When this guide first ran in April, it answered one question: "Do I really need e-invoice software by July?" Since 30 August there is a newer one for anyone who went live in January. Can I switch it off?
For most businesses under RM3 million a year, yes. LHDN tripled the exemption threshold, from RM1 million to RM3 million, in e-Invoice Guideline version 4.8 on 30 August 2026. Its FAQ, updated on 4 September, answers the switch-off question directly: you can stop right away, and you don't need to ask anyone first.
There are two catches. The exemption also depends on who owns your business, and a sole proprietor's shops are added together. This guide covers both, plus what to do if you've already spent money on e-invoicing.
What changed on 30 August 2026
LHDN published e-Invoice Guideline version 4.8 on 30 August 2026, following the Prime Minister's announcement. Section 1.6.1(e) now exempts "taxpayers with an annual turnover or revenue of less than RM3,000,000". The general FAQ was updated on 4 September 2026 with worked examples.
This is the second increase in under a year. In December 2025 the threshold rose from RM500,000 to RM1 million, and businesses in the RM1 million to RM3 million band were told to go live on 1 January 2026 or 1 July 2026. Many did, and nine months later most of them are exempt.
The Star reported on 4 September that businesses want clearer e-invoice rules, even as the higher threshold eases the load on smaller firms. That's fair. Three threshold changes in two years is a lot for a small business to track, and plenty of sources haven't caught up. When we checked Google Malaysia for "e-invoice exemption malaysia" on 23 September, several of the top results still quoted RM500,000 or RM1 million.
Who is exempt from e-invoice in Malaysia now?
Your status depends on your annual turnover or revenue. Use your audited financial statements if you have them, or the revenue in your tax return if you don't.
| Your situation | Status | Date that matters |
|---|---|---|
| Under RM3 million, passes the ownership test | Exempt | None, until you cross RM3 million |
| Under RM3 million, fails the ownership test | Must implement | 1 July 2026, penalty-free until 31 Dec 2027 |
| RM3 million to RM5 million | Phase 4 | Mandatory since 1 January 2026, penalty-free until 31 Dec 2027 |
| RM5 million to RM25 million | Phase 3 | Mandatory since 1 July 2025 |
| RM25 million to RM100 million | Phase 2 | Mandatory since 1 January 2025 |
| Above RM100 million | Phase 1 | Mandatory since 1 August 2024 |
The phase dates are based on your 2022 turnover. If you were under RM3 million in 2022 but reached it in 2023, 2024 or 2025, your date is 1 July 2026.
The ownership test. The exemption does not apply if your business has a non-individual shareholder (a company, for example), a holding company, or a related company or joint venture with annual turnover of RM3 million or more. A RM400,000 subsidiary of a bigger group still has to e-invoice. LHDN's own example is a small cycling company owned by a motor company. A group can't split itself into small exempt pieces.
Sole proprietors count as one. LHDN adds up every sole proprietorship registered under your name. Its example is one owner with a cosmetics shop at RM750,000, a tailor at RM820,000 and a cafe at RM1.54 million. Each business is small, but together they make RM3.11 million, so that owner has to implement e-invoicing. Businesses owned by different people are counted separately.
For what it costs to build or buy the integration, see our LHDN e-Invoice integration cost guide, which compares the MyInvois portal, middleware and custom API options with RM pricing.
Already issuing e-invoices? You can stop
If your turnover is under RM3 million and you pass the ownership test, LHDN's FAQ (questions 17 to 20) says:
- You can stop issuing e-invoices immediately.
- You don't need to apply to LHDN or get approval.
- You can keep issuing them voluntarily if you prefer.
If your date was 1 January or 1 July 2026 and you never started, you're covered too. The FAQ says no compliance action or penalty will be imposed on an exempt taxpayer (questions 15 and 16). You also don't need to join the e-invoice Special Voluntary Disclosure Programme for invoices you missed (question 19).
Should you stop? Our answer depends on what e-invoicing costs you each month.
If you pay a middleware subscription only to stay compliant, and your turnover will stay under RM3 million for the next two years, cancel it and keep the monthly fee.
If e-invoicing runs inside an accounting package you already pay for, such as SQL Account or AutoCount, leaving it on costs almost nothing. You'll need it again if you grow past RM3 million, and the setup work is already done.
If you do switch off, tell your larger customers first, in case their finance team relies on your e-invoices at month-end.
When you have to start again
If your turnover reaches RM3 million in 2026 or later, you must implement e-invoicing from 1 January in the second year after that year of assessment. LHDN's example is a company that passes RM3 million in 2026 and starts on 1 January 2028.
That gives you roughly a year's notice. Check your turnover every year, and plan the switch when you get close to RM3 million rather than after you cross it.
The relaxation period still ends on 31 December 2027
For businesses that are still in scope with a 1 January 2026 or 1 July 2026 date, the grace period hasn't changed. The interim relaxation period runs until 31 December 2027 (Specific Guideline version 4.7, April 2026). During it you can issue consolidated e-invoices monthly, and no penalties apply as long as you meet the minimum requirements.
Enforcement starts 1 January 2028. Each non-compliant invoice can then attract a fine of RM200 to RM20,000, imprisonment of up to six months, or both, under Section 120(1)(d) of the Income Tax Act 1967 (which enforces the e-invoice obligation in Section 82C). In practice LHDN usually sends a warning letter first and escalates from there. Imprisonment is pursued for fraud or sustained wilful non-compliance.
The exposure is counted per invoice. A business issuing 400 invoices a month that ignores the mandate for three months after the grace period has 1,200 non-compliant invoices. At the minimum RM200 each, that's RM240,000. If you're in scope, use the grace period to get ready.
Do SMEs need e-invoice software now?
If you're under RM3 million and exempt, no. Don't buy middleware, an API integration or a MyInvois-certified package because a vendor told you to hurry. Keep your records clean so the switch is painless if you grow.
If you're in scope and issue fewer than 50 invoices a month, the free MyInvois portal works. It's clunky, but it issues legally valid e-invoices, and a team of one or two can manage around 30 a week.
If you're in scope with more than 100 invoices a month, or you run SQL Account, AutoCount or Xero, middleware or a custom integration usually pays for itself in saved staff time. Break-even is around 30 to 50 invoices a month, where manual entry starts costing more than a subscription.
In our MyInvois integration work, the money most often wasted has gone on rushed custom builds for businesses that turned out to be exempt. The RM3 million change makes that more likely. Match the tool to your invoice volume and to what the law actually asks of you.
Your e-invoice plan by turnover band
Under RM3 million and you pass the ownership test:
- Confirm your latest turnover, adding up every sole proprietorship under your name
- Check your shareholders, holding company and related companies against the RM3 million line
- If you're already live, decide whether to keep going or stop, and tell your big customers first if you stop
- Review your turnover every year, since crossing RM3 million gives you about a year's notice
Under RM3 million but you fail the ownership test, or RM3 million to RM5 million:
- Register on MyInvois if you haven't already
- Issue test e-invoices through the portal to learn the format
- By early 2027, choose between the portal, middleware or a custom integration, based on your volume
- Have your approach live well before 1 January 2028
RM5 million and above:
- Your grace period is over. Check your workflow for gaps, including consolidated, self-billed and foreign-supplier e-invoices
- Budget for guideline updates. Version 4.8 came out on 30 August 2026, and changes arrive several times a year
Most Malaysian software houses, including us, can build a basic MyInvois connection from about RM5,000, up to RM50,000 for a full ERP integration. (For how that fits into wider software pricing, see our custom software cost Malaysia guide.) If you're not sure where you stand, WhatsApp us with your turnover band, invoice volume and accounting system. We'll tell you honestly whether you need us at all.
References
- e-Invoice Guideline version 4.8 (30 August 2026), LHDN
- e-Invoice General FAQs (updated 4 September 2026), LHDN
- Garis masa pelaksanaan e-Invois (implementation timeline), LHDN
- Clearer e-invoice rules needed, say businesses, The Star (4 September 2026)
- Malaysia raises e-Invoice exemption threshold to MYR 3 million, VATupdate (8 September 2026)
- Malaysia Updates e-Invoicing Framework: Specific Guide v4.7 and Phase 4 Relaxation Extended to 31 December 2027, VATupdate
- E-invoice exemption threshold up to RM1mil starting 2026, The Star (December 2025)
This article does not constitute legal or tax advice. LHDN guidelines and exemption thresholds change often; check the current rules with your tax agent or the LHDN e-invoice portal before making compliance decisions.
