Malaysia raises e-Invoice exemption threshold to MYR 3 million

Summary

The Malaysian Inland Revenue Board has published e-Invoice Guideline Version 4.8, dated 30 August 2026, increasing the annual turnover or revenue threshold for the e-Invoice exemption from MYR 1 million to MYR 3 million.
The exemption is not determined solely by the taxpayer’s individual turnover. It does not apply in certain group or ownership situations, including where the taxpayer has a non-individual shareholder, holding company, related company or joint venture with annual turnover or revenue of at least MYR 3 million. [augustadvi…ory.com.my]
Businesses should reassess their position carefully before relying on the exemption. In particular, further clarification may be needed for taxpayers between MYR 1 million and MYR 3 million that have already started issuing e-Invoices under the previous threshold.

Extended article

The Malaysian Inland Revenue Board, also known as IRBM or LHDN, published e-Invoice Guideline Version 4.8 on 30 August 2026. The most significant amendment is an increase in the exemption threshold for Malaysia’s e-Invoice mandate. Taxpayers with annual turnover or revenue below MYR 3 million may now qualify for exemption from issuing e-Invoices, including self-billed e-Invoices. The previous threshold under Version 4.7 was MYR 1 million.

The amendment represents a significant reduction in the compliance burden for smaller Malaysian businesses. It effectively removes many taxpayers with turnover between MYR 1 million and MYR 3 million from the mandatory scope, subject to the detailed eligibility conditions. The change should give qualifying businesses additional time to prepare their accounting systems, master data and invoicing processes before they become subject to Malaysia’s digital invoicing requirements. Businesses may nevertheless participate voluntarily, regardless of their turnover or revenue. [augustadvi…ory.com.my]

Exemption subject to ownership and group conditions

Importantly, the MYR 3 million threshold is not a simple stand-alone entity test. New paragraph 1.6.10 provides that the exemption does not apply in several ownership and group situations. A taxpayer may remain subject to e-Invoicing where it has a non-individual shareholder with annual turnover or revenue of at least MYR 3 million, where it is a subsidiary of a holding company reaching that threshold, or where it has a related company or joint venture with turnover or revenue of at least MYR 3 million. [jomeinvoice.my]

As a result, a company with annual turnover of MYR 2 million should not automatically conclude that it is exempt. If the company belongs to a larger corporate group, has a corporate shareholder or has a qualifying related company or joint venture, it may still fall within the mandatory e-Invoice regime. The new conditions appear intended to prevent larger groups from using smaller subsidiaries or related entities to benefit from the simplified treatment designed for genuinely small or independent businesses. [augustadvi…ory.com.my]

The guideline indicates that “related company” is interpreted by reference to section 2 of Malaysia’s Promotion of Investments Act 1986. Taxpayers should therefore document not only their own annual turnover or revenue, but also their shareholding structure, parent company relationship, related entities and joint ventures. This assessment will be particularly important for multinational groups operating several legal entities in Malaysia. [jomeinvoice.my]

Revised treatment of new businesses

Version 4.8 also updates the rules for newer businesses. A business or operation that commenced between 2023 and 2025 is required to implement e-Invoicing from 1 July 2026 only where its annual turnover or revenue reaches at least MYR 3 million. The earlier version applied the lower MYR 1 million threshold.

For businesses commencing operations in 2026 or later, the applicable date is generally 1 July 2026 or the date on which operations begin. However, where the business expects its first-year turnover or revenue to remain below MYR 3 million, implementation is deferred until 1 January of the second year following the year in which its annual turnover or revenue first reaches MYR 3 million. Once the mandatory implementation date has been determined, subsequent changes in turnover or revenue do not normally remove the obligation. [jomeinvoice.my]

Additional clarification for public bodies

Version 4.8 also adds a clarification concerning statutory bodies, statutory authorities, local authorities and international organisations. These bodies are required to issue e-Invoices for goods sold or services performed from 1 July 2025. This provision distinguishes transactions involving commercial supplies from other activities or receipts that may fall within specific exemption provisions.

Position of businesses already issuing e-Invoices

One important practical question remains for businesses with annual turnover or revenue between MYR 1 million and MYR 3 million that already started issuing e-Invoices under the previous rules. Version 4.8 raises the exemption threshold, but it does not expressly explain whether a taxpayer whose mandatory start date has already passed may discontinue e-Invoicing. [jomeinvoice.my]

The guideline contains a general principle that, once an implementation date has been determined, later changes in turnover or revenue do not alter the taxpayer’s obligation. However, that wording appears primarily intended to address changes in the taxpayer’s own turnover rather than a subsequent policy decision to increase the exemption threshold. Until LHDN provides a dedicated announcement, FAQ or transitional clarification, taxpayers that are already operational should exercise caution before switching off their e-Invoice processes. Continuing to issue e-Invoices voluntarily may be the more prudent approach in the interim.

Recommended actions for businesses

Malaysian taxpayers with turnover below MYR 3 million should reassess their status under Version 4.8, including the ownership and group exclusions. Businesses should retain evidence supporting the calculation of annual turnover or revenue and document why the exemption applies. Taxpayers belonging to corporate groups should map the relevant shareholders, holding companies, related companies and joint ventures before reaching a conclusion. [augustadvi…ory.com.my]

Businesses that have already implemented e-Invoicing should avoid making immediate system or process changes solely because of the revised threshold. They should monitor further communications from LHDN and consider the impact on customer expectations, ERP configuration, invoice archiving and existing MyInvois integrations. Businesses with turnover close to MYR 3 million should also continue preparing for implementation, as growth beyond the threshold may trigger a future obligation.

The latest guidelines and supporting materials can be consulted through the official LHDN e-Invoice guidance page. [hasil.gov.my]

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