1. Introduction
Starting in 2025, the Malaysian government will make e-Invoicing compulsory for all businesses. If you run an online business—whether on Shopee, Lazada, your own website, or even selling digital products—you need to get ready.
This change isn't just about following rules. It will affect how you issue invoices, report income, and run your daily operations. For e-commerce sellers with lots of orders each day, this means you need to make sure your systems are ready and your team knows what to do.
We know this can feel overwhelming. You might be thinking, "Do I need to change my whole system? What if I make a mistake?" Don't worry—this guide is made for you.
This blog will help you understand what e-Invoicing means for e-commerce businesses in Malaysia. It gives simple, clear steps to follow and answers common questions. It also supports our main guide, "e-Invoice Malaysia 2025: Complete SME Guide to Get Ready", by focusing only on online businesses like yours.
Let’s walk through it together—so your business can follow the rules, avoid any fines, and run smoother with e-Invoicing.
2. What e-Invoicing Means for Online Businesses
For online sellers, e-Invoicing is more than just a government rule—it’s a big shift in how your business records and reports transactions. Every sale, whether it’s a physical item or a digital download, needs to be captured in real time and reported through the MyInvois portal by LHDN.
This means your business must now generate a valid e-Invoice for each transaction and get it validated by LHDN before sharing it with the customer. Unlike traditional invoices, these e-Invoices are submitted digitally and must follow a specific format.
Here’s what it means practically:
If you sell 100 items a day, that’s 100 e-Invoices to issue, validate, and deliver to customers—automatically. If you offer services or digital products, those must also be invoiced with all the right details included, such as buyer’s information, delivery method, and tax breakdown.
Whether you’re a solopreneur with a simple checkout form or running a full Shopify store with multiple staff, e-Invoicing adds a layer of tracking, transparency, and automation that you’ll need to manage.
But the good news? Once your system is ready, the process becomes smoother, and your records will be cleaner for tax season. It’s about building trust and staying compliant—while also modernizing how your e-commerce business runs.
2.1 You’ll Need to Capture Buyer Info—Even for Small Orders
One of the biggest changes is the need to include buyer identification (like name and email or tax ID) on certain e-Invoices. For example, if a customer buys RM500 worth of goods, you may now need to ask for their tax number. This can be tricky for online businesses used to fast checkouts. You’ll need a system or form that collects this info smoothly, especially for B2B customers.
Why Buyer Info Is Needed
LHDN uses buyer information to track B2B and B2C transactions for tax compliance. Even small or one-time customers may require basic details depending on the amount or business type.
How to Collect Info Without Losing Customers
Use smart checkout forms with optional/required fields based on order size. E.g., auto-fill email and phone, ask for tax number for B2B orders.
2.3 Discounts, Vouchers & Free Shipping Must Be Handled Correctly
Promos are a big part of online selling, but now they must be recorded properly. If you give RM10 off or offer free shipping, that must be shown clearly in the e-Invoice. Your system needs to break this down correctly so LHDN knows what’s being taxed and what’s not.
Why Proper Promo Breakdown Matters for e-Invoicing
Think about it this way: if you sell a product priced at RM100 but offer a RM10 discount, the tax authority doesn’t want to see an invoice showing RM100 as the taxable amount. Instead, they need the e-Invoice to clearly state that the taxable price is RM90.
This transparency is crucial because it ensures that the tax you report is accurate. Without this breakdown, your tax filings might be challenged during audits, or worse, you could face penalties for incorrect reporting.
For example, if a seller consistently reports taxes on full prices but gives discounts, LHDN’s system might flag this as suspicious or non-compliant.
How to Record Discounts, Vouchers, and Free Shipping on e-Invoices
Now, how does this work in practice? Your e-Invoice should not simply show a reduced total; it should itemize each part of the transaction. Let’s say you sell a pair of shoes for RM150 and apply a RM20 voucher, plus free shipping that normally costs RM7. The invoice should list:
Shoes: RM150
Voucher Discount: -RM20
Shipping: RM0 (free shipping)
This detailed breakdown allows both you and the tax authority to understand exactly how the final amount was calculated. It’s not enough to just reduce the price at checkout; the e-Invoice must reflect these components clearly.
Challenges Sellers Face with Promo Handling in e-Invoicing
Many online sellers find this challenging because their current systems might not support such detailed invoice breakdowns automatically. For instance, some platforms lump discounts directly into the total price without showing the breakdown, which can create issues when generating e-Invoices that comply with LHDN’s format.
Imagine running a flash sale with multiple vouchers or combining percentage discounts with fixed-amount coupons—it quickly becomes complicated to track the taxable base precisely. Without automation, sellers risk manual errors or additional workload in fixing invoices post-sale.
Tips to Ensure Promo Compliance Without Hurting Customer Experience
To make sure you stay compliant without frustrating customers, it’s important to use invoicing or e-commerce systems that automatically handle these promo details on e-Invoices. For example, Niagawan and NiagaPlus have built-in features to show discounts, vouchers, and shipping charges separately in e-Invoices. Training your staff to check invoices for promo accuracy before submission can also help avoid mistakes.
It’s also helpful to communicate clearly with your customers about how promotions appear on their invoices, which builds trust. For example, adding a note in your confirmation email explaining that discounts are reflected on the official invoice reassures customers that your billing is transparent and accurate.
Regularly testing your invoicing setup—especially during major sales events—helps catch issues early and keeps your business running smoothly.
3. E-Commerce Businesses: Why e-Invoicing Isn’t as Simple as It Seems
On the surface, online selling seems straightforward—you get an order, receive payment, and ship the item. But behind every “Add to Cart” click, there’s a web of data that must now be properly reported under the new e-Invoicing system.
Unlike traditional retail stores, e-commerce involves split payments, platform fees, partial deliveries, vouchers, and often high sales volumes—all of which complicate compliance. And if these issues are not addressed, your business risks invoice rejection, revenue reporting errors, and even tax penalties.
3.1 High-Volume Sales: When Manual Invoicing Isn’t an Option
If your store gets 100+ orders a day, it’s no longer practical to issue invoices manually—especially now that every invoice must meet e-Invoicing rules.
Let’s say you run a beauty product store and launch a flash sale. Orders spike overnight, and suddenly you're stuck generating and submitting 600 invoices before shipment. Without automation, your team could miss deadlines, send invoices with incomplete buyer data, or forget to include tax information.
To avoid this, online sellers must look into systems that automatically generate, validate, and send e-Invoices in real time—without slowing down order processing.
Real concern: If LHDN finds inconsistencies between your invoice records and payment records, you could face compliance issues—even if your store is just "small but active."
3.2 Multiple Payment Methods: One Product, Many Touchpoints
In the world of online business, a single product can be paid for using FPX, eWallet, credit card, or even Buy Now Pay Later (BNPL). But when it comes to e-Invoicing, these payment variations matter.
For example, imagine a customer buys a smartwatch from your site using Touch 'n Go eWallet, while another pays with GrabPay using a voucher. Are you recording these differences correctly on your invoice? Does your system reflect partial payments or wallet discounts?
What can go wrong: If your invoice only reflects the product price but ignores the discount, LHDN may flag the mismatch during reconciliation.
The fix: Use invoicing software that integrates with your payment gateways and captures all the final payment details, not just the product price.
3.3 Selling on Marketplaces vs Own Website: Who Owns the Invoice?
Many online sellers today operate across multiple sales channels—Shopee, Lazada, TikTok Shop, and their own websites. While these platforms make it easier to reach customers, they also introduce complexities in terms of invoicing responsibilities under the new e-Invoicing mandate by LHDN.
A common misconception is that marketplaces will automatically handle all aspects of invoicing. While these platforms do provide transaction summaries and payout reports, the obligation to issue a compliant e-Invoice typically remains with the business owner, especially when the seller is directly responsible for product fulfilment.
Clarifying the Responsibility
Under e-Invoicing guidelines, responsibility hinges on who is considered the actual seller of the goods or services. If you are fulfilling the order, managing the stock, and handling customer service—even through a third-party platform—you are the one expected to issue the e-Invoice. The marketplace acts only as a facilitator.
This means that even if you receive consolidated payouts from Shopee or Lazada after fees and deductions, you still need to record the full transaction value in your e-Invoice—not just the net amount received.
Example Scenario: Managing Marketplace and Website Sales
Consider a seller offering electronic appliances:
On Shopee, a blender is sold for RM200. After deducting RM15 for platform fees and RM5 for shipping, Shopee transfers RM180 to the seller.
On the company’s website, the same product is sold at RM200 via FPX, with lower payment gateway fees.
In both cases, the gross sale value is RM200. However, if the seller records only RM180 as revenue for the Shopee sale, they risk underreporting income. From LHDN’s perspective, deductions like platform fees and shipping costs are considered expenses, not reductions in revenue.
This distinction must be reflected in the e-Invoice—showing the full item price, followed by any fees, taxes, and charges separately. Proper classification ensures tax compliance and avoids discrepancies during audit reviews.
Common Oversights in Marketplace Selling
Another frequent challenge is data availability. Some marketplaces may not provide full buyer details, such as tax identification numbers or addresses—especially for B2C transactions. However, LHDN may require this information based on transaction value and buyer type.
Additionally, sellers often overlook how platform commission, shipping fees, and promotional discounts should be documented separately in their invoicing system. Failing to do so can create issues during reconciliations or when generating e-Invoice reports for submission.
Why It Matters?
3.4 Digital vs Physical Products: Different Rules, Same Compliance
Selling a downloadable eBook? A monthly coaching session? Or maybe you ship handmade candles?
Each of these sales requires a different invoicing approach. Digital products might not need shipping details, but they do need license terms or access timestamps. Physical items, on the other hand, need delivery status, shipping fees, and sometimes batch info.
Digital Products – Intangible but Still Traceable
Digital goods don’t involve shipping or delivery, but that doesn’t mean you can skip compliance steps. In fact, because there’s no physical handover, digital sales often require extra documentation to prove delivery and usage.
In these cases, LHDN may expect to see:
• Clear product descriptions like “Canva Template Bundle for Instagram with 20 Designs”
• Access timestamps to show when the buyer received the digital content
Buyer identification such as name, email, and phone number
• A brief note about license or usage rights, such as personal use only or no reselling
If your invoice simply says “Digital Product – RM50” without context, it may be considered vague or incomplete. This becomes especially important if you sell high volumes or run a subscription model.
Physical Products – Tangible, but with More Moving Parts
For physical goods, there’s the added layer of logistics. Packing, shipping, and tracking details become important.
If you’re selling products like candles, snacks, clothing, or handmade crafts, your invoice should show:
• Item description with details like size or color
• Quantity purchased
• Delivery charges listed separately
• Delivery method and status, especially if using a courier
• Batch or serial numbers for regulated products like electronics or health items
What If You Sell Both?
Many online sellers offer a mix of digital and physical products. For example, a printed planner that comes with a digital version. In this case, both items must be itemized separately on the invoice, each with its own price and product code.
Bottom line
Even if your product doesn’t physically ship, you still need to clearly describe it and document fulfilment. Whether you’re selling eBooks, candles, or courses, every sale needs to be transparent and traceable. That’s what LHDN is looking for, and it’s what protects your business during any review or dispute.
4. E-Commerce-Specific Compliance Under LHDN
For e-commerce businesses in Malaysia, the e-Invoicing mandate comes with specific compliance requirements that differ from traditional brick-and-mortar operations. According to the latest LHDN guidelines (updated February 2025), e-commerce sellers must pay special attention to the following areas:
4.1 LHDN Requirements for e-commerce Documentation
LHDN has established clear requirements for e-commerce businesses under the e-Invoicing system:
1. Format Compliance: All e-Invoice must be generated in XML or JSON format as specified by LHDN. PDF invoices that many e-commerce platforms automatically generate are not considered valid e-Invoices under LHDN.
2. Real-time Validation: Each transaction must be validated through MyInvois portal or third party software that provides e-Invoice functions (Like Niagawan’s system).
3. Complete Transaction Details: E-commerce businesses must capture and report comprehensive transaction details, including:
• Full product descriptions
• Accurate pricing before and after discounts
• Payment details
• Platform fees or commissions (request from e-commerce platform)
4. If you are selling to foreign customer, you still need to generate consolidate e-Invoices for these sales.
4.2 Tax Considerations for Different E-commerce Categories
Different types of e-commerce businesses face unique tax considerations under accounting software.
4.3 Cross-Border E-commerce Considerations
For Malaysian e-commerce businesses selling internationally:
• e-Invoicing requirements apply regardless of customer location
• Currency conversion must be clearly documented if applicable
• Different tax treatments for exports must be properly reflected
• International shipping and custom details should be included
5. E-Invoicing Implementation Timeline & Preparation Milestones
5.1 Compliance Timeline for all Businesses
Based on the latest information published by LHDN (updated 5 June 2025), below is the implementation timeline according to business’s annual turnover:
| Phase | Mandatory Start Date | Who’s Included (based on FY2022 Annual Revenue) |
|---|---|---|
|
1 |
1 August 2024 |
Businesses revenue > RM100,000,000 |
|
2 |
1 January 2025 |
Businesses revenue > RM25,000,000 up to RM100,000,000 |
|
3 |
1 July 2025 |
Businesses revenue > RM5,000,000 up to RM25,000,000 |
|
4 |
1 January 2026 |
Every business except for those with business revenue > RM1,000,000 up to RM5,000,000 |
|
5 |
1 July 2026 |
Every business except for those with business revenue up to RM1,000,000 |
5.2 Preparation Milestones for E-commerce Businesses
6 - 9 Months Before Your Mandatory Date:
• System Assessment: Evaluate your current e-commerce platform, payment gateways, and tools to identify gaps in e-Invoicing capabilities.
• Team Awareness: Introduce your team to e-Invoicing concepts and how they’ll affect daily operations.
• Budget Planning: Allocate resources for potential system upgrades, staff training, and implementation costs.
• Vendor Research: Begin researching e-Invoicing solution providers that specialize in e-commerce integration.
3- 6 Months Before:
• Solution Selection: Choose an e-Invoicing solution that integrates with your e-commerce platform and meets LHDN requirements.
• System Integration Planning: Work with your team or platforms to plan the integration between your e-commerce platform, payment gateways, and the e-Invoicing system.
• Data Mapping: Identify how transaction data will flow from your online store to the e-Invoicing system, ensuring all required fields are captured.
• Process Redesign: Update your order fulfilment and accounting processes to accommodate e-Invoicing requirements.
1 - 3 Months Before:
• System Implementation: Install and configure your e-Invoicing solution.
• Staff Training: Train your team on the new system and processes.
• Test Environment Setup: Create a test environment to practice generating and submitting e-Invoices.
• MyInvois Portal Registration: Complete your business registration on the LHDN MyInvois portal.
• API Integration: If using the API approach, complete and test your connection to the system.
Final Month:
• Full Testing: Conduct comprehensive testing with various transaction scenarios (discounts, multiple payment methods, cross-border sales).
• Customer Communication: Update your privacy policy and inform customers about any changes to checkout processes.
• Contingency Planning: Develop backup procedures for system downtime or validation failures.
• Go-Live Preparation: Finalize your launch plan and prepare for the transition.
6. Cost Considerations for e-Commerce Businesses
Implementing e-Invoicing for your e-commerce business involves several cost factors that differ from traditional businesses. Understanding these costs upfront will help you budget appropriately and avoid unexpected expenses.
6.1 Platform Costs for the e-Invoice Process
E-commerce businesses face unique platform costs when implementing e-Invoicing:
Tools for e-Invoicing Software Solutions
Some of e-commerce platforms provides function to generate e-Invoice, but a lot of platforms like Temu or Shien, they don’t have provide the e-Invoice generation function. So you are required to find a tools to let you make e-Invoice if the platform don’t have provide it.
LHDN provides a free method for e-Invoicing, which is MyInvois Portal.
Cost: Free to use
Best for: Small e-commerce businesses with low transaction volumes
Limitation:
• Manual data entry is required.
• Time-consuming for high-volume sellers
• Not practical for businesses with multiple sales channels
But, if your business always has high-value transactions, maybe MyInvois Portal can’t afford it, then you need to choose third-party software that provides e-Invoice function.
Cost: Depends on the software provider. For NiagaPlus is RM497/year.
Staff Training and Operational Costs
Training your team to handle e-Invoicing transaction and process is required. The training cost is based on the e-Invoice seminar that you find.
7. Summary of Key Points for e-Commerce Businesses
As Malaysia transitions to mandatory e-Invoicing, e-commerce businesses face unique challenges but also stand to gain significant benefits from this digital transformation:
1. Compliance is mandatory and timeline-based: All e-commerce businesses must comply according to their revenue bracket, with deadlines ranging from August 2024 to July 2027.
2. E-commerce transactions require special attention: High volumes, marketplace sales, digital products, and promotional campaigns all need specific handling under e-Invoicing rules.
3. Preparation takes time: Start early with assessment, planning, and testing to ensure a smooth transition.
4. Costs are manageable with planning: While there are implementation costs, the long-term benefits include efficiency gains, better record-keeping, and reduced compliance risks.
Don't wait until the deadline approaches to begin your e-Invoicing journey. For more information on how to implement e-Invoice, we have provided a solution, and it's easy to help your business implement e-Invoice. Feel free to fill in the form on the right side to learn more about our accounting software.
