e-Invoice Exemption RM3 Million: Who Is Exempt and What to Do in 2026

Who is exempt from e-Invoice in Malaysia as of October 2026?

Any taxpayer with annual turnover or revenue of less than RM3 million is exempt from e-Invoice, unless one of the related-party exclusions below applies. The rule is in paragraph 1.6.1(e) of LHDN's e-Invoice Guideline version 4.8, published on 30 August 2026. The Prime Minister announced the change the same day, and it took effect on 1 September 2026.

The exemption covers every category of taxpayer: individuals in business (sole proprietors), partnerships, companies, co-operatives and others. You do not need to apply to LHDN (also known as HASiL or IRBM). If you meet the conditions, the exemption simply applies.

The threshold has moved several times, so older articles and seminar slides may quote a figure that is now out of date:

• RM150,000, the original threshold
• RM500,000
• RM1 million
• RM3 million, from 1 September 2026

Separately, some transactions never need an e-Invoice, whatever the size of the business. Paragraph 1.6.7 of the Guideline lists employment income, pensions, alimony, zakat, certain dividend distributions, trades in listed securities, certain share disposals and certain donations.

When does the RM3 million exemption not apply?

The exemption does not apply if a non-individual shareholder, holding company, related company or joint venture connected to your business has turnover or revenue of at least RM3 million. Under paragraph 1.6.10 of the Guideline, you are not exempt if:

1. you have a non-individual shareholder, such as a company, with turnover or revenue of at least RM3 million;
2. you are a subsidiary of a holding company with turnover or revenue of at least RM3 million; or
3. you have a related company or joint venture with turnover or revenue of at least RM3 million. "Related company" has the meaning given in section 2 of the Promotion of Investments Act 1986.

This often catches family groups. Example: a Johor Bahru trading Sdn Bhd with RM900,000 of sales is owned by a holding company with revenue of RM8 million. The trading company is below RM3 million on its own, but it is a subsidiary of a holding company above the line, so the exemption does not apply.

A business caught by an exclusion remains within the normal implementation timeline. The Guideline gives no separate start date for these businesses, so confirm your exact date with your tax adviser rather than relying on a figure seen online.

Quick self-check before you assume you are exempt:

• Is your own annual turnover or revenue below RM3 million?
• Does any corporate or other non-individual shareholder have RM3 million or more?
• Is your holding company, a related company or a joint venture at RM3 million or more?
• Do your financial statements and tax return show the same revenue figure?

When do non-exempt businesses have to start e-invoicing?

Businesses that are not exempt follow the phased timeline below, which is set by annual turnover or revenue. The bands were originally based on FY2022 audited accounts, or the YA2022 tax return where accounts were not audited, and once your date was set, later changes in revenue did not move it. The RM3 million exemption is a separate test; if you are unsure which revenue figures apply to it, ask your tax adviser.

Annual turnover or revenue	Implementation date
More than RM100 million	1 August 2024
More than RM25 million, up to RM100 million	1 January 2025
More than RM5 million, up to RM25 million	1 July 2025
Up to RM5 million (if not exempt)	1 January 2026
Less than RM3 million, no exclusion applies	Exempt from 1 September 2026

If one of the related-party exclusions applies to you, do not read your date off this table; confirm it with your tax adviser.

New businesses have their own rules:

• Started between 2023 and 2025 with turnover of at least RM3 million: implement from 1 July 2026.
• Started in 2026 or later: implement from 1 July 2026 or the commencement date. If first-year revenue is expected to be below RM3 million, the second-year rule explained below applies instead.

Any business may also implement e-Invoice voluntarily before its date.

We already started e-invoicing. Can we stop now?

Yes. HASiL's e-Invoice FAQ dated 4 September 2026 confirms that a business which has already started e-invoicing, but now meets the exemption criteria, may stop issuing e-Invoices immediately. No application or prior approval is needed.

Stopping is a choice, not an obligation; you may prefer to continue voluntarily if your corporate customers ask for e-Invoices. If you do stop, do it cleanly:

1. Confirm you qualify. Check your revenue and all three related-party exclusions, and keep the working on file.
2. Pick a clear cut-off date, such as the first day of a month, so it is obvious which sales were e-invoiced and which were not.
3. Tell your customers, especially business customers who used your e-Invoices as proof of expense. Your normal invoices and receipts serve that purpose from now on.
4. Keep your MyInvois access. Leave logins and settings in place; you may need them again if revenue grows.
5. Keep every validated e-Invoice already issued, together with your normal invoices from the cut-off onwards.
6. Agree how to correct older e-Invoices. If a sale e-invoiced before the cut-off later needs a credit note, ask your tax adviser how to issue it.

The exemption took effect on 1 September 2026. If your business was required to e-invoice before then and some e-Invoices were missed or wrong, check with your tax adviser whether those past periods need disclosure under the e-Invoice SVDP.

What happens when an exempt business grows past RM3 million?

An exempt business whose annual turnover or revenue reaches RM3 million must implement e-Invoice from 1 January of the second year after the year it reached RM3 million. The rule applies where RM3 million is reached in year of assessment 2026 or a later year, and it leaves a full calendar year in between to prepare.

Year revenue reaches RM3 million	e-Invoice required from
2026	1 January 2028
2027	1 January 2029
2028	1 January 2030

Example: a Melaka furniture retailer has revenue of RM2.6 million in 2026 and RM3.1 million in 2027. It reaches RM3 million in 2027, so it stays outside e-Invoice through 2027 and 2028 and must issue e-Invoices from 1 January 2029. That lead time only helps if someone watches revenue monthly; a retailer whose books are a year behind may not notice it has crossed the line until the deadline is close.

The same second-year rule applies to a new business that starts in 2026 or later and expects first-year revenue below RM3 million. As your date approaches, work through our e-Invoice preparation checklist.

Do exempt businesses still need to issue invoices and keep records?

Yes. The exemption removes the requirement to issue e-Invoices, not the requirement to invoice customers and keep books. Exempt businesses still:

• issue normal invoices, bills or receipts to customers;
• keep supplier invoices and receipts for their expenses;
• maintain proper books of account; and
• keep records for seven years, as explained in our guide to how long to keep business records.

Your customers are covered too: under paragraph 1.6.2 of the Guideline, a buyer can use a normal receipt from an exempt supplier as proof of expense.

It also helps to know what you are not issuing. An e-Invoice is submitted to LHDN through the MyInvois Portal or an API and validated, and the validated e-Invoice carries a QR code or validation link. A PDF invoice emailed to a customer is not an e-Invoice by itself. e-Invoices come as invoices, credit notes, debit notes and refund notes, plus self-billed versions of each.

Finally, your exemption rests on your revenue figure, so that figure must be reliable. Clean monthly sales records, bank statements and financial statements are your evidence if LHDN ever asks.

Is there still a relaxation period, and what about past mistakes?

Yes, for businesses in the last phase. Phase 4 taxpayers (turnover up to RM5 million, with an implementation date of 1 January 2026 or 1 July 2026) have an interim relaxation period until 31 December 2027, under section 16 of the e-Invoice Specific Guideline version 4.9.

During that period they may consolidate more widely, issue consolidated self-billed e-Invoices, use any description in the description field and decline individual e-Invoice requests. LHDN will not prosecute under section 120 of the Income Tax Act 1967 during the period, provided these conditions are met. Our guide to consolidated e-Invoices and the RM10,000 rule explains what this means day to day. The six-month relaxation periods for the earlier phases have all ended.

For past errors, LHDN runs an e-Invoice Special Voluntary Disclosure Programme (SVDP) from 7 July 2026 to 31 December 2027. It is for businesses that missed e-Invoices since their mandatory date, submitted e-Invoices with errors, or are under (or notified of) an e-Invoice compliance review. Read our guide to the e-Invoice SVDP and involve your tax adviser before you decide.

How WeCount helps

WeCount keeps your books up to date every month, so you can see your revenue against the RM3 million line early and keep the sales evidence your exemption rests on. If you must e-invoice, or choose to continue, our LHDN e-Invoice support runs alongside your bookkeeping: we prepare the monthly figures, flag sales that need individual e-Invoices and reconcile e-invoiced sales to your bank. Regulated audit, tax-agent and professional accountancy services are delivered through appropriately authorised partners where required. Talk to us about your situation.