Dear All,

We wish to draw your attention to an important announcement issued by the Inland Revenue Board of Malaysia (LHDNM) concerning the enforcement of e-Invoice requirements.

Effective 15 December 2025(published on 16 December 2025), LHDNM will officially commence e-Invoice Compliance Reviews nationwide. This initiative is distinct from a general tax audit and focuses specifically on assessing compliance with mandatory e-Invoice implementation requirements.

To ensure awareness and preparedness, a summary of the compliance review process and applicable penalties is outlined below.

Overview of e-Invoice Compliance Review Process

1. Case Selection

LHDNM will identify taxpayers for e-Invoice compliance reviews based on:

• System-generated data
• Risk profiling
• Information obtained from various internal and external sources

2. Issuance of Review Notice

A formal compliance review notice will be issued by LHDNM at least fourteen (14) days in advance, specifying:

• Date of review
• Assigned reviewing officers
• Years of Assessment covered
• Records and documents required for review

3. On-Site Review

LHDNM officers may conduct on-site visits to:

• Examine accounting and tax records
• Access accounting systems and electronic data
• Interview relevant personnel, where necessary

Additional Information:

• Records reviewed may include sales and purchase invoices, e-Invoices (including self-billed and consolidated e-Invoices), debit and credit notes, accounting records, bank statements, ERP systems, POS systems, and other electronic data.
• The review may cover up to two (2) Years of Assessment.

4. Issuance of Review Findings

Upon completion of the review, LHDNM will issue formal findings categorised as:

• Compliant
• Non-Compliant
• Exempted

Common non-compliance areas include:

• Failure to issue e-Invoices
• Failure to issue self-billed e-Invoices
• Failure to submit consolidated e-Invoices
• Inadequate or incomplete record keeping

5. Penalties and Settlement (Where Applicable)

In cases of non-compliance, LHDNM may issue an e-Invoice Failure Statement together with a compound (penalty) offer.

Under the Income Tax Act 1967 (ITA), the following penalties may apply:

Note: Penalties may be imposed per non-compliant transaction, depending on the nature and extent of the offence.

6. Objection or Acceptance

Taxpayers are allowed eighteen (18) calendar days from the date of the findings to submit objections together with supporting documentation.
Failure to respond within the stipulated timeframe will result in the findings being deemed accepted.

Important Reminder

All relevant departments are strongly advised to ensure that e-Invoice processes, systems, and supporting records are properly maintained and fully compliant with LHDNM requirements. Early internal reviews and corrective actions are recommended to mitigate potential compliance risks.

For further clarification or assistance, please contact the Finance / Tax Department.