Malaysia Raises E-Invoice Exemption Threshold to RM3 Million

The Inland Revenue Board of Malaysia (HASiL) has increased the annual income or sales threshold for the mandatory e-invoice requirement, raising it from RM1 million to RM3 million. The change took effect on September 1, 2026, following the Prime Minister’s announcement on August 30 and the subsequent publication of e-Invoice Guideline Version 4.8 on HASiL’s website. HASiL estimates that the revised threshold will exempt more than 1.1 million micro, small, and medium enterprises (MSMEs) that would otherwise have fallen within scope.

Scope of the Exemption

The exemption applies to all categories of taxpayers – including individuals, partnerships, companies, and co-operatives – with annual income, turnover, or sales below RM3 million (approximately EUR 640,000 or USD 742,000). Businesses that fall below this benchmark are no longer required to comply with the e-invoice mandate, although HASiL has encouraged voluntary adoption, citing digitalization benefits that align with national economic policy objectives.

Ownership and Group-Related Conditions

Eligibility for the exemption is not determined solely by a taxpayer’s own income or turnover. Under Guideline Version 4.8, the exemption does not apply where the taxpayer:

• has one or more non-individual shareholders (or equivalent) with annual turnover or revenue of at least RM3 million;
• is a subsidiary of a holding company with annual turnover or revenue of at least RM3 million; or
• has a related company or joint venture with annual turnover or revenue of at least RM3 million.

For this purpose, a company is considered related if it controls, or is controlled by, another company, is under common control with another company, or holds 20% or more of the shares in another company.

Rules for the Newly Established Businesses

Separate rules apply to businesses that commenced operations more recently:

• For businesses or operations commencing between 2023 and 2025 with an annual turnover or revenue of at least RM3 million, the e-invoice implementation date remains July 1, 2026.
• For businesses or operations commencing from 2026 onwards, the implementation date is July 1, 2026, or the date operations commence, whichever is applicable. If first-year turnover or revenue is expected to fall below RM3 million, implementation is deferred until January 1 of the second year following the year in which annual turnover or revenue reaches RM3 million.

Other Taxpayers

Statutory bodies, statutory authorities, local authorities, and international organizations remain subject to an earlier deadline, as they were required to implement e-invoicing from July 1, 2025, for transactions involving goods sold or services performed.

Background

Malaysia’s e-invoicing mandate began on August 1, 2024, initially targeting businesses with annual turnover or revenue exceeding RM100 million, and was subsequently extended in phases to additional groups of taxpayers.

Implications for Businesses

Businesses should reassess their annual income or sales against the new RM3 million benchmark. Those now falling below the threshold are relieved of the mandatory obligation, though they may still opt in voluntarily; those already operating above RM3 million are unaffected and should continue to comply with their existing obligations.

Businesses with turnover between RM1 million and RM3 million that have already begun issuing e-invoices should also review their ownership structures and any relationships with holding companies, related companies, or joint ventures to confirm whether the exemption still applies to them.

Buyers sourcing from smaller Malaysian suppliers may need to accommodate a mix of electronic and conventional invoices in their accounts payable processes, as suppliers with annual revenue below RM3 million can continue issuing non-electronic invoices.

There’s more you should know about e-invoicing in Malaysia – learn more about the new and upcoming regulations.