If your business turned over RM1 million or more in financial year 2022, e-invoicing is already a legal obligation in Malaysia. Businesses below that line are generally exempt, some groups start on 1 July 2026, and everyone in the last phase has until the end of 2026 to settle in without penalty, provided they follow the relaxation rules set by the Inland Revenue Board of Malaysia (LHDN).

This guide to e-invoicing in Malaysia explains what an e-invoice is, how to work out which phase you belong to, what the relaxation period does and does not allow, and how to choose between LHDN’s free tools and paid software. It describes the rules as LHDN has published them. For a decision about your own tax position, speak to LHDN or a licensed tax agent.

What an e-invoice is, and what it is not

LHDN’s e-Invoice Guideline (Version 4.6, published 7 December 2025) defines an e-invoice as a digital representation of a transaction between a supplier and a buyer. It replaces the paper or electronic invoices, credit notes and debit notes you issue now, and carries the same essentials: who sold, who bought, what, how many, the price, the tax and the total.

The difference is validation. A PDF invoice emailed to a customer is not an e-invoice. An e-invoice is submitted to LHDN’s MyInvois system, checked against a fixed data structure and, once it passes, stamped with an IRBM Unique Identifier Number, a validation date and time, and a validation link.

That check happens in near real time, generally in less than two seconds, according to LHDN’s e-Invoice FAQ (updated 5 January 2026). Malaysia uses what LHDN calls a Continuous Transaction Control model: the tax authority validates each e-invoice when it is submitted, instead of seeing the figures months later in a tax return.

What has to be on it

The guideline lists 55 data fields required to issue an e-invoice, grouped into eight categories such as party details, invoice details and products or services. In practice that means you need your own Tax Identification Number (TIN), your buyer’s TIN or identification details where the transaction calls for them, and clean product descriptions, quantities and tax types.

The obligation covers business-to-business, business-to-consumer and business-to-government sales. It also covers the documents that adjust a sale: credit notes, debit notes and refund notes are e-invoices in their own right.

Who must issue e-invoices, and from when

LHDN rolled e-invoicing out by turnover band, largest businesses first. The table below brings together the start dates in the e-Invoice Guideline and LHDN’s FAQ, and the interim relaxation periods in the e-Invoice Specific Guideline (Version 4.6, published 5 January 2026).

If you are in Phase 4, your mandatory date is 1 January 2026, or 1 July 2026 for the later-start groups. Either way, Table 16.1 of the Specific Guideline ends the relaxation period on 31 December 2026.

How your turnover is measured

Your phase is not set by this year’s sales. Under section 1.5 of the e-Invoice Guideline, it is based on the turnover in your audited financial statements for financial year 2022, or, if you have no audited accounts, on the revenue reported in your tax return for year of assessment 2022.

If you changed your accounting year end during financial year 2022, the figure is pro-rated to twelve months. Once your phase is fixed, later growth or decline in turnover does not move it.

Growth matters if you were exempt on your 2022 figures. LHDN’s FAQ says such a business implements from 1 July 2026 if its turnover reached RM1 million in any year of assessment from 2023 to 2025, and if it crosses that line later, the second-year rule for new businesses below applies. Once a business is in, a later fall below the threshold does not take it out again.

New businesses

Businesses that started operating between 2023 and 2025 follow a separate rule. If their annual turnover reached at least RM1 million in any of those years, their implementation date is 1 July 2026, according to the same section of the guideline and the FAQ.

For businesses starting in 2026 or later, the guideline gives 1 July 2026 or the date they begin operating. The FAQ splits them in two. A new business that does not qualify for the exemption, such as a new subsidiary of a group already on e-invoicing, starts from 1 July 2026 or its first day of operation, whichever is later.

A new business that does qualify starts on 1 January of the second year after the year its turnover first reaches RM1 million. In the FAQ’s own example, a warung that passes that mark in its first year of trading starts on 1 January 2028. The guideline and the FAQ word this differently, so confirm your own date with LHDN or your tax agent.

The RM1 million exemption, and how it got there

The threshold moved twice in 2025. In June 2025 the Finance Ministry exempted businesses below RM500,000 and split the remaining small businesses into two later phases, as LHDN’s release on the rescheduling explains.

On 6 December 2025 Prime Minister Datuk Seri Anwar Ibrahim announced that the exemption threshold would rise to RM1 million from the start of the following year, after a preliminary Cabinet decision the day before, The Star reported. The Small and Medium Enterprises Association Malaysia (Samenta) estimated that around 200,000 SMEs would benefit, according to a follow-up report.

LHDN republished its e-Invoice Guideline the next day, listing taxpayers with annual turnover or revenue below RM1 million among the exempt groups. The separate 1 July 2026 phase that the June schedule had set for the smallest businesses no longer appears in its timeline table, although that date survives as the start for the later-start groups in the table above.

A few points about the exemption are easy to miss:

• It does not cover every small business. Under LHDN’s FAQ, a business below RM1 million is not exempt if it has a non-individual shareholder, a holding company, or a related company or joint venture with turnover or revenue of at least RM1 million.
• A sole proprietor’s businesses are counted together. Three small shops registered to one owner are tested on their combined turnover.
• It applies only to the exempt taxpayer itself. A company or limited liability partnership you own does not share your exemption and follows the timeline in its own right.
• Suppliers who are in a mandatory phase must still issue e-invoices for what they sell to you.
• You may join voluntarily at any time.

Other exempt persons and transactions

Section 1.6 of the guideline also exempts foreign diplomatic offices, individuals who are not conducting business, and certain collections by statutory bodies and local authorities. Separately, no e-invoice is needed for employment income, pensions, alimony, zakat, certain dividend distributions, listed securities trades, some disposals of unlisted shares and specified donations.

The 2026 relaxation period for Phase 4, explained

In January 2026 the Government doubled the relaxation period for Phase 4 from six months to twelve, so it runs to 31 December 2026, LHDN said in its release on the extra transition period. The Prime Minister announced it in his New Year address on 5 January, according to a follow-up LHDN release on 9 January.

During the relaxation period, section 16 of the Specific Guideline allows Phase 4 businesses to:

• issue consolidated e-invoices for all activities and transactions, including those that would normally need an individual e-invoice;
• issue consolidated self-billed e-invoices in every self-billing situation;
• put any description in the “Description of Product or Service” field, instead of the receipt or bill reference numbers normally required; and
• decline a buyer’s request for an individual e-invoice, as long as the transaction is covered by a consolidated e-invoice.

LHDN will not prosecute under section 120 of the Income Tax Act 1967 during this period for non-compliance with e-invoice requirements, on condition that you follow those consolidation rules. In other words, relaxation is not exemption. You still have to submit e-invoices, at least monthly in consolidated form, from your mandatory date.

The RM10,000 rule

From 1 January 2026, any single transaction worth more than RM10,000 must have its own e-invoice and cannot be folded into a consolidated one, under section 3.7 of the Specific Guideline. That rule binds businesses in Phases 1 to 3, whose relaxation periods have ended.

For Phase 4, the guideline’s relaxation terms allow consolidation of the activities listed under section 3.7, which include the RM10,000 rule, until the relaxation period ends. Plan for the rule to apply to you from 1 January 2027, and check with LHDN if you are unsure how to treat a large sale before then.

A separate concession for building materials

The same 5 January release lets wholesalers and retailers of construction materials issue consolidated e-invoices from 1 January 2026. They need to issue an individual e-invoice only for a transaction above RM10,000, or when a buyer asks for one.

How e-invoicing works day to day

The workflow is the same whether you key invoices into LHDN’s portal or send them from your accounting system. The e-Invoice Guideline sets out these steps:

1. Create and submit. You prepare the e-invoice with the required fields and submit it to MyInvois.
2. Validation. LHDN checks it and returns the validated e-invoice with its unique identifier, or an error message telling you what to fix.
3. Notification. LHDN notifies both you and your buyer by email once the e-invoice is validated.
4. Sharing. You share the validated e-invoice, or its visual representation with a QR code, with your buyer. The QR code can be scanned to check the e-invoice’s existence and status on MyInvois.
5. Rejection or cancellation. Within 72 hours of validation, your buyer can ask to reject an e-invoice that contains errors, and you can cancel one that was wrongly issued, with a reason.
6. Storage. Validated e-invoices are stored in LHDN’s database, but you must still keep your own records of each transaction.

After the 72-hour window closes, a mistake can only be corrected by issuing a new document, the guideline says: a credit note, debit note or refund note e-invoice. Build that into your process, because a wrong price spotted on day four becomes two documents, not one edit.

When your customer does not want an e-invoice

Many retail and walk-in customers will never ask for one. In that case you give them a normal receipt, which is not submitted to LHDN, and then aggregate those sales into a consolidated e-invoice, submitted within seven calendar days after the end of each month, as section 3.6 of the Specific Guideline describes.

A consolidated e-invoice can list each receipt as a line item, or list running ranges of receipt numbers. Where the buyer is the general public and gives no TIN, the guideline provides a general TIN to use in the buyer field: EI00000000010.

If a customer does want an e-invoice, for example a company buyer that asks for one, you issue an individual one using their details. Outside a relaxation period, a buyer’s request means an individual e-invoice.

Self-billed e-invoices: when the buyer issues it

In some transactions the buyer, not the seller, must issue the e-invoice. Section 8.3 of the Specific Guideline lists nine cases, including:

• payments to agents, dealers and distributors;
• goods or services bought from foreign suppliers;
• profit distributions such as dividends;
• certain e-commerce transactions;
• pay-outs to betting and gaming winners;
• purchases from individuals who are not conducting a business, where no other self-billing case applies; and
• certain interest payments.

For many SMEs, two of these are everyday events: paying overseas software or advertising platforms, and buying from individuals such as a freelance designer with no registered business. Map them early, because they are easy to overlook when you think of e-invoicing as a sales-side task.

Choosing your channel: MyInvois Portal, MyInvois e-POS or API

LHDN offers two ways to transmit e-invoices: its own MyInvois Portal and an Application Programming Interface (API) that connects your system to LHDN, directly or through a technology provider. For small businesses it added a third option, MyInvois e-POS, a free point-of-sale platform.

The portal and the batch upload are described in table 2.1 of the e-Invoice Guideline, and LHDN’s FAQ confirms the portal is free to all taxpayers. The guideline notes that the API route requires upfront investment in technology and changes to existing systems.

In January 2026 the Government widened MyInvois e-POS to cover Phase 4 taxpayers with turnover of up to RM5 million, LHDN said in its release on e-POS. LHDN also offers a free receipt printer to businesses that register for and use MyInvois e-POS between January and June 2026, according to an earlier LHDN release.

If you already use a commercial POS, ask your vendor whether it submits to MyInvois and how it handles month-end consolidation. Our guide to choosing a POS system in Malaysia covers the other features worth comparing.

Costs, help and incentives

For a business issuing a few dozen invoices a month, the portal may be all you need, and it costs nothing beyond staff time. Expect most of the effort to go into preparation: collecting customer TINs, tidying product descriptions and teaching staff the 72-hour cancellation rule.

A tax deduction from Budget 2024 lets micro, small and medium enterprises deduct up to RM50,000 a year of environmental, social and governance spending, including consultation fees for implementing e-invoicing. LHDN’s FAQ says it applies from year of assessment 2024 to 2027.

Under Budget 2025, the Geran Digital PMKS MADANI matching grant, a Finance Ministry scheme run with Bank Simpanan Nasional (BSN), MDEC and MCMC, listed e-invoicing among its nine eligible digital services, according to BSN’s FAQ for the scheme. It matched 50% of the invoice, up to RM5,000 per business, subject to available allocation, so ask BSN whether applications are open before you count on it.

LHDN runs a round-the-clock e-invoice helpdesk on 03-8682 8000, alongside MyInvois Live Chat and the email address myinvois@hasil.gov.my, as listed in its January releases. Its branches also take walk-in questions.

What happens if you do not comply

Failing to issue an e-invoice is an offence under section 120(1)(d) of the Income Tax Act 1967. LHDN’s FAQ puts the penalty at a fine of RM200 to RM20,000, imprisonment of up to six months, or both, for each non-compliance.

The legal basis is the Income Tax (Issuance of Electronic Invoice) Rules 2024, gazetted as P.U. (A) 265 and effective from 1 October 2024, which the same FAQ cites.

In December 2025 LHDN also published an e-invoice compliance review framework, setting out the rights and duties of its audit officers, taxpayers and tax agents during reviews, as its release announcing it explains.

The data is already being used. LHDN said in February 2026 that its reviews of e-invoice data had led taxpayers to come forward and report RM1.4 billion of income they had not declared, in a media release on its reviews. For an SME, the lesson is simple: what you invoice and what you declare will be compared.

One worry you can set aside. LHDN’s FAQ says you can keep claiming tax deductions using your existing documents until the law is amended, so a supplier who is not yet on e-invoicing does not cost you the deduction.

What to do next: a checklist for SMEs

The relaxation period gives most Phase 4 businesses a year to practise. These steps follow the order in which the rules bite.

1. Confirm your phase. Pull your audited accounts for financial year 2022, or your tax return for year of assessment 2022, and read off the turnover. If you started in 2023 or later, use the new-business rules above, and check whether a holding company, corporate shareholder or related company rules out the exemption.
2. Sort out your own TIN and MyTax access. The MyInvois Portal is reached through MyTax, so whoever submits e-invoices for the business needs access there.
3. Collect your regular customers’ details. Ask corporate buyers for their TIN, business registration number and SST number, if any, before you need them.
4. Choose your channel. Portal for low volume, e-POS for counter sales, API through your software provider for everything else.
5. Set a month-end routine. Put a fixed date, well inside the seven-day window, for submitting consolidated e-invoices.
6. List your self-billing cases. For many SMEs these are foreign suppliers, agents and purchases from individuals.
7. Move to individual e-invoices before 2027. Use the relaxation year to switch business customers and large sales to individual e-invoices, so the end of the relaxation period is not a cliff.
8. Brief your tax agent. Ask how e-invoices will reconcile with your accounts and tax return, and keep your own records.

Before you load customer details into your system, it helps to confirm them. Our explainer on SSM company searches shows how to check the registration details your customers and suppliers give you.

FAQ

Do I need to e-invoice if my turnover is below RM1 million?

Usually not. Under the e-Invoice Guideline (Version 4.6), taxpayers with annual turnover or revenue of less than RM1 million are exempt, but LHDN’s FAQ withholds the exemption where a corporate shareholder, holding company, related company or joint venture has turnover of RM1 million or more. You may still join voluntarily, and you may receive e-invoices from suppliers who are required to issue them.

My turnover has grown since 2022. Does my phase change?

Not if you were already in a phase. Your phase is fixed by your financial year 2022 figures, and later changes in turnover do not alter it, under the e-Invoice Guideline. If you were exempt on your 2022 figures, reaching RM1 million brings you in on the dates in LHDN’s FAQ, and new businesses that started in 2023 or later follow separate rules.

Can I still give walk-in customers a normal receipt?

Yes, if they do not ask for an e-invoice. You then include those sales in a consolidated e-invoice submitted within seven calendar days after the month ends.

Is the MyInvois Portal free?

Yes. LHDN provides the MyInvois Portal and MyInvois e-POS free of charge. Paid software and API connections through technology providers are optional.

What changes after 31 December 2026?

For Phase 4 businesses, including those starting on 1 July 2026, the relaxation period ends on that date, according to the Specific Guideline. From 1 January 2027, its normal rules apply in full, including individual e-invoices on request and for single transactions above RM10,000, and LHDN’s no-prosecution undertaking for the relaxation period no longer covers you.