The e-Invoice Relaxation Period Now Runs to 31 December 2027 — What Phase 4 SMEs Should Do With the Extra Year

Two things changed in 2026 for businesses in Phase 4 of the LHDN MyInvois mandate, and both are good news. If you last checked the rules in 2025, your deadline — and possibly your obligation — has moved.

What changed

• The relaxation period was extended. In April 2026 LHDN pushed the end of the Phase 4 interim relaxation period from 31 December 2026 to 31 December 2027. Full enforcement now begins on 1 January 2028. The mandatory start date of 1 January 2026 did not move.
• The exemption threshold was raised. From 1 September 2026, businesses with annual turnover or revenue below RM 3 million are exempt from e-Invoice, up from RM 1 million. Phase 4 is now, in practice, RM 3 million to RM 5 million.

So: if you turn over between RM 3 million and RM 5 million, you have been in scope since January 2026 and you have until the end of 2027 before penalties apply. If you are under RM 3 million, read our exemption guide first — you may be out of scope entirely.

Which phase you are in is decided by your turnover in year of assessment 2022. Two further groups were brought in on 1 July 2026: businesses that started operating between 2023 and 2025 and reached RM 3 million in YA2023, YA2024 or YA2025, and businesses that were below RM 3 million in YA2022 but reached it in one of those years. Both get the same relaxation period, to 31 December 2027 (LHDN e-Invoice General FAQs, questions 12 to 14; e-Invoice Specific Guideline, Table 16.1).

What the relaxation period actually means

The relaxation period is not an exemption. Phase 4 businesses are already required to issue e-Invoices. What LHDN granted is a window in which the rules are relaxed and the focus is on helping businesses comply rather than on enforcement.

During the relaxation period you may:

• Issue consolidated e-Invoices for most transactions — one monthly summary document, submitted within seven days after month-end — instead of one e-Invoice per sale.
• Use general descriptions of what was sold rather than full line-item detail.
• Decline a buyer’s request for an individual e-Invoice and continue with consolidated ones.

Two things do not relax:

• Any single transaction above RM 10,000 must be issued as an individual e-Invoice, even during the relaxation period.
• The obligation itself. A business that issues nothing at all is not covered by the relaxation.

From 1 January 2028 the concessions end. Standard transactions need individual e-Invoices, buyer requests made within the month have to be honoured, and the penalties in the Income Tax Act 1967 apply — a fine of RM 200 to RM 20,000 per offence, imprisonment of up to six months, or both.

Missed or wrong e-Invoices: the SVDP

Alongside the relaxation period, LHDN is running an e-Invoice Special Voluntary Disclosure Programme (SVDP) from 7 July 2026 to 31 December 2027 (e-Invoice Specific Guideline, section 17). It is for e-Invoices you should have issued and did not, and for ones issued with wrong or incomplete details. The government announced it in July 2026 as a window for voluntary corrections without e-Invoice penalties until the end of 2027 (NST, 6 July 2026).

There is no separate registration. In practice a wrong e-Invoice is reversed with a credit note and issued again correctly, using the SVDP document versions, within the programme period. LHDN encourages disclosing as soon as you find a problem rather than saving corrections for the end of 2027 — and a business that is exempt under the RM 3 million threshold does not need to take part at all.

Do not treat the extra year as a reason to wait

An extension is the cheapest time to get things wrong. Fixing a field-mapping problem in 2026 or early 2027 is an inconvenience; fixing it in February 2028 is a compliance issue. The businesses we see struggle are not the ones that started early and found problems, but the ones that found the problems in the last quarter.

The three questions to answer first

Before anyone talks to you about software, you should be able to answer these.

1. How do you actually raise an invoice today?

Not the official process — the real one. Who types it, into what, and what happens next. Most SMEs we speak to have at least one step that lives in someone’s head or in a WhatsApp thread. That step is usually where e-Invoice integration breaks.

2. How many invoices do you issue per month?

This single number decides your whole approach. At low volume, keying invoices into the MyInvois portal by hand is genuinely workable. At higher volume it becomes a fixed daily cost and a reliable source of typos — and that is the point where connecting your existing system pays for itself.

3. What system already holds the data?

Accounting software, a POS, an ERP, or something built in-house. You almost certainly do not need to replace it. Most of the accounting packages common in Malaysia can be connected to the MyInvois API through an integration layer, so invoices flow from where they already live.

What usually goes wrong

From the integrations we have done, the same handful of problems come up:

• Missing or mismatched tax identification numbers. Your buyer records need a TIN, and plenty of existing customer databases do not have one.
• Classification codes. Every line needs the right code. Getting this wrong is the most common cause of rejection.
• Rejections that nobody sees. If a submission fails and the error only exists in an API log, staff will keep invoicing as though everything is fine. Whatever you build must surface failures to a human.
• Consolidated invoices for retail and F&B. Counter receipts are handled differently from standard B2B invoices, and the rules are easy to misread.

A realistic plan for the extra year

You do not need to solve everything at once.

1. 1Confirm your position. Check your turnover against the RM 3 million threshold and the exemption conditions, on the same basis your accountant uses for your accounts.
2. 2Clean your customer data. Chase missing TINs now. This is unglamorous, needs no software, and is the single most common blocker.
3. 3Test in the sandbox. LHDN provides a sandbox environment. Prove your fields validate there before touching live invoices.
4. 4Run a full month of individual e-Invoices in 2027, while the relaxation period still protects you, and fix what breaks.
5. 5Write down who fixes rejections. A named person, not a team.

If you are under RM 3 million

From 1 September 2026, businesses below RM 3 million in annual turnover or revenue are exempt — provided they do not have a non-individual shareholder, holding company, related company or joint venture with turnover of RM 3 million or more. The earlier threshold of RM 1 million, set on 6 December 2025, no longer applies.

If you are between RM 1 million and RM 3 million and already issuing e-Invoices, LHDN has now answered the question directly. Its e-Invoice General FAQs (updated 4 September 2026, questions 15 to 20) say that a business with annual turnover or revenue below RM 3 million that meets the exemption criteria may discontinue issuing e-Invoices immediately — no application or approval from LHDN is needed — and that no e-Invoice penalties apply to such a business that never started. You may also carry on voluntarily; larger customers may keep asking you for e-Invoices because it makes their reconciliation easier.

Where to get the facts

Thresholds, timelines and penalties are set by LHDN and can change. This article reflects publicly available information as of 20 October 2026 — the e-Invoice Guideline (version 4.8, 30 August 2026), the e-Invoice Specific Guideline (version 4.9, 7 September 2026) and LHDN’s e-Invoice General FAQs (updated 4 September 2026). Always confirm your own obligations at the official MyInvois portal or directly with LHDN before making decisions.

If you would like help working out where you stand, take a free digital checkup → and tell us how you invoice today. We will tell you what needs to change and roughly what it involves — no sales pressure.