e-Invoice exemption threshold raised to RM3 million: does your company still need to issue e-Invoices?
Many small companies breathed a sigh of relief when the threshold changed. But you still need to think through how the exemption is worked out, and whether to switch off a system you have already set up.
LHDN (Inland Revenue Board, LHDN/IRBM) has raised Malaysia's e-Invoice exemption threshold from annual revenue of RM1 million to RM3 million, effective 1 September 2026 (e-Invoice Guideline version 4.8). Businesses with annual revenue below RM3 million that meet LHDN's conditions can stop issuing e-Invoices, or continue voluntarily. Ask your accountant to confirm whether you qualify based on your company's records.
- The exemption threshold rises from RM1 million to RM3 million, effective 1 September 2026.
- Companies with annual revenue between RM3 million and RM5 million fall under Phase 4 and must still issue e-Invoices.
- The grace period runs until 31 December 2027 and applies only to Phase 4 (annual revenue of RM5 million and below).
- After the grace period, each offence can be fined RM200 to RM20,000 (section 120(1)(d) of the ITA 1967).
- Exemption does not exempt you from bookkeeping. Accounting records and documents must still be kept for at least 7 years.
Say you run an office stationery wholesale company in Seremban with annual revenue of about RM1.8 million. Late last year, to prepare for Phase 4, you spent time opening a MyInvois account, connecting it to your accounting software and teaching your clerk how to issue invoices.
In early September, a supplier forwards a news item in a WhatsApp group: "The exemption threshold has been raised to RM3 million." Two thoughts cross your mind. First, finally, no more issuing. Second, was all the money and time spent earlier wasted?
Both thoughts are normal. A higher threshold is good news for small companies with revenue of a few million ringgit or less. But whether to stop, how to stop and whether customers will mind after you stop all need to be worked through step by step.
e-Invoice: a validated electronic invoice issued through LHDN's MyInvois system. MyInvois: LHDN's official platform for receiving and validating e-Invoices.
What has changed in the e-Invoice exemption threshold?
The exemption threshold has been raised from annual revenue of RM1 million to RM3 million, effective 1 September 2026. LHDN announced the change in e-Invoice Guideline version 4.8, issued on 30 August 2026.
Put simply, previously only businesses with annual revenue below RM1 million could skip issuing. Now businesses with revenue between RM1 million and RM3 million that meet LHDN's conditions can also stop issuing e-Invoices. LHDN also allows these businesses to continue voluntarily, so you have a choice.
e-Invoice implementation phases at a glance
| Phase | Annual revenue | Start date |
|---|---|---|
| Phase 1 | Above RM100 million | 1 August 2024 |
| Phase 2 | RM25 million to RM100 million | 1 January 2025 |
| Phase 3 | RM5 million to RM25 million | 1 July 2025 |
| Phase 4 | RM5 million and below | 1 January 2026, grace period until 31 December 2027 (this phase only) |
| Exempt | Below RM3 million and meeting LHDN's conditions | From 1 September 2026 (previously RM1 million) |
In other words, Phase 4 businesses with revenue between RM3 million and RM5 million must still issue e-Invoices, with the grace period running to the end of 2027. Businesses above RM5 million already started in Phases 1 to 3. Only those below RM3 million fall into the range where you can choose.
Sources: LHDN e-Invoice (Guideline version 4.8)
Does my company still need to issue e-Invoices?
If your annual revenue is RM3 million or more, you must continue. If it is below RM3 million and you meet LHDN's conditions, you can choose to stop or continue. Before deciding, have the revenue figure for your latest full financial year ready. If your books are not done, you cannot take this step.
Confirm your annual revenue
Use the revenue figure in your financial statements or accounting software, not a guess. Total bank deposits are not the same as revenue; they may include shareholder loans, refunds or transfers.
Compare it with the RM3 million threshold
If revenue is RM3 million or more, continue issuing e-Invoices under your original phase. If it is below RM3 million, go to the next step.
Check whether you meet LHDN's other conditions
The exemption comes with conditions, such as how revenue is calculated and how groups or related companies are treated. Follow LHDN's latest guidance for details. It is best to have your accountant check this with you.
Look at who your customers are
If most customers are walk-in buyers and small traders, stopping has little impact. If most are large companies, government departments or listed companies, their finance teams may be used to receiving e-Invoices, so talk to them first.
Decide to stop or continue voluntarily
Both are compliant. Decide based on your customer mix, clerical staff and system costs, and write down your decision and the reasons.
Check again every year
If revenue rises back above the threshold, you must resume issuing e-Invoices; follow LHDN's latest guidance. Take a look each year when you close the books.
Not sure whether you are exempt? Tell us your revenue for the last year and the type of customers you have, and we will take a look first.
Ask About e-Invoice on WhatsAppI have already set up MyInvois. Should I switch it off now?
Not necessarily, and the setup cost you paid is not necessarily wasted. Back to the stationery wholesaler in Seremban: there are three reasons worth thinking about first.
First, revenue changes. It is RM1.8 million this year, but if he wins a few more annual contracts with schools and companies in two years' time, it could go over RM3 million. By then the system is already in place and the clerk knows how to use it, so there is no need to start from zero.
Second, large customers' habits. If you often supply large companies, schools or government departments, they may prefer to receive e-Invoices, which makes reconciliation easier and may also make payment smoother.
Third, continuing voluntarily is allowed. You can keep issuing or pause, but check with your accounting software provider whether your data and settings will be kept if you pause.
Companies that may want to continue
Most customers are large companies or government bodies, revenue is close to RM3 million, the system runs smoothly and the clerk is used to the process.
Companies that may want to pause
Most customers are walk-in buyers, revenue is far below the threshold, and issuing invoices each month adds a noticeable staff burden.
Companies that have not set up yet
If revenue is below the threshold and you meet the conditions, you can hold off on setting up. But check your revenue every year and prepare early as you approach the threshold.
Will customers mind if you stop issuing e-Invoices?
Most customers will not mind, as long as you tell them in advance. You may have stopped, but your customers may still be in the e-Invoice system themselves, and their finance teams need documents that match.
A good approach is to send your main customers a short letter or email explaining that your company meets the exemption conditions under LHDN's guidelines and will issue regular invoices from now on. If a customer has special requirements, discuss with your accountant how to handle them.
Also, as a buyer, your suppliers may still send you e-Invoices. Keep any e-Invoices you receive and record them in your books.
What records do you still need to keep after an e-Invoice exemption?
Keep the basis for your revenue calculation, your decision to stop, and all invoices and documents, for at least 7 years. The exemption only covers "issuing e-Invoices". Your obligations to keep books, file tax and keep documents remain the same.
- The basis for each year's revenue figure, such as financial statements or accounting software reports, showing you are really below RM3 million.
- The date and reason for your decision to stop or continue, in a short internal note.
- All e-Invoices issued through MyInvois before you stopped, kept in full.
- Regular invoices and receipts issued after you stopped, numbered and kept as usual.
- e-Invoices and documents your suppliers send you.
- All accounting records and documents kept for at least 7 years (section 82 of the Income Tax Act 1967; section 245 of the Companies Act 2016).
The grace period runs until 31 December 2027 and applies only to Phase 4 (annual revenue of RM5 million and below). During the grace period, you can use consolidated e-Invoices, descriptions can be less detailed, and you will not be penalised under section 120. After the grace period, failing to issue an e-Invoice when required falls under section 120(1)(d) of the ITA 1967, with a fine of RM200 to RM20,000 per offence, or imprisonment of up to 6 months, or both.
Sources: LHDN e-Invoice, LHDN (Inland Revenue Board of Malaysia)
Will the e-Invoice exemption threshold change again?
Possibly. No one can say for sure. Since e-Invoice was rolled out, LHDN has updated its guidelines several times.
The safest approach is to keep your books up to date every month so you always know your revenue, and to keep an eye on LHDN announcements. If the rules change, you can quickly decide whether to adjust.
To learn about setting up or stopping e-Invoice, see our e-Invoice / MyInvois service. If your books are not in order yet, start with monthly bookkeeping so your revenue figures are reliable. For what to do at month end, see the Sdn Bhd monthly closing checklist.
Stop, continue, or set up again? Tell us your situation and we will help you work out the next step.
Ask Us on WhatsAppSources: LHDN e-Invoice, LHDN (Inland Revenue Board of Malaysia), SSM (Companies Commission of Malaysia). Exemption conditions follow LHDN's latest announcements; ask your accountant to confirm based on your company's records.
BookKeeper editorial team · Published 2026-10-24 · last updated 2026-10-25
Regulatory details in this guide were checked against the official LHDN, SSM, KWSP, PERKESO and MySST websites. Rules change, so always follow the latest official announcements.Editorial policy
Questions you may still have
Tap a question to see the answer. Can't find yours? Just ask us.
Ask on WhatsAppWhat is the e-Invoice exemption threshold now?
Under LHDN's e-Invoice Guideline version 4.8 (issued 30 August 2026), the exemption threshold was raised from annual revenue of RM1 million to RM3 million, effective 1 September 2026. Businesses with annual revenue below RM3 million that meet LHDN's conditions can stop issuing e-Invoices, or continue voluntarily.
I have already set up MyInvois. Should I switch it off?
Not necessarily. LHDN allows businesses that qualify for exemption to continue issuing e-Invoices voluntarily. If most of your customers are large companies used to receiving e-Invoices, continuing may be more convenient. If most are walk-in customers, stopping can save you monthly work.
What if our revenue goes above RM3 million later?
If revenue exceeds the threshold, you no longer qualify for exemption and must resume issuing e-Invoices. Follow LHDN's latest guidance on timing and how to do it. So even if you are exempt now, check your revenue every year and do not throw away your system and process entirely.
When does the e-Invoice grace period end, and which companies does it cover?
The grace period runs until 31 December 2027 and applies only to Phase 4, meaning businesses with annual revenue of RM5 million and below, implemented from 1 January 2026. Companies with revenue between RM3 million and RM5 million fall under Phase 4, must still issue e-Invoices and enjoy the grace period. Businesses above RM5 million already started in Phases 1 to 3.
If we are exempt from e-Invoice, do we still need to do bookkeeping?
Yes. The exemption only covers the obligation to issue e-Invoices. The company must still keep its books, keep documents for at least 7 years and file tax on time. Clear books are also how you prove your revenue is really below the threshold.
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