IRB: Malaysia exempts businesses with under RM500,000 annual turnover from e-invoicing; RM1m–RM5m group mandate postponed to 2026

KUALA LUMPUR, June 6 — The Inland Revenue Board (LHDN) has announced a revised timeline for the implementation of e-invoicing, with key changes affecting businesses of various income levels.

In a statement today, LHDN said the e-invoice mandate for taxpayers with annual income or sales exceeding RM1 million but not more than RM5 million has been postponed to January 1, 2026.

Additionally, businesses with annual income or sales below RM500,000 will be exempted from the requirement altogether.

LHDN further clarified that taxpayers earning up to RM1 million annually will now begin e-invoicing from July 1, 2026, instead of an earlier proposed date.

The adjustments were made in recognition of the time and resources needed by taxpayers—especially Micro, Small, and Medium Enterprises (MSMEs)—to comply with e-invoicing requirements, which the government acknowledged pose several implementation challenges.

Under the revised schedule:

Phase 3: Taxpayers with income/sales over RM5 million up to RM25 million — effective July 1, 2025

Phase 4: Taxpayers with income/sales over RM1 million up to RM5 million — effective January 1, 2026

Phase 5: Taxpayers with income/sales up to RM1 million — effective July 1, 2026

LHDN also confirmed that the six-month grace period will apply to each phase. During this period, taxpayers may issue consolidated e-invoices, including self-billed invoices. All transaction details can be included in the 'Product or Service Description' field.

If a buyer requests an e-invoice, the seller may still provide a single consolidated e-invoice instead of one for each transaction during the grace period.

Importantly, no legal action will be taken under Section 120 of the Income Tax Act 1967 during this grace period, as long as the consolidated e-invoicing guidelines are followed.

However, beginning January 1, 2026, businesses covered under the e-invoice framework must issue individual e-invoices for each sale or service exceeding RM10,000, and the use of consolidated e-invoices will no longer be allowed.

For further information or assistance, the public can reach out to LHDN through its offices, the e-Invoice Help Desk at 03-8682 8000, MyInvois Live Chat, email at myinvois@hasil.gov.my, or the Customer Feedback Form at https://feedback.myinvois.hasil.gov.my. — Bernama