E-invoicing in Malaysia: where it stands now and what to do

If you read about e-invoicing in mid-2025, much of what you read has since changed. The exemption threshold has gone up twice, the last phase has been reshaped, and the penalty-free period for smaller businesses has been stretched to the end of 2027. Here is the position as of October 2026, based on LHDN's own guidelines and FAQs. The phases LHDN rolled out mandatory e-invoicing by annual turnover, generally based on the financial year 2022 audited accounts: - More than RM100 million: from 1 August 2024 - More than RM25 million up to RM100 million: from 1 January 2025 - More than RM5 million up to RM25 million: from 1 July 2025 - Up to RM5 million: from 1 January 2026 For businesses under RM3 million that cannot use the exemption described below, LHDN's FAQs give a later "concessionary" start date of 1 July 2026. The exemption is now RM3 million In June 2025 the start for businesses earning RM1 million to RM5 million was pushed back to 1 January 2026. In December 2025 the government raised the exemption threshold from RM500,000 to RM1 million, which removed the planned July 2026 phase for the smallest firms. Then, in his National Day address on 30 August 2026, the Prime Minister announced a further rise to RM3 million. LHDN applied it from 1 September 2026 in e-Invoice Guideline version 4.8. So today, a business with annual turnover or revenue below RM3 million does not have to issue e-invoices, including self-billed e-invoices. This covers sole proprietors, partnerships, companies and co-operatives. A sole proprietor with several businesses must add them all together. The exemption does not apply if your business: - has a non-individual shareholder (for example, another company) with turnover of RM3 million or more; - is a subsidiary of a holding company with turnover of RM3 million or more; or - has a related company or joint venture with turnover of RM3 million or more. LHDN's FAQs say exempt businesses do not need to apply or get approval, will not face e-invoice compliance action or penalties, and may stop issuing e-invoices immediately, even if they had already started. Voluntary use is still encouraged. If your turnover later reaches RM3 million in 2026 or after, you must start on 1 January of the second year after that year. Reaching RM3 million in 2026, for example, means starting on 1 January 2028. The relaxation period runs to the end of 2027 Every phase has had an interim relaxation period. For the up-to-RM5 million group, whether they started on 1 January 2026 or 1 July 2026, it now runs until 31 December 2027. During this period you may issue one consolidated e-invoice for all your sales, including transactions that normally need their own e-invoice. You still have to submit it every month, within seven calendar days after the month ends. LHDN has said it will not prosecute under section 120 of the Income Tax Act during this period, provided those consolidated e-invoices are issued. Outside the relaxation period, any single transaction above RM10,000 needs its own e-invoice. Fixing past mistakes LHDN opened an e-invoice Special Voluntary Disclosure Programme on 7 July 2026, running until 31 December 2027. Businesses that missed e-invoices, submitted incorrect ones, or never submitted any can correct them through it. Exempt businesses do not need to take part. A note on legal status The base rules, the Income Tax (Issuance of Electronic Invoice) Rules 2024, were gazetted with effect from 1 October 2024. The RM3 million exemption and the 2027 relaxation date appear in LHDN's guidelines and FAQs. We could not find a separate gazette notice for them. LHDN updates these documents often, so check the latest version before you act. What to do now - Work out your turnover on the basis LHDN uses: audited accounts if you have them, otherwise the revenue in your tax return. - Check your group. Any corporate shareholder, holding company, related company or joint venture at RM3 million or more takes the exemption away. - If you are exempt and already issuing e-invoices, decide whether to stop or carry on voluntarily. Larger customers may still prefer receiving them. - If you are not exempt, make sure a consolidated e-invoice goes in every month. Then use the time before 31 December 2027 to move to individual e-invoices. - If you missed submissions or got them wrong, consider the disclosure programme before it closes. - Watch your growth. Crossing RM3 million gives you about a year's notice, and good books show it coming. What Synco can do Synco sets up cloud accounting software with bank feeds and keeps your books, so your turnover figures are current and you can see where you stand against the threshold. Accounting starts from RM 300 a month.