Malaysia's e-Invoice mandate does not affect every business equally. Some taxpayers below RM1 million may qualify for exemption, while detailed conditions and exceptions apply. This guide helps you identify what to verify against the current HASiL guidance.
Everything here is based on official LHDN and IRBM publications. Where rules are still subject to grace periods or updates, we say so clearly.
What Is the e-Invoice Mandate?
Starting in 2024, LHDN (Lembaga Hasil Dalam Negeri) requires businesses to issue invoices digitally through the national MyInvois system. Instead of sending a paper or PDF invoice directly to your customer, your invoice data must first be submitted to LHDN's MyInvois portal, validated in real time, and then a QR-coded e-Invoice is returned for you to pass on to the buyer.
The rollout is phased by annual turnover. Taxpayers below RM1 million may qualify for exemption, subject to the current HASiL eligibility conditions and exceptions.
What this means for you
The Key Rule: Turnover, Not Profit
The threshold that determines whether your business must comply is your annual turnover — that is your gross revenue or total sales, not your profit. Even if your business makes very little profit, if your total sales cross the relevant threshold, the mandate applies.
What this means for you
Full Implementation Timeline
The rollout is structured across four main phases, plus special rules for newly incorporated businesses and those crossing thresholds in later years.
| Phase | Annual Turnover | Mandatory From | Notes |
|---|---|---|---|
| Phase 1 | Above RM100 million | 1 August 2024 | Already in force |
| Phase 2 | Above RM25 million up to RM100 million | 1 January 2025 | Already in force |
| Phase 3 | Above RM5 million up to RM25 million | 1 July 2025 | Already in force |
| Phase 4 | Above RM1 million up to RM5 million | 1 January 2026 | Interim relaxation currently listed through 31 Dec 2027, subject to HASiL requirements |
| New businesses (2023–2025) | Turnover ≥ RM1 million | 1 July 2026 | Applies to businesses that commenced operations 2023–2025 (relaxation period also extends to 31 Dec 2027) |
| Existing businesses (operating in YA2022) | Below RM1M in YA2022, then crossed RM1M in YA2023, 2024 or 2025 | 1 July 2026 | The large population of pre-2023 SMEs that have since grown past RM1 million |
| Crossing RM1M in YA2026 | First exceeds RM1 million in Year of Assessment 2026 | 1 January 2028 | General rule: 1 January of the second year following the year you cross RM1M |
| Crossing RM1M in YA2027 | First exceeds RM1 million in Year of Assessment 2027 | 1 January 2029 | Same general rule — second calendar year after crossing |
| Businesses starting YA2026 onwards | Not exempt (or first-year turnover ≥ RM1M) | 1 July 2026 or commencement date, whichever is later | If exempt at start but first-year turnover hits RM1M, mandatory from 1 January of the second year following |
| Potential exemption | Annual turnover below RM1 million | Check eligibility | Detailed HASiL conditions and exceptions apply |
Source: current HASiL guidance reviewed 30 July 2026. Always verify your position directly with HASiL.
The Below-RM1 Million Exemption
Taxpayers with annual turnover or revenue below RM1 million may qualify for exemption, subject to eligibility conditions and exceptions in the current HASiL guidelines.
Turnover is not the only test. Corporate shareholders, holding-company, related-company and joint-venture circumstances can affect eligibility. A taxpayer below RM1 million that does not meet the exemption criteria may still have an implementation date.
What this means for you
Real-World Examples
Example A: Manufacturing SME with RM3 million annual revenue
Scenario
Which phase applies? Phase 4 — annual turnover above RM1 million and up to RM5 million.
Current treatment: The HASiL General FAQ lists interim relaxation through 31 December 2027 for taxpayers with a 1 January or 1 July 2026 implementation date, subject to the stipulated requirements. Check the current FAQ for this business.
Action needed: This business must start submitting e-Invoices through MyInvois. They can use the free MyInvois portal manually, or connect accounting software via API to automate the process.
Example B: Food stall with RM400,000 annual revenue
Scenario
Which phase applies? None. Annual turnover is well below RM1 million.
Potential treatment: May qualify for exemption because turnover is below RM1 million, subject to the detailed eligibility conditions and exceptions.
Action needed: Check the current HASiL exemption criteria, including entity and related-company conditions, before relying on the exemption.
Example C: An established business that has since grown past RM1 million
Scenario
Which rule applies? This is not a "new business" and not a Phase 1–4 company by 2022 size. Because it was already operating in YA2022 below RM1 million and then crossed RM1 million in YA2023, YA2024 or YA2025, LHDN places it in the 1 July 2026 group.
Mandatory from: 1 July 2026 (LHDN's own worked example uses these exact figures).
Action needed: Get set up before 1 July 2026. This is the single largest and most-overlooked group — long-running SMEs that were small in 2022 but have grown since.
Example D: A business that started in 2026
Scenario
Which rule applies? For businesses commencing in YA2026 onwards that meet the exemption criteria at start, the clock only starts once first-year turnover crosses RM1 million. Implementation then falls on 1 January of the second year following that year.
Mandatory from: 1 January 2028 (again, LHDN's own worked example). A business that starts in 2026 and is not exempt would instead be due from 1 July 2026 or its commencement date, whichever is later.
Action needed: Track your first-year revenue closely. Crossing RM1 million triggers a fixed, non-negotiable implementation date.
Important: The Exemption Is Not Reversible Once You're In
The RM1 million exemption sounds permanent, but it works in one direction only. LHDN has confirmed that no exemption will be granted once your mandatory implementation year has been determined. In plain terms: once you cross RM1 million and are locked into a start date, you must keep issuing e-Invoices — even if your revenue later falls back below RM1 million.
Worked example from LHDN
What this means for you
Watch Out: Related Companies Can Lose the Exemption
A crucial trap for group structures: a small company can be disqualified from the exemption because of its corporate parent, corporate shareholders, or a joint-venture relationship — regardless of its own revenue. If your business is a subsidiary, an associate, or part of a joint venture within a larger group, you may be pulled into scope even if your standalone turnover is well under RM1 million.
Important: this applies to corporate shareholders, not individuals
LHDN's example: Mr. Yap personally owns 100% of two companies. Even though one grows to RM2.5 million, the other is still assessed on its own merit and stays exempt if its own turnover is under RM1 million. Individual ownership does not drag a small company into scope.
What this means for you
The RM10,000 Rule: When You Cannot Bundle Sales
Separate from the phase timeline, there is an operational rule that affects every business already issuing e-Invoices, across all industries. From 1 January 2026, you can no longer issue a consolidated e-Invoice for any single transaction exceeding RM10,000. Above that amount, each transaction must be captured as its own individual e-Invoice.
Consolidated e-Invoices are the "end of day summary" mechanism that lets retailers batch many small cash sales into one submission. This rule closes that option for big-ticket sales — so a single RM12,000 sale must be its own validated e-Invoice, not folded into a daily summary.
What this means for you
Other Rules That Catch People Out
- Multiple sole-proprietor businesses are combined. If one person owns several sole proprietorships, the revenue of all of them is added together to test the RM1 million threshold — you cannot split turnover across shops to stay under.
- Separate record-keeping rules. Some rules may require serially numbered receipts, with different thresholds for sales of goods and services. Verify current section 82 guidance for your business.
- E-commerce sales shift to the platform. For sales made through an e-commerce platform, the obligation to issue the e-Invoice generally falls on the platform provider, not the small seller. If you sell mainly through Shopee, Lazada or similar, that portion of your sales may already be handled for you.
Penalties for Non-Compliance
Failure to issue an e-Invoice in accordance with current requirements may constitute an offence under paragraph 120(1)(d), with a fine of RM200 to RM20,000, imprisonment up to six months, or both, for each non-compliance. Enforcement treatment depends on the applicable implementation and relaxation rules.
What this means for you
Grace Periods: What They Actually Mean
Each phase comes with a grace period — a window after the mandatory start date during which LHDN will generally not enforce penalties, provided a business can demonstrate it is making genuine efforts to comply. A grace period is not the same as an exemption.
The current HASiL General FAQ lists the interim relaxation period for taxpayers with 1 January or 1 July 2026 implementation dates as running until 31 December 2027. The treatment is subject to stipulated requirements. Always check hasil.gov.my for the latest LHDN guidance, as grace periods have been extended in previous phases.
What this means for you
Do I Have to Pay to Use MyInvois?
No. LHDN's MyInvois portal is completely free. Any business can log in, manually create invoices, submit them for validation, and download the resulting QR-coded e-Invoice at no cost. There is no submission fee or subscription required to use the portal directly.
Where costs may arise is if you choose to use third-party middleware or software — like EasyInvois — to automate the process, handle bulk submissions, or integrate with your existing accounting system. These are optional tools designed to save time, not a requirement imposed by LHDN.
Frequently Asked Questions
Does my hawker stall need e-Invoice?
Taxpayers with annual turnover or revenue below RM1 million may qualify for exemption, but detailed eligibility conditions and exceptions apply. Check the current HASiL guidelines, especially if the business has corporate shareholders, a holding company, related companies, or a joint venture.
What if my turnover is close to RM1 million?
If your annual revenue is approaching RM1 million, it is worth monitoring each year. The threshold is based on your annual gross revenue for the relevant Year of Assessment. If you cross RM1 million in YA2027, for example, your mandatory implementation date would be 1 January 2029 — giving you meaningful lead time. The key is to keep your revenue records accurate and check against the thresholds each year.
I started my business in 2024 and already have over RM1 million in revenue — what's my deadline?
If your business commenced operations between 2023 and 2025 and your annual turnover is RM1 million or above, your mandatory implementation date is 1 July 2026. This is a separate rule specifically for newly incorporated businesses in those years.
My business has been running since before 2023. It was small in 2022 but has grown past RM1 million since — what's my deadline?
You are in the largest and most overlooked group. If you were already operating in YA2022 with revenue below RM1 million, and then crossed RM1 million in YA2023, YA2024 or YA2025, your mandatory implementation date is 1 July 2026. LHDN's own worked example (Mountain Jump Sdn Bhd: RM400,000 in 2022, RM1.1 million in 2024) lands exactly here. If you only cross RM1 million in YA2026 or later, the general rule applies: you implement on 1 January of the second year following the year you crossed the threshold (cross in 2026 → 1 January 2028; cross in 2027 → 1 January 2029).
I only started my business in 2026 — when do I need to comply?
For businesses commencing in YA2026 onwards, it depends on whether you meet the exemption criteria. If you do not qualify for exemption, you implement from 1 July 2026 or your commencement date, whichever is later. If you qualify for exemption at the start but your first-year (YA2026) revenue reaches RM1 million, you implement from 1 January of the second year following. LHDN's worked example (Warung Salima: commenced 1 January 2026, RM1.12 million first-year revenue) gives a mandatory date of 1 January 2028.
If my revenue drops back below RM1 million after I'm mandated, can I stop issuing e-Invoices?
The current HASiL FAQ states that an MSME does not regain the exemption after its mandatory implementation year has been determined. Verify the current rule against your facts before changing an established e-Invoice process.
My company is small but part of a larger group — am I still exempt?
It depends on whether the shareholder is a company or an individual. The exemption can be lost because of a corporate parent, corporate shareholder, or a joint-venture relationship — so if you are a subsidiary, associate, or joint venture within a bigger group, do not assume the RM1 million threshold applies to you in isolation. However, this related-company rule does NOT apply to individuals: if one person personally owns several companies, each is judged on its own turnover. LHDN's own example is Mr. Yap, who personally owns 100% of two companies — even though one reaches RM2.5 million, the other stays exempt on its own merit. A common director alone does not make companies related for e-Invoice purposes.
Can I still bundle all my daily sales into one consolidated e-Invoice?
For most small sales, yes — but from 1 January 2026 you cannot include any single transaction above RM10,000 in a consolidated e-Invoice. Each transaction over RM10,000 must be issued as its own individual e-Invoice. This applies across all industries already issuing e-Invoices.
Can I still issue paper invoices or PDF invoices after my mandatory date?
After your applicable implementation date, follow the current MyInvois issuance and consolidation rules for each transaction. A paper or PDF may be used as a visual representation where allowed, but check whether the underlying transaction must be individually validated or may be included in a consolidated e-Invoice during the applicable period.
Are there real penalties? Has LHDN actually prosecuted anyone?
Failure to issue an e-Invoice in accordance with current requirements may constitute an offence under paragraph 120(1)(d), with a fine of RM200 to RM20,000, imprisonment up to six months, or both, for each non-compliance. Enforcement treatment depends on the applicable implementation and relaxation rules.
My accountant said the rules might change again — should I wait?
The rules and relaxation periods have changed over time. Check the current HASiL guidance and confirm your implementation date rather than relying on an older article, checklist, or assumption.
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Sources
- hasil.gov.my — Official LHDN e-Invoice portal and guidelines
- LHDN e-Invoice FAQ — Threshold rules, related-company disqualification, and worked examples (Mountain Jump, Warung Salima, Winner Fertilizer)
- HASiL e-Invoice Guideline Version 4.7 and Specific Guideline Version 4.8 (7 July 2026)
- HASiL General FAQ — Implementation, conditional exemption and interim-relaxation rules
- Income Tax Act 1967, paragraph 120(1)(d) — Potential penalties described in current HASiL material
- This article is for general information only and is not legal or tax advice. It was updated using official HASiL material reviewed through 30 July 2026. Verify current requirements at hasil.gov.my or with a qualified tax professional.