:

1. B2B (Business to Business)
2. B2C (Business to Consumer)
3. B2G (Business to Government)

It covers both domestic and cross-border transactions, including exports, imports, and services.

Here’s a simplified flow of the e-Invoicing process:

• Seller creates an invoice in their system (e.g., ERP or accounting software).
• Invoice is submitted to LHDN for validation via API or a portal.
• LHDN validates the invoice and issues a Unique Identifier Number (UUID) and QR code.
• Seller sends the validated invoice to the buyer.
• Invoice data is automatically available to LHDN for tax reporting.

👉 Watch the video above to see the complete setup in action! click here.