LHDN Moves the E-Invoice Goalposts Again: RM3 Million Exemption and a 2028 Deadline
If you've been following Malaysia's e-invoice rollout, you'll know the dates don't stay still. The latest round of changes is the biggest yet for small businesses, and most of the advice written earlier this year, including some of ours, is now out of date.
Three things changed. The exemption threshold went up to RM3 million. The planned phase for businesses turning over RM500,000 to RM1 million no longer exists. And Phase 4's interim relaxation now runs to 31 December 2027, which means full enforcement for those businesses starts on 1 January 2028.
Sources: LHDN's e-Invoice implementation timeline (updated 30 August 2026), the e-Invoice Specific Guideline v4.9 (7 September 2026) and the e-Invoice FAQ (4 September 2026). This is a plain-language summary, not tax advice; confirm your own position with your tax agent.
The Schedule as It Stands Now
- Above RM100 million: mandatory from 1 August 2024. Relaxation ended 31 January 2025.
- RM25 million to RM100 million: mandatory from 1 January 2025. Relaxation ended 30 June 2025.
- RM5 million to RM25 million: mandatory from 1 July 2025. Relaxation ended 31 December 2025.
- Up to RM5 million (Phase 4): mandatory from 1 January 2026, or 1 July 2026 for some businesses. Relaxation runs until 31 December 2027.
- Below RM3 million: exempt, subject to conditions covered below.
In practice, the businesses that must e-invoice now are those turning over RM3 million or more, plus some smaller ones that don't qualify for the exemption. Check whether that includes you.
Who Is Actually Exempt
LHDN's FAQ says taxpayers of every type, from sole proprietors to companies and cooperatives, are exempt if their annual turnover or revenue is below RM3 million. But the exemption has conditions that catch many small companies out. It does not apply if your business:
- has a non-individual shareholder (or equivalent) with annual turnover or revenue of at least RM3 million;
- is a subsidiary of a holding company with annual turnover or revenue of at least RM3 million; or
- has a related company or joint venture with annual turnover or revenue of at least RM3 million.
LHDN's own example is a subsidiary with RM400,000 in revenue. Because its parent is required to e-invoice, the subsidiary must implement from 1 July 2026, the concessionary date, despite being far below RM3 million.
What Happens When You Grow Past RM3 Million
Crossing the threshold doesn't make you liable immediately. According to the FAQ, you must implement e-invoicing from 1 January of the second year after the year of assessment in which your turnover reached RM3 million. LHDN's example: a company that passed RM3 million in 2026 must start on 1 January 2028.
Turnover is taken from your audited financial statements where you have them, or from the revenue in your tax return where you don't.
What the Relaxation Lets Phase 4 Businesses Do
Until 31 December 2027, Phase 4 businesses that aren't ready to issue an e-invoice per transaction may issue monthly consolidated e-invoices for everything, including transactions that normally can't be consolidated. LHDN won't prosecute under section 120 of the Income Tax Act during this period, provided those consolidated e-invoices are issued. We cover the details in our guide to the relaxation period.
The relaxation isn't a holiday. Consolidated e-invoices must still be submitted monthly, not once at the end. A business that issues nothing until 2028 isn't covered by the no-prosecution promise.
There's Also a Way to Fix Past Gaps
LHDN has opened an e-Invoice Special Voluntary Disclosure Programme (SVDP), running from 7 July 2026 to 31 December 2027. Businesses that missed submissions or submitted e-invoices with errors can correct them without compliance reviews or penalties on what they disclose. No registration is needed. We explain how it works in a separate post.
What to Do With the Extra Time
- Work out which group you're in. Check your turnover and your shareholders, parent and related companies against the RM3 million test, not just your own revenue.
- If you're Phase 4, make sure monthly consolidated e-invoices are going out. That's the condition for the no-prosecution promise.
- Use 2027 to get transaction-level e-invoicing working. From 1 January 2028 the normal rules apply, including individual e-invoices on request and no consolidation for sales above RM10,000.
- If you've already slipped, use the SVDP before 31 December 2027.
- If you're exempt but your customers are large companies, expect to be asked anyway. Big buyers need validated e-invoices to support their own expense claims, and voluntary adoption is allowed.
Want E-Invoicing Handled Without the Guesswork?
Our MyInvois platform validates every invoice against LHDN's rules before submission, consolidates monthly, and warns you before the 7th-of-the-month cut-off. From RM29/month, no contract, and you can export all your data any time.
See the E-Invoice PlatformThe Bottom Line
For many small businesses the deadline has moved further away, and for those under RM3 million it has gone altogether. But the exemption is narrower than it looks, the relaxation still requires monthly submissions, and January 2028 will arrive faster than it seems. The businesses that use this time to get their systems ready will have the calmest 2028.
Frequently Asked Questions
Probably, unless a shareholder that is a company, your holding company, or a related company or joint venture has turnover of at least RM3 million. If any of those apply, the exemption doesn't, and LHDN's FAQ treats you as implementing from 1 July 2026.
The interim relaxation for businesses with turnover up to RM5 million runs until 31 December 2027, so the normal rules and penalties apply from 1 January 2028.
No. With the exemption now at RM3 million, there is no separate phase for that band.
Yes. LHDN's FAQ says businesses that are ready may implement earlier than their timeline, and many will be asked to by larger customers.