Malaysia Introduces 6-Month Grace Period for Mandatory E-Invoicing

The Inland Revenue Board of Malaysia (IRBM) has announced a six-month grace period as part of the initial rollout of Malaysia’s mandatory e-invoicing requirements.

On 26 July 2024, IRBM published a media statement titled “Flexibility to Submit Consolidated e-Invoices during the Initial Period of Implementation of e-Invoices”, confirming that the grace period will apply from 1 August 2024.

Key Provisions During the Grace Period

During the six-month transition period, taxpayers are granted the following flexibilities:

• Consolidated e-invoices may be issued for all transactions, including self-billed e-invoices
• All industries and activities are allowed to use consolidated e-invoicing
• Any transaction description may be entered in the Product or Service Description field
• If a buyer requests an e-invoice, the seller may still issue a single consolidated e-invoice instead of individual transaction-level e-invoices
• No penalties will be imposed under Section 120 of the Income Tax Act 1967 for non-compliance, provided taxpayers follow the consolidated e-invoicing rules

Incentive for Early Adoption

Taxpayers who implement e-invoicing within the prescribed timeline without relying on the grace period will be eligible for an incentive:

• The capital allowance claim period for ICT equipment and software will be reduced from three years to two years, applicable for assessment years 2024 and 2025

This grace period is intended to ease the transition to mandatory e-invoicing while encouraging early and full compliance.