E-invoice exemption RM3 million in Malaysia: who still must comply

On 1 September 2026, the e-invoice exemption threshold in Malaysia went up from RM1 million to RM3 million in annual revenue. The Inland Revenue Board of Malaysia or Lembaga Hasil Dalam Negeri Malaysia (LHDN) says more than 1.1 million businesses are now outside the mandate.

If your business was preparing for e-invoicing (e-invois), or has already started, you may be wondering whether any of it still applies to you. This guide explains who is out, who is still in, and what to do next.

The quick answer: The e-invoice exemption threshold in Malaysia rose from RM1 million to RM3 million in annual revenue on 1 September 2026. Businesses with revenue below RM3 million and not related to any larger company are exempt from e-invoicing. Businesses with revenue of RM3 million or more, or whose shareholder company, holding company or related company has RM3 million or more, must still comply.

1. What is an e-invoice and MyInvois?

An e-invoice is a digital record of a sale or purchase that LHDN checks before it counts as valid. You submit the invoice details, LHDN validates them in near real time, and the validated invoice gets a unique number and a QR code your customer can use to check it.

MyInvois is LHDN's system for submitting e-invoices. You can use the free MyInvois Portal, the free MyInvois e-POS for small retailers, or connect your accounting software directly through an API (a link that lets two systems exchange data).

2. How has the e-invoicing rollout been phased?

E-invoicing has been phased in by business size, based on revenue in financial year 2022 (or the year of assessment 2022 tax return if there were no audited accounts). The table below shows each group and its implementation date.

The exemption line has moved several times:

• June 2025: raised from RM150,000 to RM500,000.
• December 2025: raised to RM1 million.
• 1 September 2026: raised to RM3 million.

The latest change was announced by Prime Minister Anwar Ibrahim in the 2026 National Day address.

Published summaries of Budget 2027, tabled on 9 October 2026, do not report any further e-invoicing changes.

3. How is annual revenue measured for the RM3 million exemption?

Revenue for the e-invoice exemption is taken from your audited accounts, or from the figure declared in your tax return if you have no audited accounts. LHDN's e-Invoice General FAQs (updated 4 September 2026) set this out:

• If you have audited accounts: use the revenue in the statement of comprehensive income for the relevant year.
• If you do not: use the annual revenue declared in your tax return for the relevant year of assessment.

For existing businesses, the starting point is 2022 revenue. If you were below RM3 million in 2022 but reach RM3 million in a later year, you must start e-invoicing on 1 January of the second year after that year of assessment. For example, a company that first reaches RM3 million in YA2026 starts on 1 January 2028.

New businesses follow similar rules:

• Started in 2023 to 2025 and reached RM3 million in any of those years: e-invoicing from 1 July 2026.
• Started in 2023 to 2025 and stayed below RM3 million: exempt for now. Once you reach RM3 million, you start e-invoicing on 1 January of the second year after that year of assessment, as in the example above.
• Started in 2026 or later: exempt while below RM3 million. Once you reach RM3 million, you start e-invoicing on 1 January of the second year after that year of assessment.

Getting this right depends on reliable year-end figures, which is where up-to-date accounting records matter.

4. Who still has to comply with e-invoicing?

You must still comply if your revenue is RM3 million or more. According to the e-Invoice Guideline, the RM3 million exemption also does not apply to you if:

• you have a shareholder that is not an individual (for example, another company) with revenue of RM3 million or more;
• you are a subsidiary of a holding company with revenue of RM3 million or more; or
• you have a related company or joint venture with revenue of RM3 million or more.

LHDN's FAQ says a related company has the meaning given in section 2 of the Promotion of Investments Act 1986. For e-invoicing purposes, two companies owned by the same individual shareholder are not related for that reason alone. A common director who holds no shares does not make them related either.

Businesses that qualify for the exemption can also choose to take part voluntarily.

5. What is the relaxation period for consolidated e-invoices?

Businesses with revenue up to RM5 million can issue monthly consolidated e-invoices until 31 December 2027. This covers businesses with implementation dates of 1 January 2026 or 1 July 2026.

A consolidated e-invoice is a single monthly e-invoice that bundles sales to customers who did not receive their own e-invoice. It must be submitted within seven calendar days after the end of the month.

During the relaxation period you may:

• issue one consolidated e-invoice each month for your sales, even if a customer asks for an individual one;
• issue a monthly consolidated self-billed e-invoice where self-billing applies; and
• use a general description of the goods or services.

LHDN has said it will not prosecute for e-invoicing non-compliance during this period, as long as these consolidated e-invoices are submitted on time. From 1 January 2028, the full rules apply and you will need to issue e-invoices transaction by transaction where required.

6. What is the RM10,000 e-invoice rule?

The RM10,000 rule means any single transaction above RM10,000 must have its own e-invoice and cannot go into a consolidated e-invoice. LHDN's guidelines apply it from 1 January 2026, across all industries, whether or not the customer asks.

7. When do you issue a self-billed e-invoice?

A self-billed e-invoice is an e-invoice issued by the buyer instead of the seller. Common cases are purchases from foreign suppliers and payments to agents, dealers and distributors. If you are in scope, check your purchases as well as your sales.

8. What are the penalties for not issuing an e-invoice?

Failing to issue an e-invoice when required 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. LHDN's FAQ confirms that businesses that qualify for the exemption are not penalised for not issuing e-invoices.

LHDN is also running an e-Invoice Special Voluntary Disclosure Programme from 7 July 2026 to 31 December 2027. It lets businesses that missed or got e-invoice submissions wrong put them right. A business that started e-invoicing under the previous, lower threshold and now meets the exemption criteria is not required to join it.

9. Should you adopt e-invoicing voluntarily if you are exempt?

Voluntary e-invoicing can make sense if you supply larger companies or expect to cross RM3 million soon. LHDN encourages smaller businesses to take part, and there are practical reasons to consider it:

• Larger customers may expect it. A company that is in scope needs a validated e-invoice to support its expense claims, so it may prefer suppliers who can provide one.
• You may cross RM3 million. Setting up e-invoicing while things are calm is easier than doing it against a deadline.

If you started because the previous, lower threshold applied to you, and your revenue is below RM3 million and you meet the exemption criteria, LHDN's FAQ says you can stop straight away, with no application needed, or carry on voluntarily.

10. Am I in or out of e-invoicing?

The table below summarises where common situations stand.

Frequently asked questions

Does the RM3 million e-invoice exemption apply to sole proprietors and partnerships?

Yes. LHDN's e-Invoice Guideline says the RM3 million exemption applies to all categories of taxpayers, as long as the conditions are met. Sole proprietors and partnerships below RM3 million that are not related to any larger company are therefore exempt.

Can I stop issuing e-invoices if my revenue is now below RM3 million?

Yes, if you meet the exemption criteria and your implementation date was set under the previous, lower threshold. LHDN's FAQ updated on 4 September 2026 says you can stop immediately without applying, or continue voluntarily. It does not apply if your implementation date was set because your revenue had already reached RM3 million; see the next question.

My revenue was RM3.5 million in 2022 but has fallen since. Am I exempt now?

Probably not. LHDN's FAQ says that once your e-invoicing implementation date has been set, no exemption is granted later, and you must keep issuing e-invoices even if your revenue falls below RM3 million in later years. The exception is a business that started only because the previous, lower threshold applied to it. If its revenue is below RM3 million and it meets the exemption criteria, it can stop.

Do I need to join the e-Invoice Special Voluntary Disclosure Programme if I am now exempt?

No, if you started e-invoicing under the previous, lower threshold and now meet the exemption criteria. LHDN's FAQ says such a business is not required to join the programme and can stop issuing e-invoices immediately. The programme runs from 7 July 2026 to 31 December 2027 and is meant for businesses in scope that missed e-invoice submissions or got them wrong.

Keep your invoicing and books ready for what comes next

Whether you are in or out of e-invoicing depends on your revenue, your group structure and your implementation date, and each of these can change from year to year. Keeping your books up to date lets you see where your revenue is heading and plan ahead. Get in touch with us to keep your books up to date to get your e-invoicing and wider compliance in order.