In recent years, TikTok Shop has experienced rapid growth in the Malaysian market and has become an important force in the local e-commerce ecosystem. Sales of categories such as clothing, shoes and hats, beauty and personal care, 3C digital products, and home living continue to grow, attracting a large number of local and cross-border sellers to join the platform.
Image source: TikTok Shop Malaysia
However, as the platform expands, tax compliance issues are also receiving increasing regulatory attention.
Recently, TikTok Shop Malaysia officially announced that it will launch the implementation of the e-invoice framework on July 1, 2025, in line with the policy requirements of the Malaysian Inland Revenue Board (LHDN). This new regulation will have a profound impact on sellers' business models and will also reshape the platform's operating environment.
New Policy Implemented, E-Invoice Becomes a Mandatory Requirement
In recent years, the Malaysian government has actively promoted tax digitalization, planning to fully realize the electronic invoicing of e-commerce transactions by 2026. As an early arrangement, TikTok Shop Malaysia requires sellers to complete tax information registration before July 1, 2025, including merchant tax ID, business registration information, invoice title, and payment account verification. Sellers who fail to submit the information on time will face penalties such as withdrawal freezing, traffic restrictions, or even account suspension.
It is worth noting that the Malaysian government has adopted a phased approach, implementing the policy in batches according to the annual revenue scale of different sellers. Top sellers have already started adapting to the new regulations as early as August 2024, while small and medium-sized sellers have been given a longer buffer period. This arrangement aims to balance regulatory intensity and sellers' adaptability, but many sellers still face compliance pressure due to incomplete historical transaction records or insufficient tax knowledge.
Image source: Google
Compliance Costs Rise, but Favor Standardized Operations
The introduction of the new regulation undoubtedly increases the operating costs for sellers, especially small and medium-sized ones. In the past, some sellers may have relied on cash transactions or informal channels, resulting in incomplete tax records. Now, they need to complete their tax information in a short period of time and even apply for a formal Tax Identification Number (TIN). For individual sellers, TikTok Shop provides a temporary tax number "EI00000000010" to help with the transition, but it is still recommended to obtain a formal tax number as soon as possible to avoid affecting future operations.
In addition, the implementation of e-invoices means that sellers need to adjust their financial management systems to ensure that each transaction can automatically generate a compliant invoice. This is a challenge for small sellers with weaker technical capabilities, who may need to invest in additional financial software or hire a professional accounting team. However, in the long run, tax compliance will enhance sellers' credibility, reduce the risk of tax audits, and help them gain more platform traffic support.
Image source: Google
Prepare in Advance, Optimize Financial Management
In response to the new regulation, sellers need to take proactive measures to adapt to the changes. Sellers who have not yet registered for a tax number should apply to the Malaysian Inland Revenue Board as soon as possible to avoid account restrictions due to incomplete information. It is recommended that sellers use the tax management tools provided by TikTok Shop or connect to third-party financial systems to ensure that transaction records and invoices are automatically synchronized.
For the issue of missing historical transaction records, sellers can try to supplement them with supporting materials such as bank statements and logistics documents. At the same time, pay attention to official TikTok Shop announcements to stay informed about policy details and operational guidelines, and avoid violations due to outdated information. Small and medium-sized sellers can also consider partnering with accounting service agencies to achieve tax compliance at a lower cost and ensure a smooth business transition.
Image source: Google
Under the New Policy, Challenges and Opportunities Coexist
The new e-invoice policy of TikTok Shop Malaysia is not only a signal of tighter regulation but also an essential step toward industry maturity. For sellers, adapting to the new regulations may mean short-term adjustment costs, but in the long run, compliant operations will bring a more stable business environment and a fairer competitive ecosystem.
This move by the platform echoes the global trend of e-commerce tax standardization and also provides consumers with a more transparent and trustworthy shopping experience. In the future, as the digital economy in Southeast Asia continues to develop, sellers who proactively embrace change may be able to seize opportunities in this reshuffling and win a larger market share.