Is My Business Exempt from e-Invoice? The RM 3 Million Threshold Explained (Updated October 2026)

One of the most common questions Malaysian SME owners ask about e-Invoice is: "Does this apply to me?" The answer depends on your annual turnover — and the threshold moved twice in nine months, so plenty of owners are working from a rule that no longer applies.

The current exemption threshold: RM 3 million

From 1 September 2026, businesses with annual turnover or revenue below RM 3 million are exempt from LHDN’s e-Invoice mandate, including the self-billed e-Invoice requirements. LHDN announced the change on 30 August 2026 and set it out in e-Invoice Guideline version 4.8.

This is the second increase. On 6 December 2025 the government raised the floor from RM 500,000 to RM 1 million and cancelled the planned final phase for smaller businesses. The September 2026 change lifts it again, to RM 3 million.

The exemption applies to every type of taxpayer — sole proprietors, partnerships, companies and co-operatives.

The conditions that cancel the exemption

Being under RM 3 million is not enough on its own. The exemption does not apply if your business:

• has a shareholder that is a company (or other non-individual) with annual turnover or revenue of RM 3 million or more;
• is a subsidiary of a holding company with turnover or revenue of RM 3 million or more; or
• has a related company or a joint venture with turnover or revenue of RM 3 million or more.

In plain terms: a small company inside a larger group is still in scope. If you are part of a group, check this with your accountant before assuming you are exempt.

Who is mandated now

The rollout followed a phased schedule based on annual turnover:

• Phase 1 (1 Aug 2024): above RM 100 million
• Phase 2 (1 Jan 2025): RM 25 million – RM 100 million
• Phase 3 (1 Jul 2025): RM 5 million – RM 25 million
• Phase 4 (1 Jan 2026): originally RM 1 million – RM 5 million; since 1 September 2026, in practice RM 3 million – RM 5 million. The Phase 4 relaxation period has been extended to 31 December 2027, with full enforcement from 1 January 2028.

Your phase is decided by your turnover in year of assessment 2022. If you were below RM 3 million in YA2022 but reached it in YA2023, YA2024 or YA2025 — or you started operating between 2023 and 2025 and reached it then — your start date was 1 July 2026, with the same relaxation period to 31 December 2027 (LHDN e-Invoice General FAQs, questions 12 to 14).

If your turnover is below RM 3 million and none of the group conditions apply, you are currently exempt — you do not need to issue e-Invoices via MyInvois.

Between RM 1 million and RM 3 million, and already issuing e-Invoices?

This was the awkward group. You were brought into Phase 4 in January 2026 (or given a 1 July 2026 start date), you may already have registered on MyInvois and connected your system, and now you are under the threshold.

LHDN has since 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 separate application or prior approval from LHDN is needed. And a business in that position that never started issuing will not face e-Invoice compliance action or penalties for the period since its original start date.

Stopping is a choice, not an obligation: you may carry on voluntarily, and if your integration already runs and your customers rely on it, that can be the easier path. Before you stop, check two things with your accountant — that none of the group conditions above applies to you, and that the turnover figure you are relying on is the right one. If you also find e-Invoices that were missed while you were issuing, LHDN’s FAQs say an exempt business does not need to correct them through the voluntary disclosure programme (SVDP).

"Exempt" does not mean "forget about it"

A few nuances still apply:

Your customers may require it. If you supply mandated businesses, they may ask for e-Invoices as part of their own compliance chain — particularly in B2B. Being e-Invoice-ready makes you an easier supplier to deal with.

Growth removes the exemption — with a lead time. If your turnover reaches RM 3 million in YA2026 or later, you must start from 1 January of the second year after that year of assessment: reach it in YA2027, and you start on 1 January 2029. And once a business has been mandated under the current RM 3 million rules, a later dip below RM 3 million does not bring the exemption back (LHDN e-Invoice General FAQs, question 104). That is different from the case above: a business below RM 3 million that was only caught by the old RM 1 million threshold is exempt under the current rules.

Voluntary adoption is allowed. Any business can register and issue e-Invoices through MyInvois without being mandated. Some find it simplifies their audit trail.

How to verify your own status

The test is your annual turnover or revenue, and LHDN expects you to keep evidence of how you calculated it. If you are anywhere near RM 3 million, confirm with your accountant which year’s figures apply and whether any group condition catches you.

Always verify your exact obligations at the official MyInvois portal (myinvois.hasil.gov.my) or with LHDN directly — thresholds and timelines are set by LHDN, and this article reflects publicly available information as of 20 October 2026 (e-Invoice Guideline version 4.8, 30 August 2026; e-Invoice Specific Guideline version 4.9, 7 September 2026; LHDN e-Invoice General FAQs, updated 4 September 2026). For what an integration involves, see our e-Invoice / MyInvois page.

Planning ahead

If your turnover is approaching RM 3 million — or you are exempt but have customers who are mandated — now is a sensible time to review your invoicing setup. Get a free digital checkup → to see where you stand and what an e-Invoice integration would involve.