Please note: This article is general information, last reviewed in October 2026. LHDN has revised the e-Invoice exemption threshold several times. Confirm the current rule on LHDN’s official pages or with your tax adviser before relying on it. This is not tax or legal advice.
One of the most common questions Malaysian SME owners ask is: “Do I have to do e-Invoice?” The answer depends on your turnover and your circumstances. Because the threshold has changed repeatedly, it is worth understanding how it evolved.
How the exemption threshold changed
- Original position: businesses with annual sales below RM150,000 were exempt
- 2025: the threshold was raised to RM500,000
- December 2025: the threshold was raised to RM1 million, and the planned Phase 5 was cancelled
- 2026: LHDN’s updated guideline (version 4.8) is reported to have raised the threshold to RM3 million, effective 1 September 2026
Reports indicate this change is expected to benefit more than one million businesses.
What the exemption generally means
Businesses with annual turnover or revenue below the threshold are generally not required to issue e-Invoices. That said, an exemption is not the same as a permanent rule for every situation.
Conditions to check
Reports on the updated guideline indicate the exemption may not apply in certain circumstances. Examples mentioned include:
- A corporate shareholder, holding company, related company or joint venture has annual turnover at or above the threshold
- Other specific conditions set out in LHDN’s guideline
Because these conditions can be technical, it is wise to ask your accountant or tax adviser to review your group structure and revenue.
Which turnover figure counts?
The definition of turnover or revenue follows LHDN’s guideline. Do not assume it matches the figure you use informally. Ask your accountant to confirm which period and which income to use.
What if my turnover grows?
An exemption applies only while your turnover stays below the threshold. If your business grows past it, you may need to start issuing e-Invoices. Preparing early avoids last-minute pressure.
Customers may still ask for e-Invoices
Even if you are exempt, your customers who are in scope may need proper documentation from you for their own records. Some exempt businesses choose to adopt e-Invoicing voluntarily because it makes dealing with larger clients easier.
A simple checklist
- Calculate your annual turnover or revenue as LHDN defines it
- Compare it with the current threshold
- Check whether any related-entity condition applies
- Confirm the conclusion with your accountant
- Note your threshold date and monitor your growth
- Keep records of how you reached your decision
- Review again whenever LHDN updates its guideline
Should exempt businesses prepare anyway?
Many do. Cleaning customer data, using proper invoicing software and keeping accurate records have benefits regardless of whether the law requires them.
Key takeaway
The threshold is a moving target, so check the latest official guidance and get professional advice for your specific structure. Being exempt today does not mean you can ignore the topic if you plan to grow.
FAQ
Is the RM3 million threshold final?
Thresholds have changed several times. Always check LHDN’s latest guideline.
What if I am just below the threshold?
Plan for growth. Preparing systems early makes the transition easier.
Can I volunteer to use e-Invoice?
Many businesses do, particularly when dealing with larger customers. Check LHDN’s current guidance on voluntary adoption.
Need help applying this in your business? Alpha Ark Business Solutions helps Malaysian SMEs transform, automate and grow with practical digital systems and AI. Contact us to discuss your situation.