The transition to e-invoicing in Malaysia has been a significant step toward modernizing the country’s tax system and improving business efficiency. However, the Phase 2 rollout, which began on January 1, 2025, for companies with an annual turnover of RM 25 million to RM 100 million is proving to be a challenging process for many businesses. E-invoicing challenges in Malaysia are emerging as a central theme in the country’s digital tax transformation. Despite its potential benefits, the adoption of this new system has raised a number of concerns, from technical glitches to unclear guidelines and logistical hurdles.
In this blog we discuss the top challenges that Malaysian businesses are facing during this critical transition and explore how they are navigating these obstacles.
1. Unclear Directives from the Inland Revenue Board (LHDN)
One of the most widely reported e-invoicing challenges in Malaysia is the lack of clear and timely communication from the Inland Revenue Board (LHDN).
The ambiguity in updates from LHDN, particularly regarding the Tax Identification Number (TIN) from the supply chain side, has led to delays and confusion. For many businesses, navigating the complex bureaucratic processes to obtain accurate information has been a significant roadblock, delaying their compliance with the new e-invoicing requirements as seen during the implementation of 2nd phase this year.
Moreover, the lack of detailed guidance by LHDN has resulted in inconsistent interpretations of the system’s requirements, with businesses struggling to understand exactly what is expected of them. This has led to frustration and uncertainty in an already challenging transition period.
Solution
To overcome this, businesses are turning to e-invoicing software solutions like Complyrobo™, which stay updated with the latest LHDN directives and automatically integrate them into your workflow. Real-time updates ensure compliance with evolving guidelines, minimizing ambiguity. Alongside, the 12*6 support line by the Malaysia e-invoicing experts can help operational teams really figure out any issues while e-invoicing.
2. Mismatch Between Business Systems and LHDN’s Requirements
The rollout of 2nd phase of e-invoicing has exposed significant gaps between existing business systems and the specifications outlined by LHDN. There have been mismatches that have forced companies to invest heavily in new infrastructure, training, and software updates to make their systems compliant with the new requirements. This has translated into significant financial strain for many businesses, particularly small and mid-sized enterprises (SMEs).
For businesses that were already using digital systems, the need to upgrade or replace these systems to meet the e-invoicing standards has led to additional costs, such as purchasing new software or modifying existing infrastructure. Many businesses feel that the financial burden could have been alleviated with government support, such as grants, subsidies, or tax exemptions for investments in compliant systems.
Solution
Complyrobo™ offers custom ERP integrations that align your current systems with LHDN’s MyInvois standards. This reduces the need for complete infrastructure overhauls and avoids hefty upgrade costs.
3. The Need for Subsidized Training and Support
Another layer of e-invoicing challenges in Malaysia raised by businesses is the high cost and limited availability of training for e-invoicing systems. While many companies have adopted the system, the complexity of the new processes has made it difficult for staff to get up to speed quickly. There is immediate requirement of widespread, free, or subsidized training, particularly for employees in the supply chain, to ensure that businesses are able to transition smoothly.
The lack of training resources has left many companies feeling overwhelmed. Training is often a significant investment for businesses, especially those with limited resources. Without proper training, employees may struggle to understand how to use the e-invoicing platform effectively, increasing the risk of errors and inefficiencies in invoicing operations.
Solution
With intuitive interfaces and built-in guided workflows, Complyrobo™ reduces training overhead. It also offers remote onboarding sessions and role-specific help modules, enabling quick adoption even for non-tech users.
4. Security Concerns and Access to Confidential Data
Another major challenge during the rollout is the security and confidentiality of business data. As the system requires businesses to appoint representatives to handle e-invoicing transactions, many have raised concerns about the level of access these representatives have to sensitive company information. One highlighted concern has been the risks of having representatives access confidential data, such as income tax return forms.
Companies are worried about the potential misuse of this sensitive information, and some have called for LHDN to implement safeguards that would restrict access to only the necessary e-invoicing-related data. This issue is critical, as businesses need to ensure that their financial data remains secure throughout the e-invoicing process.
Solution
Complyrobo™ ensures bank-grade data security, with role-based access controls. This restricts visibility to only e-invoicing-relevant data, shielding confidential records from unnecessary exposure.
5. The Complexity of Self-Billing
The mandatory self-billing system introduced as part of the e-invoicing process has proven to be particularly challenging for smaller businesses. The self-billing system requires businesses to generate invoices for themselves instead of relying on suppliers to issue them. While this system is intended to simplify invoicing, it has added complexity for smaller businesses that may not have the resources or expertise to manage this process effectively.
Many businesses and early adopters have struggled to align their operational workflows with the new self-billing requirements. This has led to delays and mistakes in the invoicing process, which results in penalties for non-compliance. Businesses are demanding that a grace period be given to better adjust to the self-billing system, allowing them time to ensure their internal processes aligns with the e-invoicing system.
Solution
Complyrobo™ simplifies self-billing through pre-built templates, auto-generation of tax-compliant invoices, and step-by-step guides. Built-in 200+ validation checks prevent submission errors and help SMEs transition smoothly.
6. Technical Challenges and System Limitations
Another critical issue businesses face is the technical limitations of the MyInvois platform, which powers Malaysia’s e-invoicing system. Businesses have encountered e-invoicing challenges in Malaysia with the platform’s file size limits, especially when processing large or complex invoices. Companies have had to split their invoices into multiple smaller files, which increases processing time and adds to the administrative burden.
Furthermore, many smaller businesses lack the IT infrastructure and technical expertise required to manage e-invoicing effectively. This makes the transition more difficult for businesses that were not previously equipped for such a digital shift.
Solution
Ours platform’s cloud-native design ensures scalability and can handle bulk invoices efficiently. Complyrobo™ optimizes file handling and supports batch uploads, reducing processing time and technical strain.
7. The Need for Collaboration Between LHDN and Solution Providers
The rollout of e-invoicing has highlighted the need for closer collaboration between LHDN and solution providers. The lack that’s coming across is how system updates and changes should have been announced well in advance. This would have allowed solution providers the time to allocate resources and prepare for the new requirements. Furthermore, what’s being proposed is for LHDN to provide a dedicated testing environment for solution providers and businesses to trial new releases and upgrades before deployment.
This collaboration ensures that there are proper tests and optimizes of the updates to the system, reducing the chances of errors and inefficiencies during the implementation phase.
Solution
Complyrobo™ maintains a close line of communication with LHDN and participates in early-access updates. It also features a sandbox environment where businesses and consultants can simulate changes before, they go live. This includes Testing Integration by connecting your ERP or accounting system and see how data flows, validating invoice formats and checking for errors. This also includes trying out new features and experimenting with system upgrades before applying them to production.
Smooth Transition – Navigating the Path Forward with the Right Tools
While Malaysia’s e-invoicing rollout promises to streamline tax processes and improve business efficiency, it is clear that there are significant hurdles to overcome. From unclear directives and mismatched systems to security concerns and technical limitations, businesses have had to contend with various challenges during this transition.
What the businesses need right now are solutions and solution providers that eliminate the transitional work out of the park. For this getting on board middleware who provide the right technology can easily transform these e-invoicing challenges in Malaysia into manageable tasks. Middleware solutions like Complyrobo™ provide businesses with the tools they need to seamlessly integrate their operations with Malaysia’s e-invoicing system.
Our Software Complyrobo™ offers:
- Bank-grade security to safeguard sensitive financial data.
- Custom ERP integration solutions to seamlessly align with existing business systems.
- Cloud-based environment for accessibility and operational flexibility.
- Automatic LHDN updates to keep businesses in sync with regulatory changes.
- AI-powered capabilities for precise data extraction and validation.
- Scalable infrastructure to accommodate growing transaction volumes.
- User-friendly dashboards for streamlined operations and real-time compliance monitoring.
By automating compliance processes, managing operational workflows, and bridging the gap between business systems and LHDN requirements, Complyrobo™ ensures businesses stay ahead in their e-invoicing journey. With solutions like this, businesses can focus on growth and innovation rather than facing administrative complexities.
The adoption of advanced software tools like Complyrobo™ is not just a necessity—it’s the pathway to a future-ready business landscape.
