Malaysia’s e-Invoice rollout began in 2024, and the rules for smaller businesses changed again in 2026. Many owners are unsure whether the RM3 million exemption applies to them and what the relaxation period permits. This article sets out who must issue e-Invoices now, where the exemption does not apply, the penalties for non-compliance, and an eight-step checklist to prepare.
Who needs to issue e-Invoices now
LHDN’s e-Invoice Guideline (version 4.8, published 30 August 2026) exempts businesses with annual turnover or revenue below RM3 million. The threshold was previously RM1 million. For most existing businesses, the turnover that counts is taken from the FY2022 audited accounts or the YA2022 tax return.
| Your annual turnover | What applies |
|---|---|
| Below RM3 million | Exempt, unless one of the exceptions below applies |
| RM3 million to RM5 million | Mandatory since 1 January 2026, with a relaxation period until 31 December 2027 |
| Above RM5 million | Mandatory since 2024 or 2025, depending on size |
Exceptions to the exemption
Even with turnover below RM3 million, you are not exempt if:
- a company (not an individual) that owns shares in your business has turnover of RM3 million or more
- your business is a subsidiary of a holding company with turnover of RM3 million or more
- you have a related company or joint venture partner with turnover of RM3 million or more
For these businesses, e-Invoicing started on 1 July 2026. A company holding 20% or more of your shares generally counts as related. If you own several sole proprietorships, their turnover is added together.
Already issuing e-Invoices, but now under RM3 million?
You may stop straight away. No application to LHDN is needed, provided none of the exceptions applies. You can also choose to continue, which is useful if your larger customers prefer to receive e-Invoices.
What the relaxation period allows
Until 31 December 2027, businesses with turnover up to RM5 million can:
- issue one consolidated e-Invoice each month instead of one per sale
- use a general description of the goods or services sold
One rule still applies in full: any single transaction above RM10,000 needs its own e-Invoice. This has applied to all industries since 1 January 2026.
The cost of getting it wrong
Failing to issue an e-Invoice is an offence under Section 120(1)(d) of the Income Tax Act 1967. The penalty is a fine of RM200 to RM20,000, imprisonment of up to six months, or both, for each non-compliance.
An eight-step readiness checklist
- Confirm your turnover band using your FY2022 accounts or YA2022 tax return.
- Check your shareholders and related companies against the RM3 million exceptions.
- Decide how you will issue e-Invoices: the free MyInvois Portal for low volumes, or accounting software, middleware or an API for higher volumes.
- Start collecting buyer details now: Tax Identification Number (TIN), business registration number and address.
- Flag every sale above RM10,000 so that it always receives its own e-Invoice.
- Set up a monthly routine for consolidated e-Invoices, and name the person responsible for it.
- Plan for the full rules from 1 January 2028, when the relaxation period ends.
- Check LHDN’s e-Invoice page every few months. The rules have changed several times since 2024.
Key takeaways
- The exemption is based on turnover below RM3 million, but shareholding and group relationships can remove it.
- Transactions above RM10,000 always need an individual e-Invoice, whatever your turnover band.
- The relaxation period ends on 31 December 2027, so build the monthly consolidated routine to last.
Not sure where you stand?
Our Digital & e-Invoice Readiness Review (RM800) confirms whether e-Invoicing applies to you, reviews your accounting software, POS and other tools, and gives you a roadmap with priorities and estimated costs. Book your readiness review
Based on LHDN’s e-Invoice Guideline v4.8 (30 August 2026) and e-Invoice FAQ (updated 4 September 2026). This is general information, not tax advice. Confirm your position with LHDN or your tax agent.