Small business owners have had plenty of questions about e-invoicing, and the rules have shifted again in their favour. Since 1 September 2026, e-Invoice Malaysia requirements no longer apply to businesses with annual turnover below RM3 million that meet the Inland Revenue Board’s (LHDN) exemption criteria. Here is a clear guide to where things stand as of November 2026.
How e-invoicing reached SMEs
LHDN rolled out e-invoicing in phases by annual turnover. Businesses above RM100 million started on 1 August 2024, followed by those between RM25 million and RM100 million in January 2025, and RM5 million to RM25 million in July 2025. Phase 4, covering businesses up to RM5 million that are not exempt, began on 1 January 2026.
The exemption line has risen along the way. It was RM500,000 until the end of 2025, RM1 million at the start of 2026, and RM3 million from 1 September 2026, according to a timeline compiled by VIVOS and confirmed by 3E Accounting.
6 things SMEs should know about e-Invoice Malaysia
1. Under RM3 million? You may be exempt
Businesses with annual turnover or revenue below RM3 million that meet LHDN’s criteria do not need to issue e-invoices. That takes a large share of micro and small enterprises out of the requirement altogether.
2. Group links can change the answer
The exemption does not simply follow your own sales figure. If a corporate shareholder, holding company, related company or joint venture partner has turnover of RM3 million or more, your business may still need to comply. Check your group structure before assuming you are exempt.
3. The relaxation period runs to 31 December 2027
For taxpayers with turnover up to RM5 million who are covered by e-invoicing, LHDN has extended the interim relaxation period to 31 December 2027. During this time, businesses can follow simplified rules while they get their systems in order, and LHDN has said penalties will not be imposed on those who follow the relaxation guidance.
4. Monthly consolidation keeps things simple
During the relaxation period, Phase 4 businesses may combine their transactions into one consolidated e-invoice each month. Retailers can keep giving customers normal receipts and submit the consolidated e-invoice afterwards, typically within seven days of the month’s end.
5. Watch the RM10,000 rule after 2027
Once the relaxation period ends, any single transaction above RM10,000 will need its own validated e-invoice and cannot be bundled into the monthly consolidation. Businesses with occasional large sales should plan for this now.
6. Free tools are available
You do not have to buy software to comply. LHDN offers the free MyInvois Portal for submitting e-invoices online, and a free MyInvois e-POS for small retailers. Larger or busier businesses can connect their accounting system directly through an API.
A chance to fix past slips
LHDN has also introduced a voluntary correction programme, PKPS e-Invois, which allows businesses to correct missed or incorrect e-invoices without penalty until 31 December 2027. For owners who struggled during the early months, this is a useful way to tidy up records.
Why going digital still makes sense
Even if your business is now exempt, e-invoicing can make life easier. Digital invoices reduce paperwork, speed up reconciliation and make tax filing simpler. Many larger customers and suppliers already work digitally, so being ready can help small firms win and keep business as they grow past the threshold. If you are just starting out, our SSM business registration guide covers the first steps.
Quick checklist for SME owners
- Confirm your annual turnover and your group companies’ turnover.
- Decide whether you are exempt, and record how you reached that conclusion.
- If you are covered, register on MyInvois and set a monthly reminder for consolidated e-invoices.
- Speak to your accountant or tax adviser if anything is unclear.
For the latest guidelines and FAQs, visit the Inland Revenue Board of Malaysia (LHDN) official website.
